How Do You Pick the Best Wealth Manager?
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Welcome to Merrin Talks Your Money, the personal finance edition of Merrin Talks Money. In these bonus podcasts, we talk about the best strategies for making the most of your money. Now, this episode is slightly longer than usual. I'm speaking with Gareth Wilton, who's chief vice president at Capgemini. They publish annually a World Wealth Report, which looks at where wealth is concentrated and where wealth is growing, why it's growing, and who's getting that money.

Gareth, thank you so much for joining us today. We really appreciate it. Great to be here, Maren. Thanks for the invitation. Let's start by talking about this World Wealth Report. It's super interesting. It's jammed full of fascinating findings. But tell me first, how is it put together? The Capgemini World Wealth Report, this is actually the 29th edition of this particular industry report that covers 71 countries when we look at the wealth management industry globally.

We interview something like six and a half thousand high net worth individuals. We also talk to a number of wealth management executives across Capsulam and I's clients and other industry players, as well as some of the kind of ecosystem. By that, I mean some of the technology companies that specifically support wealth management. And then we talk to some of the relationship managers. And again, relationship managers is one of the key areas.

roles that we talk about in our World Wealth Report 2025 in terms of the role they have to play and the opportunity that's represented to them going forward. Okay, so let's start with these six and a half thousand people. I mean, that's a lot of people to talk to. How are we defining high net worth, ultra high net worth? Who are these people?

A high net worth individual, we look at them effectively in three classifications. So individuals who have investable assets over a million dollars and the millionaires next door, Marin, that we all have, who have investable assets between one and $5 million.

The next category up, which we call mid-tier millionaires, is between 5 and 30 million. And then you get into the ultra high net worth individuals with investable assets of greater than 30 million U.S. dollars.

Fundamentally, if you're above a million dollars, you're included in our high net worth individual discretion. And investable assets is liquid cash, so that doesn't include property. It doesn't include property. It covers investments that individuals have. It obviously includes cash. It obviously includes some cryptocurrency, which is an increasing consideration. Okay. You interviewed 6,500 people.

How many of these people are there across the board? What percentage of the population falls into this bit? When we look at high net worth individuals, three categorizations, something like...

2.6% of the world's population falls into this categorization. It does vary by geography. We've seen how that variation has evolved because, as I say, we've done this report for multiple years. And when we look at that 2.6%, 6.2% fall into that ultra-high net worth. So 6.2% of the 2.6% have investable assets of greater than $30 million.

Okay. And the richest populations are going to be presumably in the US, where it's not going to be 2.6%. It's going to be very significantly higher. It is. And when we look at the population within North America, 7.3%. So 7.3% fall into this high net worth individual. We look in Asia, it's something like 2.7%. And we look at Europe, it's 2.1%. Can you break that out for the UK at all?

Not specifically. The point I want to make here, Mary, and actually let me just clarify that. Those figures in terms of population are in terms of growth. Okay. So when we look at North America, there's 7.3% growth in terms of the high net worth individual population. Within Asia Pacific, it's 2.7% growth when we compare 24 to 23. And

And actually in the UK, it's 2.1% decline. So we've seen a decline in terms of this high net worth individual population here in the UK for many of the reasons that you would expect when we look at 2024 as a year. But North America is growing. APAC is growing. Europe is growing.

And the UK, we've seen a decline. Okay, so a decline in Europe as well. Yeah, indeed. I know you said you all know the reasons for this, but would you run us through them so we can just feel miserable about them all over again? We've seen a fall in terms of the kind of return on equity investments and fundamentally the stock market. That has obviously contributed. We've seen declines in

in some of the investments with regard to private equity. And all of this has contributed to this reduction. Okay, interesting. I thought you were going to say that that number was falling because people were leaving the UK and the EU and taking their investable assets with them to go elsewhere. And we've seen a lot of talk, for example, about the well-off leaving the UK for tax reasons. So I'm surprised that you put it down to falling returns from their investments, not to actual departures.

Your point is valid, Meryn, in terms of the kind of globalization of this particular segment of the society. They're definitely looking at opportunities to invest globally. They're certainly looking at some of the benefits of tax jurisdictions outside their domestic market. In our report this year, we've seen growth in locations like Singapore,

We've seen growth in locations like Hong Kong. Dubai seems to be a well-known location for the relocation of wealth, but also Saudi Arabia. We should say, just to be clear, although I think it probably is clear, that this is last year's information. And obviously there's been a big change in the way the markets have moved so far this year. 24 versus 23. The shift here is based on the 24 data.

