The wealth of the world's richest people is in decline according to a new report from Capgemini, pointing to the loss of $2trn worldwide in 2018.
The drop was largely driven by a slump in the equity markets and slowing economies in key regions, especially the Asia-Pacific region, according to the World Wealth Report 2019 by Capgemini, a Paris-based consultancy and technology services firm.
The UHNW populations declined by 4%, and their wealth declined by around 6%. This plunge accounted for 75% of the total global wealth decrease.
Asia Pacific accounted for 50% of the global wealth decline, and half of that was driven from China"
The population of millionaires also decreased 0.3% to 18 million last year, according to the report. Millionaires are defined as having investable assets of $1m or more, excluding primary residence, collectibles, consumables, and consumer durables.
The decline in global wealth was driven by China with the Asia-Pacific region representing $1trn of the global decline in wealth, as the HNWI population decreased by 2% and HNWI wealth by 5%. The report notes: "China alone was responsible for more than half (53%) of Asia-Pacific and more than 25% of global HNWI wealth loss."
"Asia Pacific accounted for 50% of the global wealth decline, and half of that was driven from China," says Bill Sullivan, vice president and global head of financial services market intelligence at Capgemini.
Concerns over the US-China trade relationship have continued to weigh down on the value of the Chinese market. Beijing saw a significant deceleration in economic growth in 2018. Its stock markets declined almost 27%, and it had one of the lowest-performing real estate markets, Sullivan said.
Europe also experienced a noticeable dip in millionaires' wealth, responsible for about 24%, or $500bn, of the overall yearly $2trn decline across the globe, according to the report.
North America was flat in the number of millionaires (5.7 million); their combined wealth dropped 1.1% to $19.6trn.
The Middle East recorded an increase in its millionaire population and wealth (by 6% and 4%), the only region to see positive growth.
Despite the decline in wealth among high net worth individuals, their trust and satisfaction for wealth managers remained high.
Anirban Bose, chief executive officer of Capgemini Financial Services, said: "While the volatile economic environment of 2018 led to high net worth individuals' wealth declining globally, wealth managers have been extremely successful in maintaining strong levels of client trust.
"However, future success will depend on the agility of wealth management firms to evolve the client experience and find new ways to add value through more personalised services.
"Next-generation technology and closing expectation gaps will aid this, but the landscape is shifting so quickly that companies must not be afraid to overhaul their strategy and business models if needed."
According to the report, investment in next-gen technologies will be critical in order to enhance the client experience. While there is consensus among firm executives and wealth managers that AI is a key game-changer, only 5% of surveyed firms said they had implemented AI strategies across all core areas.