29/06/2016 01:56 AST
Private wealth in Saudi Arabia will rise to $2 trillion, according to a new report by The Boston Consulting Group (BCG) titled “Global Wealth 2016: Navigating the New Client Landscape” released Tuesday. In the next five years, the growth of private wealth in the Kingdom will be driven primarily by equities (4.4 percent), followed by cash and deposits (1.9 percent) and bonds (1.4 percent), the report noted.
Based on BCG’s in-depth study, between 2010 and 2014, Saudi Arabia saw its private wealth increase by 1.6 percent. In those four years, the wealth breakdown was 2 percent in equities, 1.4 percent in cash and deposits, and 0.8 percent in bonds.
The sixteenth annual study by BCG outlines the evolution of private wealth from both a global and regional perspective, addresses key industry trends, and explores evolving client needs—particularly those of underserved, nontraditional segments such as female investors and millennials, whose investment goals are not necessarily well-addressed by the standard, net-worth-based service approach.
“Segmentation approaches based mainly on wealth level continue to be used by the majority of wealth managers, neglect what clients are truly willing to pay for,” said Markus Massi, Partner & Managing Director of BCG Middle East’s Financial Services practice. “Such approaches no longer allow wealth managers to capitalize on the full potential of the market.”
Massi added: “Local asset managers still provide a standard product program with limited differentiation. International asset managers have embarked on a journey designed to tailor their offering around specific customer segments, leveraging increasingly digital opportunities. They use technology to offer additional communication channels and services to their customers and tap into big data to generate customer insights—so they can further customize their offering and make it more personal. Local wealth managers in the GCC are only now starting to recognize this opportunity, which could become a source of true differentiation.”
Over the next five years, wealth in the Middle East and Africa region is set to reach $11.8 trillion—and Saudi Arabia, the UAE, and Kuwait’s contribution will account for 22.7 percent of that sum.
In terms of wealth distribution, private wealth held by ultra-high-net-worth (UHNW) households (those with above $100 million) in Saudi Arabia is expected to grow by 4.8 percent in the next five years. Interestingly, by 2020, this specific segment will be witnessing the highest growth.
Across the Kingdom, private wealth held by the upper high-net-worth (HNW) segment (those with between $20 million and $100 million) is projected to increase at a rate of 4.1 percent over the next five years.
In parallel, private wealth held by the lower HNW segment (those with between $1 million and $20 million) will go up by 2.6 percent.
And lastly, looking ahead, the total number of millionaire households (those with more than $1 million in net investable assets) in Saudi Arabia is set to grow by 1.3 percent by 2020.
The findings of BCG’s report also revealed that, in 2015, for Middle East and Africa (MEA) wealth booked offshore, Switzerland (30 percent) was the destination of choice, followed by the UK (23 percent) and Dubai (18 percent).
Worldwide, the report noticed a slowdown in growth. Global private financial wealth grew by 5.2 percent in 2015 to a total of $168 trillion, according to the report. The rise was less than a year earlier, when global wealth rose by more than 7 percent. All regions except Japan experienced slower growth than in 2014. Unlike in recent years, the bulk of global wealth growth in 2015 was driven by the creation of new wealth (such as rising household income) rather than by the performance of existing assets, as many equity and bond markets stayed flat or even fell. Assuming that equity markets regain momentum, p
Saudi Gazette
Please wait...
