Gareth Wilson (3:59)

Great to be here. Maren, thanks for the invitation.

Maren Thomsset (4:02)

Let's start by talking about this World Wealth Report. It's super interesting, it's jammed full of fascinating findings. But tell me first, how is it put together?

Gareth Wilson (4:10)

The Capgemini World Wealth Report. This is actually the 29th edition of this particular industry report that covers 71 countries. When we look at the wealth management industry globally, we interview something like 6,500 high net worth individuals. We also talk to a number of wealth management executives across Capgemini's clients and other industry players as well as some of the kind of ecosystem by that I mean some of the technology companies that specifically support wealth management. And then we talked to some of the relationship managers. And again, relationship managers is one of the key roles that we talk about in our World Wealth Report 2025 in terms of the role they have to play and the opportunity that's represent to them going forward.

Maren Thomsset (4:54)

Okay, so let's start with these six and a half thousand people. I mean that's a lot of people to talk to. How are we defining high net worth, ultra high net worth? Who are these people?

Gareth Wilson (5:03)

A high net worth individual? We look at them effectively in three classifications. So individuals who have investable assets over a million dollars and the millionaires next door marin that we all have who have investable assets between 1 and $5 million. The next category up, which we call mid tier millionaires is between 5 and 30 million. And then you get into the ultra high net worth individuals with investable assets of greater than US$30 million. Fundamentally, if you're above a million dollars, you're included in our high net worth individual discussion.

Maren Thomsset (5:44)

And investable assets is liquid cash. So that doesn't include property.

Gareth Wilson (5:49)

It doesn't include property. It covers investments that individuals have. It obviously includes cash. It obviously includes some cryptocurrency, which is an increasing consideration.

Maren Thomsset (6:01)

Okay, you interview six and a half thousand. How many of these people are there across the board? What percentage of the population falls into this bit?

Gareth Wilson (6:14)

When we look at high net worth individuals, three categorizations, something like 2.6% of the world's population falls into this categorization. It does vary by geography. We've seen how that variation has evolved because as I say, we've done this report for multiple years. And when we look at that 2.6%, 6.2 fall into that ultra high net worth. So 6.2% of the 2.6% have investable assets of greater than $30 million.

Maren Thomsset (6:48)

Okay. And the richest populations are going to be presumably in the US where it's not going to be 2.6%, it's going to be very significantly higher.

Gareth Wilson (6:57)

It is. And when we look at the population within North America, 7.3. So 7.3% fall into this high net worth individual. We look in Asia, it's something like 2.7. And we look at Europe, it's 2.1.

Maren Thomsset (7:13)

Can you break that out for the UK at all?

Gareth Wilson (7:15)

Not specifically the point I want to make here, Marin. Actually, let me just clarify that those figures in terms of population are in terms of growth. Okay, so when we look at North America, there's 7.3% growth in terms of the high net worth individual population. Within Asia Pacific, it's 2.7% growth when we compare 24 to 23. And actually in the UK it's 2.1% decline. So we've seen a decline in terms of this high net worth individual population here in the UK for many of the reasons that you would expect when we look at 2024 as a year. But North America is growing. APAC's growing, Europe and the UK, we've seen a decline.

Maren Thomsset (8:03)

Okay, so a decline in Europe as well.

Gareth Wilson (8:05)

Yeah, indeed.

Maren Thomsset (8:06)

I know you said you all know the reasons for this, but would you run us through them so we can just feel miserable about them all over again?

Gareth Wilson (8:11)

We've seen a fall in terms of the kind of return on equity investments and fundamentally the stock market, those obviously contributed. We've seen declines in some of the investments with regard to private equity. And all of this has contributed to this reduction.

Maren Thomsset (8:30)

Okay, interesting. I thought you were going to say that that number was falling because people were leaving the UK and the EU and taking their investable assets with them to go elsewhere. And we've seen a lot of talk, for example, about the well off leaving the UK for tax reasons. So I'm surprised that you put it down to falling returns from their investments, not to actual departures.

