Young High Net Worth Individuals Interested In Holding Cryptocurrencies – World Wealth Report 2018

News | June 26, 2018 By:

High net worth individuals (HNWI) are showing increasing interest in cryptocurrencies, according to a survey released last week by consulting giant Capgemini.

HNWI are defined as those having investable assets of $1 million or more – excluding primary residence, collectibles, and consumables. According to Capgemini’s World Wealth Report 2018 (WWR), HNWI wealth surpassed the $70 trillion threshold for the first time in 2017. Registering its sixth consecutive year of gains, HNWI wealth grew 10.6 percent, making 2017 the second-fastest year of HNWI growth since 2011.

The report also highlighted the growing interest of millionaires in cryptocurrencies, which reached an all-time high market capitalization in January of this year. According to the report, 29 percent of the surveyed millionaires expressed a high degree of interest and 26.9 percent said they are somewhat interested.

“Cryptocurrency’s potential for investment returns and as a store of value are driving HNWI interest, with 71.1 percent of HNWIs aged 40 and below placing high importance on receiving cryptocurrency information from their primary wealth management firms, compared to 13 percent of HNWIs aged 60 years and above,” the report said. “Globally, 39.3 percent of HNWIs said investment return was the primary reason they would hold / purchase cryptocurrencies, while 19.3 percent cited the potential as an alternative store of value.”

However, asset managers are still cautious about cryptocurrency and are reluctant to broach the subject with clients. Only 34.6 percent of millionaires globally said that they have received cryptocurrency information from their wealth managers.

“North American HNWIs appeared the most satisfied with their wealth manager (75.2 percent), while no other region passed the 70 percent threshold,” the report said. “In 2018, only 55.5 percent of HNWIs said they connected very well at a personal level with their wealth managers, despite substantial investment returns delivered over the past two years. The majority of HNWIs (64.3 percent) globally said they would use an improved system for locating a wealth manager, whether this is a firm-specific initiative or provided by a third party or parties.”

The report said the 26.9 percent of the HNWIs currently on the fence about cryptocurrencies could be a source of new assets for wealth management firms if they are able to engage in a meaningful dialogue.

“There is clear opportunity for wealth management firms to strengthen their relationships with their high net worth clients as nearly half say they don’t connect well with their wealth managers,” said Anirban Bose, member of the Group Executive Board and Head of Capgemini’s Financial Services Global Strategic Business Unit. “Providing an innovative digital client experience is one way to strengthen the bond between wealth managers and their clients.”