Global HNWI wealth hits $60 trillion among 15.4 million people

04 July 2016 Consultancy.uk

The wealth of the world’s wealthiest people, those with more than $1 million in non-primary residence based assets, continues its momentous rise. It stood at $59.7 trillion last year, up from $37.2 trillion in 2006. Particularly Asia is seeing a rise in the number of rich: Asia totals more than 5.1 million millionaires, up from 3.3 million in 2010 – globally there are now more than 15.4 million millionaires.

In Capgemini’s latest ‘World Wealth Report’, the 20th edition, the consultancy surveyed 5,200 high-net-worth-individuals (HNWI) across 23 countries as well as desk research, to develop a comprehensive snapshot of the global wealth of the world’s wealthiest people. For the analysis the firm divided HNWls into three distinct wealth bands: Millionaires Next Door (MND), those with $1 million to $5 million in investable wealth; Mid-tier Millionaire, those with $5 million to $30 million; and ultra-HNWl (UHNWI), those with $30 million or more.

Global population of HWNI

Multi-millionaire growth
The number of HNWI across the globe increase slightly to 15.4 million, an average 4.9% increase on last year - growth has slowed somewhat compared to the average rate of 7.7% between 2010 and 2014.

The largest gain (9.4%) in numbers was in the Asia-Pacific region, where 400,000 new rich arrived on the scene bringing the region’s total up to 5.1 million of HNWI. In North America, the number of rich grew by 2%, falling behind the Asian-Pacific region millionaire numbers to reach 4.8 million of HNWI. Two regions saw a decrease in the number of millionaires, Africa, down -1.8%, and Latin America, down -2.2%. Europe saw an increase of 4.8% in 2015, taking the number of HNWI over the 4 million threshold. 

HWNI wealth projection

The total wealth owned by the richest people on earth has been growing steadily over the past decade. In 2006 HNWI held $37.2 trillion globally, of which $10.1 trillion was held in Europe and $11.2 trillion in North America – Asia at the time, held $8.4 trillion of total wealth. By 2015 the total global wealth has reached $59.7 trillion, a 57.5% increase in less than a decade. The rapid growth in Asia-Pacific economies is reflected in the increased wealth of its richest people, which in 2015 stood at $17.4 trillion.

The coming ten years will continue to see expansion in the total wealth of the world’s wealthiest. The projection from Capgemini for the total HNWI wealth comes in at $108 trillion, a substantial 90.7% growth on last year. Asia-Pacific will continue to dominate, with total wealth in the region increases to $42.1 trillion. North America will see a modest increase, with total wealth in the region reaching $25.7 trillion. Latin America is after Europe the region with the slowest projected growth, up 58.4%.

Given the projections are based on historic trends, and considerable changes are currently taking place globally, there are no guarantees regarding the long term trends. Political and economic headwinds could plunge the region into the so-called middle-income trap, in which a country’s growth allows it to reach middle-income levels but then slows, making the transition to high-income levels seemingly unattainable. Even with a more conservative model, of just 7.0% CAGR in Asia-Pacific (compared to the 9.2% used previously), the total increase in the region would still see it reach $34 trillion by 2025, with global HNWI wealth at $98 trillion.

Wealth bands

The research also highlights that the different segments, from the rich to the very rich, have been growing at different rates. While the population growth rate within each segment was relatively close between 2010 and 2014, at around 7.7%, between 2014 and 2015 growth dropped off slightly to 4.9% for MND and 4.2% for UHNWI. In terms of total wealth accretion, MND managed to increase their wealth by an average of 7.7% between 2010 and 2014, while UHNWI managed 6.1% in the same period. Between 2014 and 2015 growth of UHNWI wealth stalled to 2.5% growth. In total UHNWI hold 34.1% of total HNWI wealth, while MND hold 43.1%.

HNWIs overseas wealth

Overseas invested
The wealth of the wealthiest, according to Capgemini’s research, is, in part, not held within the borders of the home country of its owners. Particularly Asian-Pacific nation HNWIs (67.8%) are holding some of their assets abroad. Those in Latin America too are keen on holding cross-border assets, at 60.3%, followed by the Middle East & Africa, at 59.6%. The Japanese are the least likely to own overseas assets, at 46.2%, followed by Europeans, at 49.7%.

Reasons for overseas investment

The research also sought to find out why HNWI are diverting wealth away from their home territories. The ‘most important’ to ‘also important’ reasons vary, although the top reason for both was to pursue ‘specific investment opportunities abroad’, cited by 17.3% as the most important reason and by 63.2% as also important. ‘Portfolio diversification away from the home market’ came second, as cited by 79.8% of respondents, with 15.2% citing it as the main reason to move. ‘Concerns about economic/financial market risk in my home market’ was cited by 14.3% as their primary reason, while 64.1% cited it as also a reason.

Funding personal interest overseas was cited as the most important factor by 11.5% of respondents, while ‘I have family there’ was cited as important by 11.2% of respondents. Demographically, 83.9% of HNWls in Asia-Pacific cited specific investment opportunity abroad and 86.5% of HNWI in Latin America cited concern about economic risks in their home markets as an important reason to invest outside their home country.

Digital disconnect
Two other recent reports from consultancies into the wealth management industry, conducted by PwC and EY respectively, found that the demand for digital channels is growing among HNWIs, however, at the same time wealth managers tend to overestimate their digital capabilities, which in turn leads to a disconnect with clients.

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”