Gareth Wilson (8:51)

Your point's valid, Marin. In terms of the kind of globalization of this particular segment of the society, they're definitely looking at opportunities to invest globally. They're certainly looking at some of the benefits of tax jurisdictions outside their domestic market. In our report this year, we've seen growth in locations like Singapore. We've seen growth in locations like Hong Kong. Dubai seems to be a well known location for the relocation of wealth. But also Saudi Arabia, we should say.

Maren Thomsset (9:27)

Just to be clear, although I think it probably is clear that this is last year's information. And obviously there's been a big change in the way the markets have moved so far this year.

Gareth Wilson (9:35)

24 versus 23. The shift here is based on the 24 data.

Maren Thomsset (9:39)

Okay, let's talk about the main theme or one of the big themes of this year's report, which is all about the great wealth transfer. The number that you put in there is there'll be a wealth transfer of $83.5 trillion to a new generation of investors or rich people, whatever you like to call, by 2048, and that's real money.

Gareth Wilson (9:59)

There's a huge shift in wealth from one generation to the next. $83.5 trillion by 2048. Now that 2048 sounds a long way away, Marin, but actually when you look at the short term, 30% of that wealth will actually transfer before 2030 over the next five years and a further sort of 30% will transition before 2035. So it's a big number, but it also is an imminent consideration for the individuals, obviously, particularly if you're about to receive or inherit that wealth. But also it's an important consideration for the wealth management organizations in terms of effectively, how do they mean relevant to their clients kids generation in a way that they've been relevant to their. To the parents generation?

Maren Thomsset (10:47)

Yeah. And one of the interesting things about this is the extent to which that wealth as it's passed down stays in the market and the extent to which it is removed for living costs, particularly down at the lower end, right. You inherit a million dollars or $2 million and you're in your 30s or 40s, what are you going to do? You're probably going to buy a house and maybe pay for school fees, that kind of thing. So there is this dynamic where you can't necessarily expect that 83.5 trillion to hang around in stock markets, in private equity, in crypto, et cetera. You can expect it to be taken out for living.

Gareth Wilson (11:22)

Undoubtedly that will be the case. I think everybody's situation is fundamentally different however, when we look at the Gen X. So those of us who are between sort of 44 and 59 years of age, we have one perception in terms of what that inheritance will mean. The millennials, the famous millennials, who are all sort of between their late 20s and early 40s in 2025, have a different outlook and to your point is very relevant and Marin, that's where property, school fees, lifestyle will be. And then you have Gen Zs, which are really only teenagers in their early 20s, but there also will be a recipient for this wealth. So I think we'll see different behaviors depending on the generations and obviously by individual. But fundamentally the point we're making here is how can the wealth management industry take advantage of this transfer but also mitigate the risk that it represents? Because there's a chance that the wealth management firms will lose some of those assets.

Maren Thomsset (12:25)

Let's put the decumulation point aside for the moment. The second interesting thing, as you say, is this idea that it's something of a threat to the wealth management business, partly in terms of that flow out, but also in terms of the different expectations and needs that a younger generation will have. One of the terrifying statistics for wealth management companies that you put in this report is that 81% of those who inherit are likely to shift wealth management company within one or two years. Can it really be that much? Can people really be that non apathetic?

Gareth Wilson (12:55)

