- Global financial assets increase by seven percent to 275 trillion US dollars, most strongly in North America (+10.4 trillion USD), Western Europe (+2.2 trillion USD) and Asia-Pacific excluding Japan (+3 trillion USD)
- Global real assets increase by two percent to 262 trillion US dollars, liabilities increase by four percent (60 trillion US dollars)
- Net assets in Germany stagnate at 19.2 trillion US dollars – falling real estate prices severely slow growth
- 3300 “super rich” people own almost a quarter of the total financial assets in this country – number of millionaires in Germany grows to 555,000
- Switzerland remains the number one financial centre in times of crisis, followed by Hong Kong
- Wealth managers’ margins have been falling for years – AI can increase productivity and improve the quality of advice
Munich/Zurich— After a weak year in 2022, global net assets rose significantly again last year – by four percent to 477 trillion US dollars. Financial assets (cash, account balances, bonds, stocks and mutual funds, and pensions) increased the most, increasing by seven percent to 275 trillion US dollars, while real assets (real estate, precious metals, and other physical assets) rose by just two percent to 262 trillion US dollars. Liabilities, on the other hand, increased by four percent (now 60 trillion USD).
These are the results of the BCG Global Wealth Report 2024 The GenAI Era Unfolds, which is being published for the 24th time this year. Akin Soysal, BCG partner in Zurich and co-author of the study, says: “2023 was again a significantly better year on the international financial markets, with investors in North America and Western Europe in particular benefiting from this.”
The report shows that wealth has increased most in both absolute and percentage terms in North America. The USA remains clearly at the top of the ranking of financial assets with 119 trillion US dollars. Last year alone, it increased by almost nine percent or 9.9 trillion US dollars. By comparison, the increase in financial assets in the USA last year corresponds to more than half of the total assets in Germany, including real assets. In the wealth ranking behind the United States, China (33 trillion USD), Japan (15 trillion USD) and Germany (9 trillion USD) follow. By 2028, the authors expect that financial assets worldwide will increase by 92 trillion US dollars.
German assets barely changed – tangible assets lose value
Despite the positive stock market performance, the total net assets of Germans have hardly changed and have only increased by around 60 billion US dollars – to just under 19.2 trillion US dollars. Compared to other industrialized nations, Germany has lagged behind in terms of wealth growth. Financial assets in this country did grow by around five percent, but this was offset by higher debts and falling real assets (minus 290 billion USD/minus 2.3% compared to the previous year). “In Germany, the increased interest rates have had a major impact on the performance of the real estate market, which is very important here,” says BCG partner Soysal. Well over half of assets (just under 12.3 trillion US dollars) are invested in real assets.
73,000 “super rich” worldwide – third most in Germany
There are now around 73,000 “ultra high net worth individuals” (UHNWI) worldwide, 7,000 more than last year. These super-rich individuals each have more than 100 million US dollars in financial assets. Most of them, more than 26,000, live in the USA, followed by China (8,300) and Germany (3,300, plus 300 compared to last year). The next places are taken by France (2,700), India (1,200) and Mexico (850). In total, this group of super-rich individuals has almost 38 trillion US dollars in financial assets, which is almost 14 percent of all financial assets worldwide. The report shows that the higher the initial assets of the individual, the higher the increases.
This also applies in Germany, where the distribution of wealth is more unequal than average. UHNWIs in Germany own almost 2.1 trillion US dollars, or 23 percent of all financial assets in this country – that is one percentage point more than last year and almost nine percentage points more than the global average for this group. The number of dollar millionaires in Germany is also growing: around 555,000 people currently own more than one million US dollars in financial assets. The number rose by around 30,000 last year.
In contrast, there are 66.5 million Germans who have less than 250,000 US dollars in financial assets. Altogether, this group owns 42 percent of the country’s total financial assets. The study authors’ calculations show that this trend will even intensify in the next five years. The super-rich will then own around 26 percent of all financial assets in Germany.
The more wealth, the stronger the growth in Germany has been recently. In this country, the financial assets of the super-rich increased by more than 10 percent. The lower down the wealth pyramid, the lower the increase in wealth for individuals. In the segment of one to five million euros in assets, the increase was still more than five percent, while in the largest segment (0 to 250,000 USD in financial assets) it was only 1.5 percent – and thus below the inflation rate. “Very wealthy investors have invested a higher proportion of their assets in the capital market and in high-yield asset classes such as private equity,” explains BCG partner Soysal. “Less wealthy people traditionally rely on lower-risk asset classes such as bank balances, cash or insurance – at the expense of returns.”
Switzerland remains the number one financial centre – closely followed by Hong Kong
As soon as macroeconomic uncertainty prevails, asset flows across national borders increase. This was particularly evident in 2022 with the war in Ukraine and continued to have an impact in 2023. “Investors look for safe havens abroad in times of crisis,” says study author Soysal. In 2023, so-called cross-border assets grew by more than five percent to 13.2 trillion US dollars worldwide. Switzerland, as the “booking center”, continues to have the highest investment assets (2.6 trillion US dollars) and, at 4.8 percent, recently grew more strongly than the world’s number two, Hong Kong (2.4 trillion USD, up 3.2%). Lower inflows from China were the main reason for this. Singapore follows in third place with assets under management of 1.7 trillion US dollars, which increased sharply by 7.8 percent compared to the previous year. Cross-border assets grew most strongly in the United Arab Emirates (plus 8.9%).
Wealth managers’ margins have been falling for years – AI can increase productivity
The margins of asset managers have fallen significantly since 2007. The study authors expect this downward trend to continue. In order for the industry to remain profitable, wealth managers should look into the possibilities of (generative) artificial intelligence (AI), recommends study author Akin Soysal. “The industry does not have a problem of awareness, it is more a problem of implementation,” he says. The report shows that 85 percent of wealth managers expect AI to have a major impact on the industry, but four out of five providers do not yet have a long-term GenAI strategy. Three quarters said they find it very challenging to determine where the technology can create the most value. “GenAI can increase productivity by up to 30 percent and at the same time enormously increase the quality of advice – wealth managers should not let this potential go to waste,” advises Soysal.
