In 2020, the number of High Net Worth Individuals grew by 6.3%, while HNWI wealth grew 7.6% just falling shy of US$80 trillion. Capgemini’s World Wealth Report notes that UHNWIs and HNWIs are keen to explore new asset classes such as cryptocurrencies and other digital assets such as NFTs. While these asset classes might not add up to a significant portion of HNWIs portfolio yet, they are increasingly being seen as a new avenue for investments.
Here are 3 new types of wealth be created in the investment world:
Crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority to manage it, for e.g a bank. Research from the deVere Group finds that 68% of high-net-worth individuals (HNWIs) will have invested in cryptocurrency by 2022. While more individuals move towards the digital assets wave, some private banks are catching up. The Swiss bank has already announced a partnership with fintech firm SEBA CRYPTO in February 2019, offering storage, transaction and investment solutions for digital assets.
NFTs can represent various properties, including artworks, collectibles, virtual reality and gaming items, domain names, and ownership records using digital wallets that are compatible. This is an increasingly growing field of investment interest in digital assets, with trading in NFTs reaching $22bn in 2021, compared with just $100m in 2020. To add to that, the floor market cap of the top 100 NFTs ever issued – a measure of their collective value – was $16.7bn.
DAO, or decentralised autonomous organisation, is an organisation taking roots from distributed ledger technology that is frequently administered by a native crypto token. Many investors are taking an interest in these assets with billionaire Mark Cuban, calling them “the ultimate combination of capitalism and progressivism.”
How does this impact Private Bankers?
Generally, UHNWIs and HNWIs make investment decisions with a personal relationship manager. In 2021, 49 % of advisers indicated that clients had asked them about investing in cryptocurrencies in the last six months, up from 17 percent in 2020. These numbers will only go upwards providing an opportunity for private bankers and wealth management professionals to understand digital finance and its investment opportunities for the mass affluent, HNWIs, family offices and corporate investor.
Essentially, a growing trend in the demand for private wealth solutions for digital asset investing in the coming years. This is based on a combination of the attractive demand level from mass affluent, HNWIs, family offices and corporate investors and the fact that neither current digital asset platforms or incumbent wealth managers are structured to meet their needs.
With this in mind, at CFTE we are designing a new, unique programme for the modern private banker. A programme to help uncover the new wealth of digital finance and be fluent in the new language of Fintech and digital assets so bankers can effectively communicate with their clients. If you are interested you can pre-register today, and if you would like to help us with your feedback, we’ll offer you a free course on NFTs!