Okay, let's talk about the main theme or one of the big themes of this year's report, which is all about the great wealth transfer. The number that you put in there is there'll be a wealth transfer of $83.5 trillion to a new generation of investors or rich people, whatever you like to call it, by 2048. And that's real money. There's a huge shift in wealth.

from one generation to the next, $83.5 trillion by 2048. Now that 2048 sounds a long way away, Maren, but actually when you look at the short term, 30% of that wealth will actually transfer before 2030 over the next five years. And a further sort of 30% will transition before 2035. So it's a big number.

But it also is an imminent consideration for the individuals, obviously, particularly if you're about to receive or inherit that wealth. But also it's an important consideration for the wealth management organizations in terms of effectively how do they remain relevant to their clients' kids' generation in a way that they're being relevant to the parents' generation.

Yeah. And one of the interesting things about this is the extent to which that wealth, as it's passed down, stays in the market and the extent to which it is removed for living costs, particularly down at the lower end, right? If you inherit a million dollars or $2 million and you're in your 30s or 40s, what are you going to do? You're probably going to buy a house and maybe pay for school fees, that kind of thing. So there is this dynamic where you can't necessarily expect the

that $83.5 trillion to hang around in stock markets and private equity and crypto, etc. You can expect it to be taken out for living. Undoubtedly, that will be the case. I think everybody's situation is fundamentally different. However, when we look at

The Gen X, those of us who are between 44 and 59 years of age, we have one perception in terms of what that inheritance will mean. The millennials, the famous millennials who are all sort of between their late 20s and early 40s in 2025 have a different outlook. And to your point is very relevant, Maren, that's where...

property, school fees, lifestyle will be. And then you have Gen Zs, which are really only teenagers and in their early 20s, but there also will be a recipient for this wealth. So I think we'll see different behaviors depending on the generations and obviously by individual. But fundamentally, the point we're making here is how can the wealth management

industry take advantage of this transfer, but also mitigate the risk that it represents because there's a chance that the wealth management firms will lose some of those assets. Let's put the decumulation point aside for the moment. The second interesting thing, as you say, is this idea that it's something of a threat to the wealth management.

business, partly in terms of that flow out, but also in terms of the different expectations and needs that a younger generation will have. One of the terrifying statistics for wealth management companies that you put in this report is that 81% of those who inherit are likely to shift wealth management company within one or two years. Can it really be that much? Can people really be that non-apathetic?

I think they can, and the statistics definitely support that potential risk. Now, of course, there's things that we can all do to mitigate that. Do we really understand what the inheriting generations want to achieve in terms of their objectives? And as I say, the baby boomers have somewhat been in a little bit of a wealth preservation mindset. I think when we look forward into the millennials, it's all about long-term growth. And that's where some of these maybe higher-risk assets come

come into the frame we've talked about cryptocurrencies we've talked about private equity you know a movement towards some of these types of investments in a portfolio potential consideration i think this global diversification i think future generations will look at the world

in its entirety and think, well, quite frankly, if they want to invest in markets in Asia, they want to invest in centers like Singapore, then again, much more open to do so. And then thirdly, I think the nature of the services. I think our senses in the report very clearly draws out that concierge services, trust planning, property management, and

a willingness to have a more encompassing relationship that's not just purely based on the scale of your wealth.

and the growth of that particular portfolio, but with a set of services around that really contributes to our lifestyle. Our report draws out that this idea of luxury, certainly for those high net worth individuals, is becoming an increasing consideration in terms of where they spend their wealth. How can the wealth management firms bring some of those lifestyle concierge support services to bear to make sure that they're bringing that all

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Okay. Let's go back a bit to this idea of the young wanting a different class of assets, a riskier class of assets. So crypto, okay. Private equity, I mean, again, there's a rising evidence that in fact private equity is not a higher return asset class at all. As we say these days, it's not magic, it's debt, right? Yeah.

And as interest rates rise, and we've seen over the last couple of years, it's a huge difficulty that private equity companies are having in exiting any of their positions. So it's possible that private equity may not be one of the asset classes that the young end up looking at.

But I'm really interested in the idea that they might want to invest in a more global way, because we have had over the last couple of decades, even global has meant the U.S., right? And that 60, 70 percent of world indices are still America. So even if people say, I want to be globally diversified, they still end up basically invested in the U.S. and more or less invested in those top tech companies. But you think that over the next couple of decades, we'll see a shift in

driven by people genuinely wanting to be more international? Yeah, we do. It's partly driven by some of those favourable tax regimes, but also the access...

