HNWIs Get Boost From Markets

The number of people globally who are considered high-net-worth individuals (HNWIs) grew in 2021 and so did their wealth, says Capgemini’s ‘World Wealth Report.’ It says recovering economies being boosted by the stock market helped propel the global HNWI population by eight per cent with their wealth also rising by this percentage. Almost two thirds of these wealthy people were in the United States, Japan, Germany, and China. The growth was led by those with at least US$30 million net worth, the ultra-high-net-worth individuals, with a rise of almost 10 per cent in population size and eight per cent in wealth. The report found that the gap between wealth bands has narrowed with more information access for investors and democratization of asset classes helping to level the playing field.

Wealth managers need to have a good understanding of their clients’ focus on ESG (environmental, social, and governance) in relation to their investment portfolios and should be able to show a robust recording of this if required, says Oxford Risk. It says regulators and investors will increasingly place investment management firms under closer scrutiny to ensure they are not greenwashing, or misleading clients over the ESG credentials of funds and portfolios. Its research shows most investors want the emotional comfort that ESG investments do what they claim to do from independent parties they can trust to verify those claims. The onus is on wealth advisers to match suitable ESG solutions to individual preferences. However, properly constructed ESG profiling can provide a double bonus for wealth managers by increasing the amount investors put in ESG investments by up to four times and making investors with high ESG preferences much more likely to invest overall. It believes the best investment solution for each investor needs to be anchored on stable and accurate measures of risk tolerance.

Investing in a Canadian corporation that is controlled by a family or founder appears to offer an advantage over wider-held public firms. National Bank of Canada’s ‘Family Advantage – Spring 2022’ found that between June 2005 and June 2021 the family/founder controlled Canadian public firms it tracked registered a cumulative return of 325.1 per cent. Meanwhile, the S&P TSX Composite Index returned 221.9 per cent over the same period. In annualized terms, that means a 9.4 per cent return for the family/founder firms compared to 7.6 per cent for the wider-held companies. “Many of the great Canadian business successes take root in the idea of an entrepreneur who, surrounded by talented and trustworthy people, knew how to make it grow with patience and discipline,” sates Laurent Ferreira, president and CEO of National Bank. “Understanding the role of family-controlled businesses, as well as their specific characteristics, is essential to the development of our economy and its diversity.”