I think they can. And the statistics definitely support that potential risk. Now of course there's things that we can all do to mitigate that. Do we really understand what the inheriting generations want to achieve in terms of their objectives? And as I say, the baby boomers have somewhat been in a little bit of a wealth preservation mindset. I think when we look forward into the Millennials, it's all about long term growth. And that's where some of these may be higher risk assets come into the frame. We've talked about cryptocurrencies, we've talked about private equity. You know, a movement towards some of these types of investments in a portfolio. Potential consideration. I think this global diversification, I think future generations will look at the world in its entirety and think, well, quite frankly, if they want to invest in markets in Asia, they want to invest in centers like Singapore, then again, much more open to do so. And then thirdly, I think the nature of the services, I think our sense is in the report very clearly draws out that concierge services, trust planning, property management, a willingness to have a more encompassing relationship that's not just purely based on the scale of your wealth and the growth of that particular portfolio, but with a set of services around that really contribute to a lifestyle. Our report draws out that this idea of luxury, certainly for those high net worth individuals, is becoming an increasing consideration in terms of where they spend their wealth. How can the wealth management firms bring some of those lifestyle concierge support services to bear to make sure that they're bringing that all encompassing relationship for the future generations?

Maren Thomsset (14:41)

Okay, let's go back a bit to this idea of the young wanting a, a different class of assets, a riskier class of assets. So crypto, okay, private equity, I mean, again, there's a rising evidence that in fact private equity is not a higher return asset class at all. As we say these days, it's not magic, it's debt. Right. And as interest rates rise, and we've seen over the last couple of years this huge difficulty that private equity companies are having in exiting any of their positions. So it's possible that private equity may not be one of the asset classes that the young end up looking at. But I'm really interested in the idea that they might want to invest in a more global way because we have had over the last couple of decades, even global has meant the US right? In that 60, 70% of world indices are still America. So even if people say I want to be globally diversified, they still end up basically invested in the US and more or less invested in those top tech companies. But you think that over the next couple of decades we'll see a shift driven by people genuinely wanting to be more international?

Gareth Wilson (15:52)

Yeah, yeah, we do. It's partly driven by some of those favorable tax regimes, but also the access to those particular sort of financial ecosystems, the stability, political stability within those particular regions are all considerations. But I think when I look at the long term benefits, and I'm going to bring you back to your point about private equity, I think when you look at private equity in the long term. It's a very valid option. As, as with crypto, as with the kind of globalization piece.

Maren Thomsset (16:25)

Okay, I have to, I have to stop you there. I've got to stop you there because first on private equity there is no real long term because the scale of it is only relatively recent. Right? So we don't know yet. I'll give you that. If you look at the numbers that the private equity industry gives you, it looks like maybe this outperforms over the long term. But this is a tiny industry. Until relatively recently, it's only become a giant industry during the low interest rate period. We have no idea how at this scale it will perform in a higher interest rate environment. So I'm not giving you that one. Cryptocurrency. Again, I can't give you that because there is no long term. We have no idea there is no long term. We only have the short term here. We can only guess about the future, right? Which doesn't mean that if you have a high risk appetite, you shouldn't be in it. But no one can tell you that cryptocurrency has a great long term performance record because there is no long term. Right? Unless your definition of long term is.

Gareth Wilson (17:17)

Different to mine, I'm not going to argue with you on that point. We're seeing organizations invest, Goldman Sachs, to give an example, they have their GM for a product proposition which is enabling that BNY Mellon, they have what they call alt bridge, which is looking at what we talk about, alternative investments. So as I say, we can argue the pros and cons, but ultimately I think as an industry, I think my key point is it's important to be cognizant of those alternative investments and our sense of capgeminis, those will be more relevant going forward. And I think the regulation of those particular products, you know, crypto as an example, I suppose, are also increasing, let's just say the acceptance of the opportunity they represent.

Maren Thomsset (18:07)

Let's go back to crypto because I get in a lot of trouble from the Bitcoin Bros all the time about confusing bitcoin and crypto because they're different things, right? So when you say crypto and you say that the young or the younger generations would like to include crypto as an asset class inside their portfolios, what do you mean?

Gareth Wilson (18:24)

Anything that qualifies as a digital asset, Marin, including Bitcoin.

Maren Thomsset (18:27)

Can I just interrupt to give my usual message? But if any of you would like to send hate mail about the differentiation between crypto or Bitcoin, NFTs, et cetera. Please, can you send them direct to Gareth? I'll give you his contact details at the end.

