Damper for the rich of this world
Private financial assets barely grew in 2018. It looks a little better in Germany – thanks to a special feature.
IThe Boston Consulting Group (BCG) presented its “Global Wealth Report” every June. In the past few years, there has always been a clear trend through this: private financial assets are growing rapidly, with the very rich in particular getting richer. But in 2018 the millionaires and billionaires of this world had to accept a sensitive setback. According to the figures that BCG has collected and sorted from banks and asset managers, private assets (excluding real estate), adjusted for exchange rate effects, grew by only 1.6 percent to just under $ 206 trillion in the past year. In the previous year, assets had increased by 7.5 percent. In the period between 2013 and 2017, the average annual growth was 6.2 percent.
The main reason for the unusually weak development in the past year was the drop in share prices. Mainly due to the bear market in the fourth quarter, important stock indices fell by a fifth. This in turn hit those regions and countries where people are particularly affinity for stocks. This is especially true of Americans, around 50 percent of whom are invested in stocks and mutual funds. As a result, according to the 2018 BCG study, they suffered a slight loss of assets.
The Germans, on the other hand, are grumpy about stocks; their equity and mutual fund share of the assets held domestically (including life insurance and bonds) is only 19 percent. In times of low and negative interest rates, the reluctance of stocks, which investment advisers often complain about, has often harmed Germans: in previous years, their wealth grew only below average in an international comparison.
Most millionaire density in Switzerland
But “thanks” to the stock market storm in autumn, the 2018 balance sheet looks a bit better: Because the losses from stocks were comparatively low due to lack of mass, private financial assets in Germany rose by an above-average 1.9 percent to 7.5 trillion dollars. “Last year, it was an advantage for German investors that they were comparatively conservative,” says Anna Zakrzewski, who, as a BCG partner in Zurich, is one of the main authors of the wealth study.
At the same time, she pointed out to the FAZ that the picture can of course quickly darken again at the expense of the Germans in the event of an upturn on the stock markets. In fact, things have been going well for shareholders this year: The German share index (Dax) has risen by 17 percent since the beginning of January, the Euro-Stoxx has gained 15 percent.
Although the Americans suffered a loss of assets in 2018, you don’t have to go around with the bell bag for them. Nowhere is there greater wealth than in the United States. According to BCG, 14.7 million millionaires live there. Far behind are China (1.3 million millionaires), Japan (1.1), Switzerland (0.5), Great Britain (0.4) and Germany (0.4). In relation to the number of adult residents, the density of millionaires is highest in Switzerland, followed by the United States, Canada and Taiwan.
The number of millionaires around the world rose by 2.1 percent to 22.1 million last year. Together, these people own half of the world’s private financial wealth. BCG expects the number of millionaires to increase to 27.6 million by 2023. Above all, Asia is the engine of this development. There, the study authors expect millionaire growth of a good 10 percent.
But also in Africa (plus 9.8 percent) and Latin America (9.1 percent), according to forecasts, more and more people are accumulating financial assets in the millions. As far as wealth development as a whole is concerned, Boston Consulting expects a clear upward trend in the coming years. An annual average increase of 5.7 percent can be expected until 2023. In Germany, wealth would grow annually by 5 percent to 9.3 trillion dollars during this period.
Many German banks and asset managers are not particularly well prepared for the business opportunities that arise from this development: “Almost all of the German private banks approach customers in the same way, most of them offer very similar products,” she criticizes BCG partner Zakrzewski. Especially in times of falling margins and rising costs, it is important to focus on a differentiated offer that is precisely tailored to the customer.
The banks need more volume
Instead, however, one recruits customer advisors from other banks in the desperate hope of generating growth in this way. The success rate is low: “A consultant who moves to another bank will drag a third of his previous customers over with him – but only if things are really going very well.” It is important to standardize and automate the processes behind the customer interface . At the same time, the customer must be looked after and addressed much more individually, not least with the help of digital channels.
Anyone who does not manage this transformation process threatens to fly out of the curve sooner or later. Although the merger between Deutsche Bank and Commerzbank has failed, Zakrzewski expects takeovers and mergers in the German banking market. “The consolidation has to pick up speed because the current operating models are far too expensive. The banks need more volume on their platforms so that they pay off. “