BCG: Kingdom’s private wealth growth ranks among strongest in region

Private wealth in Saudi Arabia is projected to post a compound annual growth rate of 2.7 percent to reach a staggering $2 trillion by 2020, according to a new report.
The Boston Consulting Group’s (BCG) latest report — Global Wealth 2016: Navigating the New Client Landscape – says that in the next five years, the growth of private wealth in the Kingdom will be driven primarily by equities (4.4 percent), followed by cash and deposits (1.9 percent) and bonds (1.4 percent). 
In terms of wealth distribution, private wealth held by ultra-high-net-worth (UHNW) households (those with above $100 million) in Saudi Arabia is expected to grow by 4.8 percent in the next five years. Interestingly, by 2020, this specific segment will be witnessing the highest growth. 
Across the Kingdom, private wealth held by the upper high-net-worth (HNW) segment (those with between $20 million and $100 million) is projected to increase at a rate of 4.1 percent over the next five years. 
In parallel, private wealth held by the lower HNW segment (those with between $1 million and $20 million) will go up by 2.6 percent.
Looking ahead, the total number of millionaire households (those with more than $1 million in net investable assets) in Saudi Arabia is set to grow by 1.3 percent by 2020. 
Based on BCG’s in-depth study, between 2010 and 2014, Saudi Arabia saw its private wealth increase by 1.6 percent. In those four years, the wealth breakdown was 2 percent in equities, 1.4 percent in cash and deposits, and 0.8 percent in bonds. 
This sixteenth annual study by BCG outlines the evolution of private wealth from both a global and regional perspective, addresses key industry trends, and explores evolving client needs — particularly those of underserved, nontraditional segments such as female investors and millennials, whose investment goals are not necessarily well-addressed by the standard, net-worth-based service approach.
“Segmentation approaches based mainly on wealth level continue to be used by the majority of wealth managers, neglect what clients are truly willing to pay for,” said Markus Massi, partner and MD of BCG Middle East’s Financial Services practice. “Such approaches no longer allow wealth managers to capitalize on the full potential of the market.”
Massi added: “Local asset managers still provide a standard product program with limited differentiation. International asset managers have embarked on a journey designed to tailor their offering around specific customer segments, leveraging increasingly digital opportunities. They use technology to offer additional communication channels and services to their customers and tap into big data to generate customer insights - so they can further customize their offering and make it more personal. Local wealth managers in the GCC are only now starting to recognize this opportunity, which could become a source of true differentiation.”
Over the next five years, wealth in the Middle East and Africa (MEA) region is set to reach $11.8 trillion — and Saudi Arabia, the UAE, and Kuwait’s contribution will account for 22.7 percent of that sum.

The findings of BCG’s report also revealed that, in 2015, for MEA wealth booked offshore, Switzerland (30 percent) was the destination of choice, followed by the UK (23 percent) and Dubai (18 percent).

Source : Arab News