Those particular sort of financial ecosystems, the stability, political stability within those particular regions are all considerations. But I think when I look at the long-term benefits, and I'm going to bring you back to your point about private equity, I think when you look at private equity in the long term, it's a very valid option, as with crypto, as with the kind of globalization piece. Okay, I have to stop you there. I've got to stop you there.

Because first on private equity, there is no real long term because the scale of it has only relatively recent. So we don't know yet. I'll give you that if you look at the numbers that the private equity industry gives you, it looks like maybe this outperforms over the long term. But this is a tiny interestee until relatively recently. It's only become a giant industry during the low interest rate period. We have no idea how...

how at this scale it will perform in a higher interest rate environment. So I'm not giving you that one. Cryptocurrency, again, I can't give you that because there is no long term. We have no idea. There is no long term. We only have the short term here. We can only guess about the future, right? Which doesn't mean that if you have a high risk appetite, you shouldn't be in it. But no one can tell you that cryptocurrency has a great long term performance record because there is no long term, right? Unless your definition of long term is different to mine.

I'm not going to argue with you on that point. We're seeing organizations invest. Goldman Sachs, to give an example, they have their G-Infra

product proposition, which is enabling that. BNY Mellon, they have what they call Altbridge, which is looking at what we talk about alternative investments. So as I say, we can argue the pros and cons, but ultimately, I think as an industry, I think my key point is it's important to be cognizant of those alternative investments. And our sense at Capgemini is those will be more relevant going forward. And I think the regulation...

of those particular products, you know, crypto as an example, I suppose are also increasing the

Let's just say the acceptance of the opportunity they represent. Let's go back to crypto, because I get in a lot of trouble from the Bitcoin bros all the time about confusing Bitcoin and crypto because they're different things, right? So when you say crypto and you say that the young or the younger generations would like to include crypto as an asset class inside their portfolios, what do you mean?

Anything that qualifies as a digital asset, Maren, including Bitcoin? Can I just interrupt to give my usual message? If any of you would like to send hate mail about the differentiation between crypto or Bitcoin, NFTs, etc., please can you send them direct to Gareth? I'll give you his contact details at the end. Thank you. Thank you, Maren. My pleasure. I get enough. Everyone should share the joy. Exactly. Exactly. I think 56%, 57% of Gen Zs

millennials view alternative investments as a valid part of their portfolio. And inside alternative investments, we're putting crypto, we're putting private equity. What else are we putting? ETFs, for example. Is that an alternative? Depends on the product type. The other thing about the

future generations is the digital experience. Very much moving away probably from the classic face-to-face. When you look at the millennials, they really want a mobile interface. They want personalization. They want us to use their data. When I say us, the banking industry, the wealth management industry, they want us to use their data to bring proactive propositions that are relevant to their investment strategy. And fundamentally, they probably also want to see

Certainly for these high net worth individuals, their extent of wealth in one place. Yeah. And I'm really interested in this idea that a wealth manager should also provide a sort of luxury concierge service that does travel and does bespoke experiences, education, medical, cybersecurity, all these things in a one-off.

I would love that. Sounds great. Do you think that the next generation has different expectations of how they will spend to the current generation? And one of the things that we've talked about, again, quite a lot on the podcast is the way, particularly in travel, people with a much lower level of wealth than the luxury travel industry previously have expected are spending very large amounts of money on luxury travel.

I think it's the experience generation. I think fundamentally, and with this segment, next generation high net worth individuals, it probably just amplifies that, Meryn. You know, travel, experience, passion. You know, we talk about passion investments. I can see you looking quizzically. Literally sneering. It's not quizzical, it's a sneer.

But, you know, art, art, wine, cars. And again, in our Capgemini report last year, we talked about the role of the family office. This is an extension, Maren, in terms of bringing some of those non-financial services to bear in a way that actually is very much in line with the client expectations and their desire for experiences.

