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The world's richest people are getting more and more annoyed at how much it costs them to look after their money

Jul 9, 2020, 17:27 IST
Business Insider
Anwar Hussein / Contributor / Getty Images
  • The world's richest people aren't happy about how much it's costing them to manage their money, according to a new survey from consultancy Capgemini.
  • 33% of millionaires surveyed were found to be unhappy with the fees their wealth manager charges them, Capgemini's World Wealth Report showed.
  • More than one in five of those high net-worth individuals might switch firms in 2021 with high fees being the main driver of any switch for 42% of those surveyed, it said.
  • Visit Business Insider's homepage for more stories.
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The world's richest people aren't happy about how much it's costing them to manage their money, according to a new survey from consultancy Capgemini.

The pandemic eliminated more than $18 trillion from global markets between February and March before a slight recovery in April, as per Capgemini's World Wealth Report 2020.

Many rich investors became increasingly critical of high money management fees and a third of those individuals, having over $1 million in investable assets, said they were uncomfortable with charges in 2019.

"HNWIs [high net-worth individuals] are also becoming increasingly critical over wealth managers' fees," the report said.

That may drive a further wedge between asset managers and clients in 2020 as uncertainty and volatile markets could foster higher scrutiny around advising fees, the report said.

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More than one in five of those high net-worth individuals might switch firms in 2021 with high fees being the main driver of any switch for 42% of those surveyed.

They also cited a leaning towards service-based fees as compared to asset-based ones — a percentage based on a portfolio's market value — demonstrating a higher interest in value delivered, the report showed.

Read More: UBS has compiled an investing playbook for all the possible election outcomes. Here are the 6 trades it recommends to profit from a Trump triumph — and 10 for a Biden blue wave.

Capgemini's report comes soon after investment bank UBS announced its super-rich clients would have access to zero management fee strategies from July 7 onwards.

The zero-fee client offering was limited to three funds from Natixis, Breckinridge Capital Advisors, and Goldman Sachs Asset Management.

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Another potential opportunity for firms was a budding interest in sustainable investing (SI), which regards environmental, social and governance standards, the Capgemini report said.

Capgemini

40% of those wealthy people, with over $30 million in investable assets, are willing to put their cash into sustainable investing, according to the report.

80% of wealth management firms have implemented sustainable investing options, the survey showed.

The main reasons behind rich people's interest in SI are higher returns and lower risks.

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Early in the year, equities were the most favored asset class and made up 30% of the rich's portfolio while 17% went to fixed income, 15% in real estate, 13% in alternative investments, and 25% in cash.

Read More: Buy these 15 stocks that are shielded from COVID-19 fallout and primed to beat the market even as virus cases spike, Evercore says

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