Gareth Wilson (18:39)

Thank you. Thank you.

Maren Thomsset (18:41)

My pleasure, My pleasure. I get enough. Everyone should share the joy.

Gareth Wilson (18:45)

Exactly, Exactly. I think 56%, 56% of Gen Zs and millennials view alternative investments as a valid part of their portfolio.

Maren Thomsset (18:59)

So just inside alternative investments, we're putting crypto, we're putting private equity. What else are we putting?

Gareth Wilson (19:05)

ETFs, for example.

Maren Thomsset (19:07)

ETFs.

Gareth Wilson (19:07)

Yeah, yeah, yeah.

Maren Thomsset (19:08)

Is that an alternative?

Gareth Wilson (19:09)

Depends on the prototype. Yeah. Yeah.

Maren Thomsset (19:11)

Okay. All right. Interesting.

Gareth Wilson (19:13)

The other thing about the future generations is the digital experience very much moving away probably from the classic face to face. When you look at the millennials, they really want a mobile interface, they want personalization, they want us to use their data. When I say us, the banking industry, the wealth management industry, they want us to use their data to bring proactive propositions that are relevant to their investment strategy. And fundamentally they probably also want to see, certainly for these high net worth individuals, their extensive wealth in one place.

Maren Thomsset (19:48)

Yeah, and I'm really interested in this idea that a wealth manager should also provide a sort of luxury concierge service that does travel and does bespoke experiences. Education, medical, cybersecurity, all these things in a oner. I would love that. Sounds great. Do you think that the next generation has different expectations of how they will spend to the current generation? And one of the things that we've talked about again quite a lot on the podcast is the way, particularly in travel, people with a much lower level of wealth than the luxury travel industry previously have expected are spending very large amounts of money on luxury travel.

Gareth Wilson (20:29)

I think it's the experience generation. I think fundamentally and with this segment, next generation high net worth individuals, it probably just amplifies that. Maren, you know, travel experience, passion. We talk about passion investments. I can see you looking.

Maren Thomsset (20:49)

Yeah, it's not quizzical, it's a snare.

Gareth Wilson (20:53)

But you know, art, Art, wine, cars. And again in our Capgemini report last year, we talked about the role of the family office. This is an extension, Marin, in terms of bringing some of those non financial services to bear in a way that actually is very much in line with the client expectations and their desire for experiences.

Maren Thomsset (21:17)

Yeah, I guess that what I object to slightly is the idea that something is a passion investment. I kind of feel either it's a passion or it's an investment confuse you too. And it's a route to low returns or disaster. So listen, here's the real question for you, right? We have a lot of listeners out there. Maybe they're going to inherit, maybe they're not. Maybe they already have money or whatever. And they're sitting listening to this and they're thinking to themselves, do you know what? Why haven't I got a wealth manager? I should have a wealth manager. This is what I need. And maybe they're inheriting, they're thinking, I don't want my mom and dad's wealth manager. I never liked them anyway. Fusty old people, suits, tights, blah, lunch at Christmas. Don't want any of that nonsense. How do you look for a wealth manager? What are the main things that you should be looking for when you go out trying to find somebody to do exactly this, not just run your money, but effectively manage your long term, long term income and lifestyle? What are we looking for?

Gareth Wilson (22:08)

Really, really good question. I probably think about it in three ways. I think first and foremost, probably a wealth manager or wealth management organization that fundamentally understands your aspirations. So I think they have to be 100% aligned with what you want to achieve. I think the second thing I would say, Maren, is I think a wealth manager that gives you access to the breadth of products, services and experiences you're looking for for you and your family. And then finally, I think with anything in life there has to be a degree of chemistry. I think fundamentally having a very real time relationship that's supported by digital. And we've talked about this demand for a digital platform, but also that's enabled through a relationship because fundamentally we're talking about the very important conversations for you as an individual and your future and your family's future.