Yeah, I guess that what I object to slightly is the idea that something is a passion investment. I kind of feel either it's a passion or it's an investment. Okay.

confusing too. And it's a route to low returns or disaster. So listen, here's the real question for you, right? We have a lot of listeners out there. Maybe they're going to inherit. Maybe they're not. Maybe they already have money or whatever. And they're sitting listening to this and they're thinking to themselves, do you know what? Why haven't I got a wealth manager? I should have a wealth manager. This is what I need. And maybe they're inheriting. They're thinking, I don't want my mom and dad's wealth manager. I never liked them anyway. Fusty old people, suits, ties, blasts, lunch at Christmas. Don't want any of that nonsense. It's

How do you look for a wealth manager? What are the main things that you should be looking for when you go out trying to find somebody to do exactly this? Not just run your money, but effectively manage your long-term income and lifestyle. What are we looking for? Really, really good question. I probably think about it in three ways.

I think first and foremost, probably a wealth manager or wealth management organization that fundamentally understands your aspirations. So I think they have to be 100% aligned with what you want to achieve. I think the second thing I would say, Maren, is I think a wealth manager that gives you access to the breadth of products, services, and experiences is

you're looking for for you and your family. And then finally, I think with anything in life, there has to be a degree of chemistry. I think fundamentally having a very real-time relationship that's supported by digital, and we've talked about this demand for a digital platform, but also that's enabled through a relationship. Because fundamentally, we're talking about

Very important conversations for you as an individual and your future and your family's future. Okay. And crucially, what should I pay and how should I pay? Has there been any shift in the charging structure for wealth management or are we still just going to pay 1% ad valorem forever? One and a half, whatever it is, depending on where you go.

Obviously, it varies very much by organization. Don't comment on the kind of pricing models for specifics. But again, I would say in a world where we're looking to achieve outcomes and experiences, why not link

the investment to those outcomes. And that will be, as a client, that will be the angle that I would always be looking to take in terms of how can we get some surety in terms of the long-term investment and how can we link fees, costs, et cetera, on that basis.

So you would suggest that people find a way to link what they pay to the performance of the assets that they left for the wealth manager rather than pay a flat ad valorem? I think if you're able to make sure that all aspects of the kind of investment are aligned to the ultimate aims, that would be, that for me would be a preferable model. The relationship manager model as well, Maren, let's just think about that because

The other dynamic we're seeing here is relationship managers are also considering their long-term future. Many of them are approaching retirement age. We've seen a significant proportion of relationship managers that will leave the industry.

So there's quite a lot of volatility in terms of the relationship manager community as well. So again, this is another consideration for the wealth management organizations. How do they retain and grow that talent that also evolves with their client base? How has it happened that the relationship managers in this business have not recruited at a younger age? Why have we got an aging industry? I think undoubtedly they are. But the key challenge is...

Can you retain and excite that talent? Give them the capabilities that we've talked about, you know, digital capabilities, you

generational AI? Can you give them access to the products and services that their clients need? Sorry, is this really about a lot of people working in this industry who used to be active wealth managers and gradually as the asset management itself is centralized, men or women or whatever who used to find themselves actively running assets now find themselves really only being a relationship manager because the asset management has been shifted centrally. Is that what we're talking about here?

Undoubtedly, there's been a change in the role. But again, as we've said, there's also a change in the client base. And as a wealth management firm, you've got to make sure that you're giving your relationship managers the tools and techniques to enable them to serve as future generations. Do you know what, Gareth? I think we can now answer one of the questions that we get asked most regularly by listeners, which is what career should my child go into when they leave university? I don't think you've answered this for us.

Become a specialist wealth management relationship manager with an AI and luxury travel speciality. Can I cover it? You heard it here first, Merit. You heard it here first.

Oh, lucky kids. Wonderful. Gareth, thank you so much. I have one last question for you. What are you reading at the moment? Oh, I'm reading a book called Vine Street. Vine Street? Yeah, yeah. There's a drama based in Soho in the 1930s. Classic police drama. Nothing at all to do with banking, nothing at all to do with financial services. Police drama. I love a police drama. Vine Street. I'm getting into that. I recommend it, Maren. I'm very much enjoying it. Partway through.

Brilliant. Thank you so much. Thank you so much for joining us today. That was really, really interesting. My pleasure. Great to see you. Thank you.

Thanks for listening to this week's Merrin Talks Money. If you like our show, rate, review and subscribe wherever you listen to podcasts and keep sending questions or comments to merrinmoney at bloomberg.net. You can also follow me and John on Twitter or X. I'm at Merrin SW and John is John underscore Steffek. This episode was hosted by me, Merrin Somerset Webb. It was produced by Sam Asadi and Moses Andam. Sound design by Blake Maples. Special thanks, of course, to Gareth Wilson.

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