The annual RBC Wealth Management/Capgemini World Wealth Report also showed that North America, which in 2011 had lost its top-dog status to Asia-Pacific, is now back as the place with the largest high net worth market.

North America, which
in 2011 had lost its top-dog status to Asia-Pacific, is now back as the place
with the largest HNW market, new figures show. North America has
a total population of 3.73 million high net worth individuals, compared with
3.68 million in Asia-Pacific. In North America, HNW total assets stood at $12.7
trillion, while in Asia they stood at $12
trillion.

The ranks of high net worth individuals around the world
swelled by 9.2 per cent in 2012 from a year before to reach 12 million while
their total investable wealth rebounded by 10 per cent to $46.2
trillion, rebounding from the previous year’s 1.7 per cent fall, according to the annual RBC Wealth Management/Capgemini World Wealth
Report.

The report is one of a number of annual barometers of how
many HNW and ultra high net worth individuals there are, and what their
investment and spending habits are like. Recently, Boston Consulting Group, the
US-based organization, said at the end of May that total private financial
wealth expanded by 7.8 per cent last year from the year before to reach a total
of $135.5 trillion, outpacing the rises in 2011 or 2010, when global wealth
grew by 3.6 per cent and 7.3 per cent, respectively. It also reported that
offshore wealth grew, but declined in relative terms.

While the RBC/Capgemini headline figure might provoke some
contentment in the US at a time of fears of being eclipsed by the East, this
situation is unlikely to persist, Jean Lassignardie, chief sales and marketing officer,
Capgemini Global Financial Services, said in the report.

“Interestingly, while North America led in HNWI population,
Asia-Pacific actually had a higher overall wealth growth rate at 12.2 per cent
compared to North America’s 11.7 per cent,” Lassignardie said.

The figures also show that the Asia-Pacific region is
projected to rise by one and a half times faster the global average, at 9.8 per
cent over the next three years. Global HNW wealth is expected to rise by 6.5
per cent annually over the same period.

The figures also reveal that the pace of growth is quicker
for those higher up the wealth spectrum – UHNW individuals (at
least $30 million of investable wealth) – suggesting continued widening of
wealth differentials. The number of UHNW individuals, and their wealth in
total, rose by 11 per cent last year from 2011, the report said.

All regions logged growth in the numbers of HNW individuals,
and wealth, apart from Latin America, which
faltered in 2012 amid slower gross domestic product growth and volatile equity
markets, the report said.

Cautious

HNW individuals remain cautious about markets, and the
priority for them is to protect wealth, according to responses to a survey from
more than 4,400 individuals polled in a new element of the RBC/Capgemini survey
this year. Although some markets have regained momentum, some 33 per cent of
HNW individuals are more focused on preserving wealth, rather than 26 per cent
who said they were mainly concerned with growing it.

The wealth preservation trend set the tone for asset
allocation: almost 30 per cent of HNW individual wealth is held in cash and
deposits (an interesting outcome given that short-term interest rates are near
to, or actually negative, in some countries).

North American HNW investors hold a larger slice of their
portfolios in equities than among other regions (37 per cent), while
those in Latin America and Asia-Pacific (ex-Japan) prefer real
estate (30 per cent and 25 per cent, respectively). In the UK,
allocations
favor cash/deposits at 28 per cent, and real estate, at 26 per cent.

Trust is coming back

A repeated theme of wealth management articles and
conferences in recent years, the issue of regaining clients’ trust appears to
have seen actual success on the ground. The report said confidence in the industry
has risen, with 61 per cent of respondents having a higher degree of trust in
managers and firms in early 2013, up four and three percentage points
respectively from a year ago.

Increased trust and a cautiously upbeat economic outlook
contributed to 75 per cent of HNW individuals feeling confident about
generating future wealth. More negatively, these individuals have a low level
of confidence in markets and regulators – perhaps jolted by a run of recent scandals,
such as the LIBOR-rigging affair and related events. Fewer than half of those
polled had a high level of trust in markets and regulators (45 per cent and 40
per cent respectively).

Among detailed findings, the report showed that 41.4 per
cent of HNW individuals prefer to deal with a single trusted firm rather than a
number of them. “This represents one of the most surprising survey results,
given the pervasive industry assumption that HNW individuals are happy to work
with multiple firms,” the report said. “Wealth management firms with universal
banking models able to offer a wide breadth of trusted expertise through a
seamless process will likely be the beneficiaries of this trend.”

However, the desire to work with a single firm was later
described by the report as understandable because managing a variety of
portfolios and bank relationships is increasingly complex, an issue aggravated
by rising regulatory issues such as know-your-client procedures. The report
found that 34 per cent of HNW individuals want a single-touch point
at the firm to facilitate all aspects of a relationship, moving as high as 52.8
per cent in the US
where they want to deal with just one firm.

In terms of service preferences, clients look for more than
just face-to-face contact. Some 30.7 per cent of those surveyed want such
contact, 23.7 per cent said digital interactions are more important.
Asia-Pacific clients lead the way in a desire for digital interaction, with
38.2 per cent of them putting more stress on this, compared with 23.8 per cent
for direct contact.