2021 has seen growth in wealth and the number of millionaires around the world. According to the data of Capgemini Wealth Management Report 2022the number of people who have investable assets (excluding primary homes, collectibles, and durables) of $1 million or more, High Net Worth Individuals – Hnwi, globally grew by 7.8%, their wealth increased by 8%. And it is not growth driven by nouveau riche residents of Asia, the growth rate of theEurozone is estimated second only to that of the United States, the population of millionaires increased by 6.7% and investable wealth by 7.5%. Our country has lost a position in the world ranking in terms of Hnwi population, overtaken by Netherlands is now in tenth place with 322 thousand millionaires, 7.1% more than in 2020. A different perimeter is traced for our country by theAipbthe association of private banking which conventionally defines private clients as individuals who have financial assets of at least 500 thousand euros.
The population of private customers in Italyaccording to theAipbrepresents the 2.6% of Italian familiesbut holds the 36% of investable financial wealth, that calculated excluding the portion invested in shares (typically shareholdings in own companies, difficult to liquidate), and approximately 50% of the invested financial wealth; at the end of June this wealth was estimated at a little less than 1 trillion. Serving this population requires a different approach than that used for ordinary retail customers. The relationship between client and private banker is usually more articulated, very often the reference is not the single individual, but the family nucleus; the services offered are not limited to the management of financial assets, they also include advice on planning and optimizing family assets, real estate consultancy and art advisory, as well as dedicated banking and financing services.
In many cases, specialized private banking operators adopt a further segmentation of customers, creating specific divisions, if not actual separate structures, dedicated to wealthier customers, the Ultra High Net Worth Individuals – Uhnwi, families who have an investable wealth measured in at least ten million euros, they own about 17% of the wealth served by private structures, and who can take advantage of even more sophisticated and personalized services, such as example the creation and management of family offices.
Unlike what happens in other countries where there is the creation of new wealth linked to young peopleoften related to the world of technology and some startupsthe Italian market of private banking reflects the demographic trend and the reduced economic growth of our country, wealth is held by people who are getting on in age. Longevity obviously affects the investment choices of assets, the time horizon of the wealth holder is naturally limited, but requires careful planning of the future, in terms of covering the costs of medical care and self-sufficiency and above all of the transmission of this wealth to future generations.
According to the estimates of Aipb, 31% of the approximately 3,450 billion which make up the investable financial wealth of Italian households belongs to households whose financial decision maker is over 65 years old. In a nutshell they are 1,080 billion and of this wealth the private banking industry manages about half, 550 billion. The theme of planning and the need for more sophisticated consultancy, underline in Aipb, concerns the entire population to a certain extent, the customer group between the ages of 45 and 65, for example, holds another substantial slice of wealth investable financial institution, approximately 1,400 billion. Also there management of invested wealth it changes substantially in the private client range, even more for those with assets measured in millions or tens of millions of euros. In the first place, the larger size of the assets makes it possible to work on different time horizons and objectives, while for retail customers, even “affluent” ones, starting from the profiling questionnaires, an approach prevails which envisages a single investment objective and, consequently, a single time horizon.
More substantial assets then give access to a wider investable universe, more sophisticated financial instruments become available, which are not accessible to retail customers, albeit affluent, because they provide for high minimum investment thresholds and also because their inclusion in the portfolio would not guarantee aadequate risk diversification. Among the financial instruments within the reach of the Scrooges there are those that are defined as alternative investments, in particular the hedge fundsfunds that can sell short, make greater use of derivatives and financial leverage.
In recent years, private customers have approached a new type of investment, those in the private market, in the unlisted sector, which use private equity and of venture capital, private debt funds or other alternative funds with relatively lower access thresholds. In absolute value and in relation to portfolios, the contribution of private market investments is, according to Aipb estimates, still marginal, we are just under six billion, or just 0.57% of total portfolios, albeit with a high dispersion among operators, the maximum incidence detected reaches just under 10%. What is striking is their growth rate: +53% in 2019, +16% in the more complicated 2020 and again +43% in 2021. Most operators believe that the percentage of alternative products is destined to grow further in the coming years; by the lowering of the minimum investment threshold in Italian reserved funds for i retail subscribers should a further boost arrive, Aipb estimates that the volumes of this type of investment could reach 64 billion by 2025, with a weight in portfolios equal to 5%, considering only families with the highest risk profiles.