Andrew Shirley of Knight Frank, and editor of the firm's recent annual wealth report, considers the trends exposed in the study.

Editor's note: Following the recent publication of Knight Frank's annual wealth report, which looked at trends around the world in terms of wealth "hotspots", Andrew Shirley, head of rural property research and editor of this report, comments on its findings and the relevance of such studies. This publication is delighted to share these insights; as ever, it does not necessarily endorse all the views expressed in this article. 

Every year since 2007 Knight Frank
has published The Wealth Report. Given the economic events that have
unfolded since then – the collapse of Lehman Brothers, the credit
crunch,
double-dip recessions, the eurozone crisis, the list goes on - journalists have sometimes questioned why we create a report that
includes the word wealth in its title when many people are getting a lot
poorer.

It’s obviously a spurious question; a magazine
can’t keep changing its title just to reflect the current economic
climate. The editor of WealthBriefing, who has been kind enough
to invite me to write this article, won’t, one assumes, suddenly change
the name of this publication to: “Diminishing WealthBriefing”, for
example. (Editor: you can take that as read.)

But it’s easy to be flippant. One of the reasons why we continue to produce The Wealth Report is because in many parts of the world fortunes
continue to be created and our audience wants to know where and how
those fortunes are being spent and what the attitudes of the people
spending them are towards property, investments and
other issues such as philanthropy.

The economic uncertainty that continues to grip the
world has only seemed to fuel the demand for more information. As
traditional wealth markets in the West become more challenging,
professionals look increasingly to new parts of the world.

To reflect this demand we have increased the range
and volume of data in the report to provide, what we hope, is the global
perspective on prime property and wealth.

A key part of the research that informs the content of the report is what we call The Attitudes Survey. The survey is based on the responses from
leading private bankers and wealth advisors from around the world. This
year’s survey results reflect the decisions and attitudes of a client
base worth almost $1 trillion.

One of the findings that might be of most interest
to readers of this publication is that 81 per cent of the respondents
said their clients were taking an increasingly hands-on
approach to their investments. This could be interpreted in a number of
ways, but it suggests to the outsider that wealth advisors need to work
harder to convince their clients that they are adding value to the
management of their investment portfolios.

Even those inside the industry admit the old
approach may not be good enough. Arnaud de Servigny, global head of
discretionary portfolio management and investment strategy at Deutsche
Bank, was happy to be quoted saying: “If the industry is being paid
simply to follow a static recipe it is not really adding a lot of
value.”

So that’s a challenge for the wealth sector to
address, but the report also contains a lot of positives. The good news,
according to The Attitudes Survey, is that a positive net balance of
respondents said their clients’ wealth increased in 2012 and is likely
to grow further this year. There are also likely to be a lot more HNW
individuals needing advice.

The world’s HNW individual population (defined in
the report as those with over $30m of net assets) is set to grow by 50
per cent over the next decade. Unsurprisingly, much of the
growth will be in Asia (+88 per cent), but Latin America (+88 per cent)
and Africa (+69 per cent) are also areas of opportunity that should not
be overlooked. Europe and North America will see numbers increase by
around 30 per cent.

From the results of our survey it also looks like
HNW individuals could need a lot more advice regarding alternative “investments of
passion” such as wine, classic cars, art and the like.
Their popularity is increasing, but given that this is probably an area
where HNW individuals feel they are experts, convincing them to pay for
advice could be tricky. But, as the report explains, not all of these
markets are as transparent as they first appear.

The Wealth Report also contains a lot of
unique data on the performance of the key luxury property markets around
the globe. No prizes for guessing that safe-haven locations
such as London continue to attract HNW spending,
but some new trends are emerging. Dubai and Dublin, for example, are
starting to rebound after being hit hard by the credit crunch.