CAIRO: The Gulf Cooperation Council’s financial wealth grew by 9 percent to $7 trillion in 2021, revealed the annual global wealth report published by Boston Consulting Group.
The report identified the GCC as the fourth fastest growing region in the world in 2021 after Eastern Europe and Central Asia, which grew at 23 percent, North America at 15 percent and Oceania at 14 percent.
The UAE led the GCC in terms of growth in financial wealth. It increased by 20 percent in 2021 and contributed around 30 percent to the region’s development.
The financial wealth of Western Europe, Japan and Africa increased by 8 percent, whereas Latin America and Asia increased by 7 percent, according to the BCG press release.
Overall, the global financial wealth in 2021 grew by 10.6 percent over the previous year, the fastest rate in over a decade.
The report further stated that the world’s net financial wealth stood at $473 trillion in 2021 and is expected to increase by $80 trillion in 2026.
These figures consider the current political and economic pressures that could affect this growth.
According to the press release, the financial wealth of Western Europe, Japan and Africa increased by 8 percent, whereas Latin America and Asia increased by 7 percent.
When addressing the potential for future growth, the BCG report identified emerging opportunities for wealth managers and pushed for their effective utilization.
It stated the broadening arena of blockchain and crypto is an untapped resource for financial advisers and should be more efficiently employed to generate additional financial wealth in the coming years.
Crypto assets reached a market cap of over $2 trillion by December 2021 and are forecast to grow four or five times larger before the decade ends. Additionally, 71 percent of institutions either bought or intend to buy crypto assets, stated the report.
“About 95 percent of crypto wealth is bypassing traditional wealth management channels,” it clarified, “putting significant value at stake for wealth managers.”
While crypto possesses vast potential, wealth managers and leaders “need to assess the opportunity systematically, determine the time to invest in this space, and identify the best ways to structure their approach” to successfully generate significant global financial wealth.
Another emerging opportunity for wealth managers mentioned in BCG’s release was sustainable investment or net zero.
This investment, which is growing three to five times as fast as traditional investing, should be an ‘immediate imperative’ for wealth managers, stated the report.
According to Mustafa Bosca, the managing director and partner at BCG, the biggest challenge the industry could face in terms of crypto and sustainable development would be to stand still.
“Wealth managers and leaders need to have a plan where they are continually testing products with their clients, working closely with regulators to shape this,” said Bosca in a webinar discussing the report titled Global Wealth 2022: Standing Still Is Not an Option.
The competent utilization of personalization and digitalization would further empower wealth managers to produce a greater scope of financial wealth in the years to come.
Delivering individualized products and services would accelerate top-line growth and witness a higher level of client satisfaction.
Compared to traditional wealth managers that incorporate little digital technologies, “digital wealth managers are outperforming them in the markets, out-innovating them in client service, and outclassing them in core operational efficiency,” the report said.
“To protect their future growth, these wealth managers must begin to emulate the practices of these digital leaders,” it added.