The Private Banking and Wealth Management Forum is a timely event that seeks to officially initiate the conversation around wealth management, the steady year on year increase in number of High Net Worth Individuals (HNWIs) and its impact on a growing wealth management industry.
Over the past decade, African economies have experienced exponential economic growth not only leading to the burgeoning of the middle class demographic in Africa, but also spurring a silent and steady growth of HNWIs. By definition, high net worth individuals are classified as persons with at least USD 100 million dollars in net worth and in 2015, the number of HNWIs in Africa stood at 145,000 with a combined wealth portfolio of USD$ 1.392 trillion dollars.
The HNWIs are considered a sophisticated demographic class that is quite particular in their financial needs, therefore this has spurred immense interest in the private banking and wealth management services making it a much sought after financial service in Africa. In the soon to be launched Think Business Private Banking and Wealth Management Report, that comprehensively details with articulate precision the emerging trends of Africa’s HNWIs, market trends, market size, and the regional distribution of these HNWIs assets.
The report shows that Africa’s HNWIs elicit varying prioritization on matters wealth. 47.9 percent of Africa’s HNWIs prefer to work with a single management firm, while 15.2 percent prefer to work with several multiple firms. In addition 36.6 percent seek professional advice on matters regarding their wealth while 30 percent do not feel the need to. In addition, 87 percent of the individuals are optimistic and maintain confidence in their ability to generate wealth in the future, 34 percent are focused on growth while 33 percent are prioritized on preservation of the wealth.
The HNWI have diversified their business interests into a variety of asset classes. 26.5 percent of African HNWI have their assets in cash and cash equivalent, 20 percent in real estate, 19 percent in bonds and equity stocks and 18 percent in fixed income securities. Alternatives investments account for 17 percent of Africa’s HNWIs.
With an estimated 34 percent of HNWI focused on growth of assets and increasing their portfolios, this directly impacts the choice of wealth advisors since many HNWIs would prefer advisors with global outreach with the aim of taking their businesses global. North America, accounts for 22 percent of the group’s business interest with Africa at 21 percent. Other major regions where the African HNWI reserves interests in Middle-East, Asia Pacific, and Western Europe counting for 17 percent, 14 percent, and 10 percent respectively.
Among the speakers at the Wealth Management Forum to be held at Radisson Blu is Atiq Anjarwalla Senior Partner at Anjarwalla and Khanna who taps into over 25 years experience in legal practice discusses matters inheritance from a legal perspective. In an past interview with Think Business Anjarwalla elucidates that inheritance matters are a major source of family strife, challenges that if left unresolved pose significant risk to the wealth with attrition being the imminent consequence.
“At Anjarwalla and Khanna we have taken the initiative to advice businessmen and emphasize on the importance of preparing a succession plan. The ultimate aim should be preserve the business since it is the main source of the family’s livelihood and making them understand that having in place a succession plan ensures longevity of the business beyond them,” says Mr. Anjarwalla.
Present at the Forum will be Nairobi Securities Exchange CEO, Geoffrey Odundo who discusses enriching wealth management in Africa through the Capital Markets. In a past interview with Think Business, Mr. Odundo, mentions that there are plenty of incentives that continue to endear HNWIs to the NSE , the main factor being the ability to continue creating wealth in proportion to investment.
“The securities market has largely been an avenue for wealth creation because of a variety of factors. Firstly, there is ease of entry into the market and it is devoid of unnecessary sophistication from the basic requirements to the entry level. Historically an analysis of the stocks that have come through IPOs, 8 out of 10 entities have had a capital appreciation on their secondary listing, with price value at IPO price scaling by over 300 percent in a short period of time. Therefore over time shares provide an opportunity for capital appreciation through price growth which enjoys tax benefits, bonuses and dividends. The market provides that platform to ably de-invest wealth across various sectors which enables an investor build a portfolio across the economic sectors, which ensures the risk is diversified and enjoy the benefits of different sectoral strengths as opposed to just a single line of investment,” states Mr. Odundo.
Kenya is the 4th richest country in Africa in terms of individual HNWIs only trailing South Africa, Nigeria and Egypt. The country’s HNWIs volumes increased by 60 percent from 5300 in 2015 to 8500 individuals in 2016 and the number is expected to soar to 15300 by 2025.
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