HNWIs are embracing digital assets

Capgemini released its 2022 World Wealth Report on 14th June. Its poll surveyed 2,972 global HNWIs with 54% reporting a wealth band ranging from $1 million to $30 million and 46% reporting wealth of $30 million and over. One of the most exciting insights is that 71% of these high net worth individuals have invested in digital assets.

The survey asked about investment preferences, breaking the digital asset sector into cryptocurencies, exchange-traded funds (ETFs) non-fungible tokens (NFTs) and products related to the Metaverse.

The highest concentration of owners are under forty years old, with nine in ten having invested, compared with one in seven overall. The younger group expressed more interest in cryptocurrencies, saying they were their favourite investment, although crypto ETFs and Metaverse products are also highly desired.

However, cryptocurrencies don’t make up the majority of portfolios. According to the survey, HNWIs have only allocated 14% of their portfolios into “alternative investments” which includes crypto alongside commodities, currencies private equity and hedge funds.

On the other hand, Capgemini says that it is seeing an influx of investments into digital assets and this has “increased the demand for educational capabilities.” Nilesh Vaidya, the firm’s head of retail wealth management said: “The influx of new investment avenues such as sustainable investing and digital assets is having a crucial impact on the wealth management industry. Wealth management firms must prioritize providing timely education around this trend to retain their customers.”

As a result, some wealth management firms are looking for first-mover advantage in this niche sector by launching investment products targeted at the demographic. For example, Morgan Stanley introduced Bitcoin to its HNWI clients in March 2021, allowing only those with $2 million or more to invest in the cryptocurrency. BBVA in Switzerland is also offering access to crypto trading and custody services, as is Wells Fargo in the USA. Both of these started their service in 2021.

I previously wrote about the Accenture report that revealed 52% of wealthy Asian investors held some form of a digital asset during the first quarter of 2022, but that wealth management firms have been slow to adopt investment products with cryptocurrency or digital asset exposure. But it looks as those wealth managers elsewhere are now alert to the potential of the digital asset market.

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