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Prosperity: the rich want to invest more sustainably

Whe is one of the rich must have at least $ 1 million in available assets for the investment. This is the bar for the prosperity report of the IT consulting company Cap Gemini. This sum must be available for investment decisions and must not be dormant in owner-occupied real estate, collections or consumer goods such as cars. According to the current Cap Gemini study, the number of these millionaires rose last year by almost 9 percent to 19.6 million. Their assets also increased by almost 9 percent last year to $ 74 trillion. For the first time since 2012, growth in North America and Europe was again higher than in Asia.

How much of the fortune is left after the corona crash and the subsequent recovery can only be estimated. According to figures from the World Federation of Exchanges, in February and March, when the pandemic raged in the financial markets, $ 18 trillion in assets disappeared. The recovery on the stock exchanges already started in April, so that Cap Gemini estimates the decline in wealth to 6 to 8 percent by the end of April. There were also price increases in May and June, so that some of the lost ground should have been made up for.

The millionaires are increasingly concerned with the topics of the environment, social development and good corporate governance. For these sustainable investments, the abbreviation ESG has become established on the financial markets according to the English terms “environment, social, governance”. Especially the very rich with fixed assets of more than $ 30 million are particularly interested in the topic. Here 40 percent are ready to invest sustainably, while the proportion in the Cap Gemini survey is only 27 percent. However, a high level of dynamism is emerging: 41 percent of the rich want to include ESG systems in their portfolios by the end of 2020, and 46 percent by the end of 2021. Cap Gemini believes that growing interest is opening up new opportunities for asset managers. They seem to have recognized these, because 80 percent already offer ESG products.

The main reasons for the interest in sustainable investments lie not only in a clear conscience, but also in the higher yields with lower risks. 39 percent expect higher returns from ESG investments, while a third of the wealthy consider these products to be solid and less speculative. A good quarter expressed a wish to want to give something back to society. A further finding from the Cap Gemini survey is that interest in sustainability is growing, the younger the wealthy investors are. In addition, the willingness to invest sustainably is highest in Asia and South America.

The Cap Gemini advisers believe that the pandemic has shifted investment priorities. Sustainable investments with ecological and social priorities would have become more important after the pandemic. According to Klaus-Georg Meyer, who oversees financial services providers for Cap Gemini in Germany, wealthy clients have become more critical of the fees that asset managers charge for their services. A third felt uncomfortable last year.

Number of millionaires increased in Germany in 2019

They think 47 percent are not transparent enough. 41 percent complain that the focus on performance is too low. Another 35 percent would like the fees to be linked more closely. More than one in five wealthy investors is considering changing asset managers over the next twelve months. High fees are the main reason for 42 percent of those wishing to change. In the meantime, the large technology and internet groups in this investor group are also gaining acceptance, who are believed to have more to do with information.

At the end of March, 30 percent of the wealthy people’s assets were shares, 25 percent cash, 17 percent bonds, almost 15 percent real estate, and almost 13 percent alternative investments, including private equity and hedge funds. In Germany, the number of millionaires increased by 8.6 percent in 2019 to 1.47 million people. Her assets grew by 8.8 percent to 5.5 trillion euros, which Cap Gemini justified with the stock market development and property prices. According to the report, the rich Germans invested 23.9 percent of their assets in shares, 29.5 percent in cash, 15.0 percent in bonds, 16.1 percent in real estate and 15.6 percent in alternative investments.

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