Global financial wealth clocks record high of $530 trillion in 2021 despite crises: BCG report

Global financial wealth reached a record high of $530 trillion in 2021 despite continued crises. The 22nd edition annual report on the global wealth management industry by Boston Consulting Group (BCG) on Thursday stated the rise in global wealth was driven by strong equity markets and a surge in demand for real assets.

In its Global Wealth 2022, BCG finds out that despite geopolitical and economic destabilizers such as inflation and Russia’s invasion of Ukraine, approximately $80 trillion in new wealth is likely to be created over the next five years.

Furthermore, BCG's note said in a notable industry shift, Hong Kong will probably overtake Switzerland in 2023 as the domicile managing the largest amount of private cross-border wealth, ending a run of more than 200 years of Swiss dominance.

Anna Zakrzewski, global leader of BCG’s wealth management segment and a co-author of the report, said, "although this stability provides a tremendous opportunity for wealth managers, they must make strategic choices to remain competitive. Wealth clients are looking for next-generation offers and next-level service—including net-zero, crypto, personalization, and digitization. The most important question facing wealth managers today is not which initiatives to prioritize, but how best to implement them.”

BCG report predicts that wealth assets will continue to rise in value terms in all regions.

However, BCG's report expects Asia-Pacific to maintain the fastest rates of wealth growth, with asset values poised to increase by a compound annual growth rate (CAGR) of 8.4% through 2026. If that rate holds, the region could be home to nearly one-quarter of the world’s wealth by 2026.

Varun Kejriwal, Managing Director & Partner, BCG India said, "Digital wealth managers have delivered 5-6 times higher shareholder value vis-à-vis traditional managers over the past decade, by virtue of superior customer experience and seamless execution."

Kejriwal added, "Further, Asia Pacific is expected to see the fastest rates of wealth growth and its share in global wealth is expected to increase to 25% by 2026. This presents enormous opportunities for wealth managers and those who adapt to this digital shift and move decisively, will be capable of seizing these opportunities and enjoying exponential growth.”

Moreover, BCG's note expects wealth in the Middle East and Africa on track to rise by a CAGR of 5.4% over the next five years, the biggest overall leap in regional wealth growth. In North America, wealth growth will be slower than in years past, with an estimated CAGR of 4.7% through 2026, down from a prior five-year average of 9.1%. Likewise, in Western Europe, wealth growth is likely to slow from roughly 4.5% over the past five years to less than 4% annually until 2026.