Wealthy Australians with a net worth over $46 million number at approximately 2,450, but a generational shift might be on the horizon.
Australia's Wealthy Next Gen Shakes Up Finances
Australia's high-rolling elite are seeing a generational shift, with the next generation of wealthy individuals demanding digital services, alternative investments, and value-added offerings from wealth managers. Kartik Ramakrishnan, CEO of Capgemini's Financial Services Strategic Business Unit, explains, "The next generation of high-net-worth individuals arrive with vastly different expectations to their parents."
The expectations of the new wealthy include digital services that cater to their preferences, alternative investments such as cryptocurrency, and value-added services ranging from inheritance planning to trust management. This shift is not merely an Australian phenomenon; globally, AUD$72 trillion is set to transfer into the hands of women over the next three decades.
High net worth individuals (HNWI) in Australia hold more wealth than ever, amounting to over AUD$1.6 trillion in investable assets. According to Capgemini's research, there are currently 334,800 Australians meeting the HNWI criteria, with 30,240 individuals boasting wealth above $7.7 million and 2,450 sporting a net worth of $46 million or more, making them Ultra High Net Worth (UHNW).
Growth has been modest, with a mere 0.5% increase from last year. But in the coming years, a seismic shift is on the horizon as the wealth of HNWIs changes hands. Eighty percent of HNWI wealth is projected to transfer into the hands of Gen X, millennials, and Gen Z within 15 years, with this transformation promising to drastically alter the status quo.
The new generation of HNWIs "are willing to take more risks to expand their wealth," according to Capgemini's report, contrasting with the efforts of baby boomers to preserve and secure their wealth. If financial services firms fail to adapt to these changing expectations and preferences, a significant 81% of inheritors may consider moving their money away within just a year or two.
It's not just Australia that's experiencing this shift – digital services, alternative investments, and value-added services are reshaping the global financial landscape. To meet these demands, financial services firms are innovationating and diversifying their offerings, investing in robo-advice platforms, expanding service portfolios, and enhancing client relationships.
In recognition of this shift, firms like UBS have launched programs such as the Women's Investment Circle Masterclass, empowering women to take an active role in managing family wealth. With the great wealth transfer set to be a defining moment for the industry, the firms that adapt to these changing expectations and preferences stand to reap the rewards.
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Enrichment Data:
- The new generation of HNWIs expects a greater focus on digital services, alternative investments, and value-added services provided by wealth management firms.
- Approximately 46% of next-gen HNWIs consider a lack of digital offerings as a potential reason for switching wealth managers.
- Approximately 33% of next-gen HNWIs are demanding alternative investment options like cryptocurrency, which traditional wealth managers may struggle to offer.
- About 25% of next-gen HNWIs feel that wealth management firms are inadequate when it comes to providing value-added services, such as inheritance planning and trust management.
- The great wealth transfer, driven by baby boomers passing down their wealth to the next generation, is set to reshape the financial services industry.
- To adapt to the changing expectations and preferences of the next generation of HNWIs, financial services firms are leveraging technology, expanding service portfolios, and enhancing client relationships.
- With volatile market conditions, firms are focusing on deeper client engagement through more frequent planning meetings to retain trust and provide tailored advice.
- Firms are diversifying investment portfolios to include alternative assets and sophisticated financial products to cater to the evolving preferences of next-gen HNWIs.
The new generation of high-net-worth individuals in Australia is prioritizing digital services, seeking alternatives like cryptocurrency for investment, and demanding value-added services such as inheritance planning and trust management from their wealth managers. Roughly 46% of these next-gen HNWIs view a lack of digital offerings as a potential reason to switch wealth managers, while 33% are pushing for alternative investment options. Simultaneously, about 25% of next-gen HNWIs believe that wealth management firms are falling short when it comes to providing value-added services. To cater to their evolving preferences, financial services firms are adapting by leveraging technology, diversifying investment portfolios, expanding service portfolios, and enhancing client relationships.
