Australia trails in key HNW metrics

Australia has recorded a modest increase in its high net worth (HNW) population, significantly outpaced by global growth figures, Capgemini’s latest World Wealth Report 2025 has revealed.

Australia today hosts nearly 334,000 individuals with a HNW, an increase of 0.5%, the 29^th edition of the Report revealed.

The global increase in HNW individuals was five times greater than Australia’s, at 2.6%, which was matched by Asia-Pacific’s growth figures, at 2.7%. APAC’s increase was propped up by a significant increase in the HNW populations of India and Japan.

North America recorded the biggest gains, with the HNW population rising by 7.3%, buoyed by a favourable interest rate environment and strong equity market returns through 2024.

In contrast, Europe (-2.1%), Latin America (-8.5%) and the Middle East (-2.1%) saw declines in their HNW populations, each weighed down by macroeconomic challenges and stagnation in their domestic economies.

Of this Australian total, 30,240 individuals were categorised as ‘mid-tier millionaires’, with wealth between US$5 million (AU$7.7 million) to US$30 million (AU$46.2 million); Australia’s top tier, those with more than US$30 million in assets, totals 2,450 individuals.

The total value of HNW individuals in Australia increased by 3.3% to US$1.087 trillion (AU$1.68 trillion), also below the global rate of 4.2%, totalling US$90.47 trillion (AU$139 trillion).

The great wealth transfer was the defining trend of the report, with an estimated US$83.5 trillion (AU$128 trillion) set to change hands over the next two decades between the Baby Boomers and their descendent generations.

“This segment has needs and expectations which significantly diverge from previous generations, presenting challenges and opportunities for wealth management firms,” the report wrote.

According to the report, this handover will unfold in three phases: 30% of HNWIs will receive an inheritance by the end of 2030, 63% will inherit wealth by the end of 2035, and 84% by 2040.

In Australia, by 2030, 22% of HNWIs will receive an inheritance, rising to 69% in 2035 and 80% by 2040.

As younger investors take charge of their elders’ accumulated wealth, asset mixes and investment priorities are also rapidly evolving. The report showed the notably increased presence of alternative investments, including private equity and cryptocurrencies, in HNW individuals’ portfolios.

As of January 2025, alts investments now represent 15% of HNW individuals’ portfolios.

“They are willing to take more risks to expand their wealth – allocating capital to higher growth asset classes and niche product offerings, notably by 61% of millennial and Gen Z HNWIs,” the report read.

“The great wealth transfer will be a defining moment for the industry. Despite global wealth on the rise, 81% of inheritors plan to switch firms within one to two years of inheritance,” said Kartik Ramakrishnan, chief executive of Capgemini’s Financial Services Strategic Business Unit.

“Potentially losing these unsatisfied clients is going to create significant risk for the global wealth management sector.”

Unsatisfied advisers present ‘flight risk’

In a survey of the global adviser community, the report also showed a:

• significant interest in private equity and cryptocurrencies, with 88% of advisers observing a greater demand for alternative assets amongst younger investors.
• demand for tailored or concierge services such as luxury travel, medical care, and safeguarding against cyber threats, as top non-financial value-added services.
• preference for digital interactions, with advisers ranking digital platforms with a holistic client view and actionable insights as critical to effectively servicing next-gen HNW individuals, followed by intelligent automation.

Despite the demand for digital, however, one-in-three advisers expressed dissatisfaction with their firms’ lack of digital capabilities.

In addition, 62% of next-gen HNWIs say they would follow their adviser if they moved to a different firm.

“Altogether, this directly impacts retention, as advisors struggle to engage these digital-native clients,” the report read.

Capgemini reports that the industry is on the “cusp of a talent shortage amid an unprecedented transfer of wealth to Gen X, millennial, and Gen Z inheritors”.

“In the next 12 months, one in four advisers plan to be on the move, with a majority transitioning to a competitor firm and a few starting their own ventures.”

Additionally, the report revealed, around 20% of advisors plan to retire by 2035, with 48% planning to retire by 2040.