The annual RBC Wealth Management/Capgemini World Wealth Report showed that the number of high net worth individuals surged last year, despite some market headwinds in particular regions.

A record 1.76 million people have joined the high net worth individual ranks despite lacklustre economic growth across the globe, a report says.

The 15 per cent increase is the second largest since 2000 and was mostly driven by the booming equity markets, according to the World Wealth Report 2014 published by Capgemini and RBC Wealth Management.

The report is one of a series of surveys of the state of global wealth and the industry that serves it; in recent days, there have been reports from the likes of KPMG and Boston Consulting Group, for example. 

The RBC/Capgemini report noted that total investable wealth grew almost 14 per cent from the year before to stand at $52.62 trillion, a record. While the data has to be understood in its context, it is bound to fuel debate about rising wealth inequalities in developed and emerging countries.

“Overall, 2013 was another strong year for the High Net Worth market, with surging equity markets and improving economies contributing to double digit growth in both population and wealth levels,” said M. George Lewis, group head at RBC Wealth Management & RBC Insurance. “Looking at longer term growth trends, nearly 40 percent of the current level of High Net Worth wealth has been created in the past five years alone.”

The wealthy benefited from stock market and property price growth in the developed markets. Stocks grew last year in North America by 27.6 per cent, 24.9 per cent in Japan and 21.7 per cent in Europe. Meanwhile Japan’s Nikkei 16,000 for the first time in six years following a weakened yen and increased imports thanks to an improvement in the US economy.

Figures provided by the report also show that property prices showed impressive growth, in particular in Taiwan, Germany and the US.

Yet despite asset prices growing - real economic growth was dismal in 2013. Global GDP grew at just 2.2 per cent, down from 2.3 per cent in 2012 and even worse than 2011 when it was 2.8 per cent.

“The global economy turned in a lacklustre performance in 2013, barely registering any growth over the year before,” the report said.

It is perhaps not surprising then that many economists believe the global economy is experiencing an asset bubble caused by over exuberance on behalf of the wealthy investors and heavy quantitative easing - particularly by the Fed.

On a regional basis, North America and Asia-Pacific once again led the way. North America’s wealthy population expanded by 16 per cent to 4.33 million, while Asia-Pacific’s grew by 17 per cent to reach 4.32 million.

North America’s wealth now stands at $14.88 trillion, while Asia-Pacific is $14.20 trillion.

Meanwhile Europe’s rich grew by 12 per cent to reach 3.83 million and their  wealth by 14 per cent to reach $12.39 trillion - both significant increases from the previous two years.

And in the UK the total number increased by 13.4 per cent to reach 527,000 and their wealth by 15.6 per cent to reach $1.9 trillion.

Latin America and Africa however recorded disappointing figures driven by over dependence on the resource sector which had a tough year in 2013. Latin America recorded an increases of just four per cent in its high net worth population and two per cent in their wealth.

Performance ratings

Most worryingly for the wealth management industry was that its performance ratings were down on last year. Ratings by their rich clients were down by four percentage points, to 63 per cent in early 2014. The most substantial drop in ratings was in North America -  at seven per cent.

This dissatisfaction is being driven largely by the refusal of the wealth management sector to get up to speed with digital technology, the report said.

It found that nearly two-thirds of the world’s high net worth individuals expect to manage most or all of their wealth relationship digitally in five years and would consider leaving their current firm if an integrated channel experience is not provided.

It is particularly the case for those under 40 whose preference for digital increased to 36.7 per cent from 29.1 per cent last year.

“Declining wealth  manager performance scores indicate opportunities still exist for firms to tailor their offerings to better meet client needs,” said Jean Lassignardie, chief sales and marketing officer, at Capgemini Global Financial Services.  “One way to address the evolving demands of current and future clients is to provide digital capabilities that move beyond simply having a digital presence, to offering an integrated and seamless client experience that  incorporates digital at all touch points.”

Ultra

On ultra high net worth individuals - defined as those with investible assets of $30 million or more - held more than a third (34.6 per cent) of global HNW individual wealth; such persons account for 0.9 per cent of the total HNWI population. The UHNW population rose by 15.6 per cent, but their wealth rose less rapidly, up 12 per cent. 

The report said the relative weakness of UHNW individuals' wealth growth was driven by "poor performance in Latin America", which has a highly concentrated population in this segment.