Qatar’s financial wealth will experience a sturdy compound annual growth rate (CAGR) of 3.9% in new wealth, rising from $0.3tn to $0.4tn in five years up to 2026, a new report by Boston Consulting Group (BCG) has shown.
The report titled, ‘Global wealth 2022: Standing still is not an option’, shows equities and investment funds in Qatar make up the largest asset class at 46% of total personal wealth in 2021 whereas life insurance and pensions are expected to grow the fastest with a CAGR of 5.7% by 2026.
Whereas currency and deposits represent the second largest class at 40% of total personal wealth in 2021, bonds make up a mere 1%. It is expected life insurance and pensions will become the third largest asset class over the next five years.
“We see the Middle East and Africa financial wealth growing year after year, including Qatar, despite a tremulous global market. In fact, Qatar represented 4.2% of the Middle East and Africa's financial wealth in 2021, having grown 3.1% every year since 2016 to $0.3tn,” said Mustafa Bosca, managing director and partner, BCG.
In 2021, approximately 40% of Qatar’s wealth derived from Ultra High Net Worth (HNW) individuals who are worth more than $100mn, with this expected to grow to 41% in 2026, whereas individuals with wealth ranging above $1mn held 25% of Qatar’s wealth in 2021 and is expected to remain the same by 2026.
Net-zero is an immediate imperative: Although people tend to think of net-zero as a 2050 goal, the report notes that wealth managers must act immediately to embed sustainable investing across the entire client life cycle.
Crypto: An untapped market for wealth managers:
The opportunity for wealth managers is clear: nearly 80% of clients surveyed said that they would consider increasing their crypto holdings if wealth managers offered advisory and education services. Two-thirds of clients who sourced their crypto investment with third parties said that they did so because they didn’t think their wealth managers offered such services. To determine whether crypto is right for their businesses, wealth managers must consider if, when, and how they want to participate.
Personalisation as a driver of top-line growth
On average, wealth managers that excel at customising offers and interactions see higher rates of client satisfaction and lower rates of churn than others do.
Personalisation is a complex undertaking that requires introducing new data and analytics, connecting processes across the firm’s front, middle, and back offices, and changing ways of working.
In the report, BCG has identified three actions that wealth managers vying to deliver individualised service at scale can take to improve personalisation: prioritise capabilities that recur across journeys; design for value and scale; and back good ideas with the right enablers.
Digital wealth management premium is real: The valuation multiples of digital wealth management firms are six or seven times as high as those of traditional wealth managers.
Digital wealth management institutions are delivering faster customer growth, cheaper cost structures, and superior rates of innovation. To protect their future profitability, traditional wealth managers must evolve with the times.
“The wealth management agenda is getting more crowded — and the items on it more urgent. Net-zero, crypto, personalisation, and digitisation are not merely arenas that leaders can simply consider. They are imperatives whose outcomes will determine which institutions grow client share over the next five years. The most important question facing wealth managers right now is not which initiatives to prioritise — but how best to execute on all of them,” Bosca added.
The report titled, ‘Global wealth 2022: Standing still is not an option’, shows equities and investment funds in Qatar make up the largest asset class at 46% of total personal wealth in 2021 whereas life insurance and pensions are expected to grow the fastest with a CAGR of 5.7% by 2026.
Whereas currency and deposits represent the second largest class at 40% of total personal wealth in 2021, bonds make up a mere 1%. It is expected life insurance and pensions will become the third largest asset class over the next five years.
“We see the Middle East and Africa financial wealth growing year after year, including Qatar, despite a tremulous global market. In fact, Qatar represented 4.2% of the Middle East and Africa's financial wealth in 2021, having grown 3.1% every year since 2016 to $0.3tn,” said Mustafa Bosca, managing director and partner, BCG.
In 2021, approximately 40% of Qatar’s wealth derived from Ultra High Net Worth (HNW) individuals who are worth more than $100mn, with this expected to grow to 41% in 2026, whereas individuals with wealth ranging above $1mn held 25% of Qatar’s wealth in 2021 and is expected to remain the same by 2026.
Net-zero is an immediate imperative: Although people tend to think of net-zero as a 2050 goal, the report notes that wealth managers must act immediately to embed sustainable investing across the entire client life cycle.
Crypto: An untapped market for wealth managers:
The opportunity for wealth managers is clear: nearly 80% of clients surveyed said that they would consider increasing their crypto holdings if wealth managers offered advisory and education services. Two-thirds of clients who sourced their crypto investment with third parties said that they did so because they didn’t think their wealth managers offered such services. To determine whether crypto is right for their businesses, wealth managers must consider if, when, and how they want to participate.
Personalisation as a driver of top-line growth
On average, wealth managers that excel at customising offers and interactions see higher rates of client satisfaction and lower rates of churn than others do.
Personalisation is a complex undertaking that requires introducing new data and analytics, connecting processes across the firm’s front, middle, and back offices, and changing ways of working.
In the report, BCG has identified three actions that wealth managers vying to deliver individualised service at scale can take to improve personalisation: prioritise capabilities that recur across journeys; design for value and scale; and back good ideas with the right enablers.
Digital wealth management premium is real: The valuation multiples of digital wealth management firms are six or seven times as high as those of traditional wealth managers.
Digital wealth management institutions are delivering faster customer growth, cheaper cost structures, and superior rates of innovation. To protect their future profitability, traditional wealth managers must evolve with the times.
“The wealth management agenda is getting more crowded — and the items on it more urgent. Net-zero, crypto, personalisation, and digitisation are not merely arenas that leaders can simply consider. They are imperatives whose outcomes will determine which institutions grow client share over the next five years. The most important question facing wealth managers right now is not which initiatives to prioritise — but how best to execute on all of them,” Bosca added.