Financial management firms could lose their next generation of wealthy clients to the lure of global giants like Amazon and Google, according to the latest report on the habits of the rich.
There are 16.5 million individuals around the world with assets of $US1 million or more, excluding their primary residence, with a combined wealth of $US63.5 trillion, the Capgemini 2017 World Wealth Report said.
More than 56 per cent of them were open to letting a tech giant like Google, Amazon, Facebook or Apple handle their investing, Capgemini said.
Traditional wealth management firms are aware of the threat from the major tech companies, with 78 per cent of firms viewing their entry into financial services as either a certainty or strong possibility, according to the wealth report.
If the tech giants trained their digital firepower on investment advice wealth management, existing firms could be outgunned and outmanoeuvered, Capgemini Australia banking and capital markets industry practice director Phil Gomm said.
“The knowledge that any or all of them could do so – and do it powerfully – looms as an existential threat in the minds of wealth managers,” he said.
The number of wealthy individuals willing to engage with the tech giants jumps to more than 81 per cent for those aged under 40, and in emerging markets.
“The younger high net worth individual population are looking for an increase in frequency of updates of their overall financial position, which sends clear a message you must have digital solutions in order to be able deliver that immediacy of the view of the portfolio,” Mr Gomm said.
“Giant technology firms around the world have made huge imprints on consumer life over the last 10 years or so, while also gaining access to vast troves of financial, behavioural, and psychographic data.”
The Capgemini report says wealth management firms may end up partnering with big tech firms, being acquired by them or the tech giants may instead develop their own wealth management systems.