Wealth on the rise
An old saying posits that you have to spend money to make money.
Well, two new studies suggest that simply having it will get you a lot more of it.
And therein lie issues for wealth managers.
The first study, from The Boston Consulting Group, which covers everything from cash deposits to listed securities and pension assets in more than 60 countries, says private financial wealth climbed to $164-trillion (U.S.) in 2014, up almost 12 per cent, or about the same pace as a year earlier.
Almost three-quarters the increase came from existing assets: 11 per cent from stocks, 6 per cent from bonds, and 3 per cent from cash and deposits. The rest was newly created.
North America is, of course, exceptionally rich. At $46-trillion, the United States accounted for 28 per cent of the global sum. At $4.5-trillion, Canada also ranks in the top 10.
The forecasts are interesting, too: Wealth is projected to climb to $57-trillion in the U.S. by 2019, and to $5.5-trillion in Canada. Globally, it’s forecast to hit $222-trillion, a boon to wealth managers.
“The wealth management industry has arrived at an inflection point,” the report said.
“While one group of players seems to be guarding the status quo, another group is seizing the moment,” it added.
“These proactive institutions are doing more than their competitors to raise their game in ways that will ensure profitability and market-leading positions over the next five years and beyond.”
A second report, by Capgemini and Royal Bank of Canada’s wealth management arm, looked at people in 71 countries deemed high net worth individuals, (HNWIs) or those with assets of at least $1-million, not including the primary abode and certain other things. Their Canadian population rose last year by 4 per cent.
(The “ultra” high net worth group includes those whose wealth tops $30-million, the “mid-tier millionaire” is someone at $5-million to $30-million, and the “millionaire next door” is at $1-million to $5-million. I’ll let my next-door neighbours think what they want to. No need to tell them the truth.)
According to the report, the wealth of HNWIs rose in 2014 by 7.2 per cent, described as a modest pace compared to most of the past few years.
In Canada, though, the pace in that group was 8.6 per cent, better than the compound earlier growth of 2009-2013. Wealth in Canada is projected to now climb at a slower pace through 2019.
(Of course, one person’s modest is another’s holy cow!.)
This slower pace suggests that “wealth managers and firms are challenged with working harder to develop and nurture new relationships,” the report said.
“In another challenge facing the industry, we quantified growing HNWI demand for advice related to the nascent, but increasingly important, investment area of social impact,” it added.
“HNWIs are putting wealth managers to the test to provide them greater access to credit, particularly for HNWIs who are under 40, wealthier, and living in emerging market regions.”
Supply management in Canada?
What they're saying about Greece
“Keep calm and have a summit.”
Michael Hewson, CMC Markets
'Last chance saloon'
As our European bureau chief Eric Reguly reports, there’s renewed optimism today of a deal that would head off a default by Greece.
This comes after new proposals from Athens in advance of an emergency summit of officials from the euro zone, who said today they were a good starting point but they want to see more details.
As observers note, however, we’ve been down this road so many times before.
Here’s what some are saying:
“These hours are critical and finding a mutually beneficial outcome at the moment seems something of a fairy tale.” Brenda Kelly, London Capital Group
“Impending disaster has a knack of focusing the minds of Europe’s politicians, even if any agreement that is reached today remains subject to agreement by national governments, and is very unlikely to do more than postpone further trouble.” Kit Juckes, Société Générale
“How many times have we been here in the last five years, in the last chance saloon for Greece, and it’s creditors, before a short-term fudge is found and a final decision is pushed out further into the future?” Michael Hewson, CMC Markets
“With debt repayments stacking up and political rhetoric running at a high pitch, today feels like it may go down in history as the moment when Greece is either saved or begins to depart from the euro zone.” Chris Beachamp, IG
“It remains to be seen how this will end but the uncertainty could dampen tourism (and the dollars that they spend). Travel groups and tour operators have been advising tourists to take lots of cash with them in the event that the banks (and the ABMs) are not open.” Jennifer Lee, BMO Nesbitt Burns
A performance I'd love to see
“There is nothing I do better than revenge.”
Upsetting the Apple cart
Superstar Taylor Swift has struck a blow for musicians, forcing the mighty Apple to back down.
Apple Inc. says it has changed its mind and will pay musicians during the three-month trial for its Spotify rival music streaming service.
“Swift’s battle with market leader Spotify is clearly something Apple’s PR department wishes to avoid replicating, just as the company’s rival music streaming service gets going,” said analyst Jasper Lawler of CMC Markets.
Apple’s change of heart followed Ms. Swift’s pledge to keep her new album off the service.
The tech giant said it heard her loud and clear. Here’s what Eddy Cue, its senior vice-president, said in a series of tweets:
“Apple will always make sure that artist are paid.”
“#AppleMusic will pay artist for streaming, even during customer’s free trial period.”
“We hear you @taylorswift13 and indie artists. Love, Apple.”
Chart of the day: King for a year
The loonie may be suffering, but not to the extent of other commodity-linked currencies.
“Judging by movements over the past year, the Canadian dollar is the commodity currency king,” Andrew Grantham of CIBC World Markets said in a look at how various currencies have performed since mid-2014.
Against the U.S. dollar, the loonie has been the third-best performing currency among the G10 countries since the plunge in oil prices began, Mr. Grantham said.
Others in the commodity group - Norway’s krone and the Australian and New Zealand dollars - have fared poorly.
“That’s partly because Canada isn’t as reliant on commodities as those others, and hasn’t seen the same cuts to interest rates,” Mr. Grantham said, referring to the fact that the Bank of Canada trimmed its benchmark rate once, in January.
“But the loonie’s relative performance is a reminder that the BoC will be wary of further appreciation, and why we see renewed downside pressure in the coming months.”
(CHF is the symbol for the Swiss franc, GBP the British pound, CAD the loonie, EUR the euro, DKK the Danish krone, JPY the yen, SEK Sweden’s krona, AUD the Aussie dollar, NOK the Norwegian krone, and NZD the New Zealand dollar.)