Maren Thomsset (23:11)

Okay, and crucially, what should I pay and how should I pay? Has there been any shift in the charging structure for wealth management or are we still just going to pay 1% ad valorem forever? One and a half, whatever it is, depending on where you go.

Gareth Wilson (23:25)

Obviously it varies very much by organization. Can't comment on the kind of pricing models for specifics. But again, I would say in a world where we're looking to achieve outcomes and experiences, why not link the investment to those outcomes? And that will be as a client. That would be the angle that I would always be looking to take in terms of how can we get some surety in terms of the long term investment and how can we link fees, costs, et cetera, on that basis.

Maren Thomsset (23:57)

So you would suggest that people find a way to link what they pay to the performance of the assets that they left with the wealth manager rather than pay a flat ad valorem.

Gareth Wilson (24:05)

I think if you're able to make sure that all aspects of the kind of investment are aligned to the ultimate aims, that for me would be a preferable model, the relationship manager model as well. Mehren, let's just think about that, because the other dynamic we're seeing here is relationship managers are also considering their long term future. Many of them are approaching retirement age. We've seen a significant proportion of relationship managers that will leave the industry. So there's quite a lot of volatility in terms of the relationship manager community as well. So again, this is another consideration for the wealth management organizations. How do they retain and grow that talent that also evolves with their client base?

Maren Thomsset (24:49)

How has it happened that the relationship managers in this business have not recruited at a younger age? Why have we got an aging industry?

Gareth Wilson (24:58)

I think undoubtedly they are. But the key challenge is, can you retain and excite that talent? Give them the capabilities that we've talked about, digital capabilities, generational AI? Can you give them access to the products and services that their clients need? We all see.

Maren Thomsset (25:19)

Sorry, is this really about a lot of people working in this industry who used to be active wealth managers? And gradually, as the asset management itself is centralized, men or women or whatever, who used to find themselves actively running assets, now find themselves really only being a relationship manager because the asset management has been shifted centrally. Is that what we're talking about here?

Gareth Wilson (25:39)

Undoubtedly there's been a change in the role, but again, as we've said, there's also a change in the client base. And as a wealth management firm, you've got to make sure that you're giving your relationship managers the tools and techniques to enable them to service future generations.

Maren Thomsset (25:56)

Do you know what, Gareth? I think we can now answer one of the questions that we get asked most regularly by listeners, which is what career should my child go into when they leave university? And I think you've answered this for us. Become a specialist wealth management relationship manager with an AI and luxury travel specialty. Can I cover it?

Gareth Wilson (26:16)

You heard it here first, Merritt. You heard it here first.

Maren Thomsset (26:19)

Oh, lucky kids. Wonderful, Gareth, thank you so much. I have one last question for you. What are you reading at the moment?

Gareth Wilson (26:25)

Oh, I'm reading a book called Vine Street.

Maren Thomsset (26:28)

Vine Street?

Gareth Wilson (26:29)

Yeah, yeah. It's a drama based in Soho in the 1930s. Classic police drama. Nothing at all to do with banking, nothing at all to do with financial services.

Maren Thomsset (26:39)

Police drama. I love a police drama. Vine Street.

Gareth Wilson (26:42)

I'm going to Vine Street. I recommend it. Maren. I'm very much enjoying it partway through.

Maren Thomsset (26:47)

Brilliant. Thank you so much. Thank you so much for joining us today. That was really, really interesting.

Gareth Wilson (26:51)

My pleasure. Great to see you. Thank.

Maren Thomsset (26:57)

Thanks for listening to this week's Marin Talks Money. If you like our show, rate, review and subscribe wherever you listen to podcasts and keep sending questions or comments to marinmoneyloomburg.net you can also follow me and John on Twitter or x. I'm at marionursw and John is John Underscore Stepeck this episode was hosted by me Marin Thumbset Web. It was produced by Sama Saadi and Moses Andam Sound designed by Blake Maples. Special thanks, of course, to Gareth Wilson.