Millionaires’ combined wealth fell in 2018, Capgemini reports

Australia fell in the global millionaires ranking in 2018 as the combined wealth of the world’s rich went backwards.

Racegoers walk by a Rolls-Royce in the carpark at Royal Ascot. Picture: AFP

Australia dropped in the global millionaires ranking in 2018 as the combined wealth of the world’s rich backtracked for the first time in eight years.

Taken together, the wealth of the world’s millionaires dropped 3 per cent in 2018, according to the 2019 World Wealth Report by consulting firm Capgemini.

In Australia, the number of high net wealth individuals decreased 4.32 per cent from 278,000 in 2017 to 266,000 last year, pushing Australia to fall to 10th place in the global rankings for 2018, down from 9th place the prior year.

The global fall-off was partly due to flailing equity markets and global trade jitters, as well as the property market slump, which affected millionaires locally. But a rebound is expected for 2019 as equity and property markets recover.

In the Asia-Pacific region, the wealth of high net worth individuals — measured as those who have an investable wealth exceeding $US1 million ($1.44m) outside of their primary residence — accounted for half of the $US2 trillion drop-off in global wealth, with 53 per cent of the losses attributed to Chinese millionaires.

A fall in global sharemarkets prompted high net worth individuals to replace equities with cash last year, with many parking their money in government bonds and term deposits as they de-risked their portfolios from share markets and real estate, Capgemini said.

The move to cash, combined with a trend towards passive investing in products like exchange traded funds, meant wealth managers and private banks had to maintain a degree of intimacy with their clients, financial services practice leader for Capgemini Australia Phil Gomm said.

“I think the overall trend is going to be for an increase in investment technology to help wealth managers build that intimacy,” Mr Gomm told The Australian.

“As we move to passive investments and exchange traded funds, it becomes difficult for funds to attract the same sort of fees that they’ve been able to in the past.”

Still, Mr Gomm said that he expected wealth to rebound in 2019, as equity markets recovered and the property market began to improve.

“I’m feeling more confident, certainly now with the federal election behind us, the policies of a Labour government no longer in play, and the policies of the Coalition government giving investors more comfort,” he said.

“Still, we still need to watch the effect of geopolitical impacts very carefully,” Mr Gomm said. “There are still a number of trade agreements that are still under renegotiations, including the Brexit challenges, as well as negotiations between the US and China.”

Mr Gomm’s comments came ahead of the publication NAB’s business confidence survey, which recorded a slump in confidence for June after a post-election boost in May.

Ultra-high net worth individuals — those with at least $US30m in investable income — saw a much steeper wealth decline last year compared to the “millionaire next door”, Capgemini found. Those at the top of the pyramid were more effected by trade tensions compared to those at the lower end, who remained more reliant on wealth industry professionals to manage their assets.

European high net worth individuals accounted for about a quarter of global losses. In North America, high net worth individual population grew 0.4 per cent, though wealth declined 1 per cent.

Saudi Arabia and Kuwait both saw an increase in high net worth population as well as wealth growth on improved GDP and strong financial performance. Saudi Arabia’s high net worth individual population increased by 7 per cent, while Kuwait saw an 8 per cent increase.