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Chapter 1: What is the main topic discussed in this episode?
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Welcome to Merrin Talks Your Money, the personal finance edition of Merrin Talks Money. In these bonus podcasts, we talk about the best strategies for making the most of your money. I'm Merrin Somerset Webb, editor-at-large for Bloomberg UK Money. So this week, we are talking about who is getting wealthier and where and how those people are reshaping the wealth management industry.
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Chapter 2: Who are the high net worth individuals shaping the wealth management industry?
Yeah, we're seeing positive trajectory on that basis. And interestingly, to your point, Maren, for these high net worth individuals, we also saw equities become more important in their portfolio. The stock market increases that we saw were certainly driving a proportion of that wealth population and wealth growth.
So when you look at who's growing wealthier where across the world, you can pretty much see the correlation with domestic stock markets.
You can.
It's interesting because it suggests that most places have a fairly hefty home bias.
Yes. Yeah, very much so. And we saw a little bit of a movement away from some of the more conservative asset classes.
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Chapter 3: What do wealthy clients expect from their wealth managers in 2025?
So where we saw equities increased by something like 3%, we saw cash reduce by 2%.
So some of that kind of... I'm always interested by when I look at your charts every year, I'm always interested by the extent to which the high net worth people keep... so much money in cash or cash equivalents, it always knocks around pretty substantially over 20%, 23, 24, 25%. And that seems an awful lot of your assets are holding cash or cash equivalents.
I'm pretty sure that if you looked at mid-ranking wealthy people before they quite get to your millionaire next door, they'd be holding much less of that in cash or cash equivalents.
Yeah, I think you're right. And I think we always use it as a little bit of a barometer in terms of risk appetite and conservatism. And in markets that are growing where individuals see greater value in terms of stock and equity markets, They're obviously taking on a greater risk position. Fixed income, we also saw increase when we looked at 24 versus 25, Meron.
So again, by something like two percentage points. And interestingly, alternative investments, we saw a little bit of a decline. So there was a move away from some of the alts.
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Chapter 4: How is the wealth management industry evolving with new competition?
into fixed income and equities. But I think to your point, I think those high net worth individuals were really following where they saw the performance and the value in 2025.
And when you say alternatives, what do you mean? You're talking about private equity in the main, private equity, private credit, etc. ?
private equity, private credit, some of the hedge funds. And again, not all of those investment asset classes are available to everyone. I know you've discussed this in the past in terms of both the liquidity associated with private assets, but also in terms of accessibility.
But again, I think that breadth of asset class and those breadth of investments is something we're seeing greater appetite for.
I was interested to see that two thirds of your respondents said that they were interested in increasing their exposure to private equity, which seems to me slightly extraordinary at the moment when it hasn't been a great performer. And there's an awful lot of debate about the extent to which its historical record of outperformance is real or not. But still, everyone says they want more of it.
I think they want more access to it, Maren. That's not necessarily going to say they're going to commit, but having the option. And I think this, for high net worth individuals, access to products and services is a real driver. And the ability to the ability to diversify your portfolio, whether it be in terms of asset classes or also geographically.
Again, I think you and I have touched on this in the past. We've seen high net worth individuals want to diversify into different markets. We've seen significant growth and attraction in Asia and the Middle East in the past. So I think to your point about Two thirds of our respondents wanting to have access to the alternative investments. I think that's true.
Whether or not they'll commit is dependent on that point in terms of where they see value and where they see growth.
And what about crypto? And one of the things that you talk about in the report is how important it is for wealth managers to be able to offer their high net worth investors access to all investment classes. And crypto, again, is that a class that, I'm loathe to call it an asset class, to be honest, but is that a group of possible places where you might put some money? How about that?
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Chapter 5: Where is the fastest growth in wealth occurring globally?
Of course, of course. We've got Anthropic on the books on SpaceX. When we looked at what was generating wealth previously, we talked about those equity markets, we talked about stocks and shares, and I think it continues to be a significant part of the growth that we've seen over the last five years.
Yeah, and it will be, I'll tell you what, when we next have this conversation, we tend to have it every year, when we next have this conversation, we'll know a lot more about how the young, newly rich young, like to have their money managed and what kind of wealth managers they're after, because assuming something doesn't go horribly wrong, which of course it could, there will be an awful lot of newly rich, relatively young people, presumably delegating a lot of that money management to the wealth management industry.
So we'll know a lot more in a year, won't we?
We will. And I suppose my prediction is, They will definitely want that level of empathy and personalization that we've talked about, Meryn. But also, I think they'll be demanding in terms of the kind of products and services from the wealth management industry and their relationship managers.
Yeah, it's fascinating. And we will find out. Gareth, thank you so much joining us today.
Pleasure, Meryn.
Thanks for listening to this week's Merrin Talks Your Money. If you like our show, rate, review and subscribe wherever you listen to your podcasts. Also be sure to follow me and John on X or Twitter. I am Merrin SW and John is John underscore Stepak. This episode was produced by Sam Asadi and Moses Andam. Sound design by Blake Maples.
Special thanks, of course, to Gareth Wilson and the team at Cap Gemini. And questions and comments on this show are always welcome. Our show email is merrinmoney at bloomberg.net. The Big Take podcast from Bloomberg News keeps you on top of the biggest stories of the day.
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