World Wealth Report offers CIOs insight

"There's nothing surer, the rich get rich and the poor get poorer" said the jazz age song Ain't We Got Fun. Sure or not, it's a claim that gets new support from the latest annual World Wealth Report, published this month by Merrill Lynch and Capgemini. The report shows that in 2009 the number of HNWIs (High Net Worth Individuals – those with 'investable assets' of $1 million or more) worldwide increased by 17 per cent while their total wealth grew by 19 per cent to reach $39 trillion.

So what? You might ask. What's that got to do with us poor labourers in the hot and dusty vineyards of IT? Well, quite a lot, actually, if you take a careful look at the report, and for three reasons in particular.

Firstly, the report reveals some highly illuminating trends in who the wealthy are, where they live and where they invest. There are some big changes happening, and perhaps the wilier CIOs might take care to know where their major investors are likely to be located in a few years' time – and perhaps even try to figure out if their next boss is going to be British, American, Chinese or Brazilian! More seriously perhaps, I might argue that any senior executive of a multi-national – or an organisation that does business internationally – should get a broad understanding of those big investors who are, after all, the tail that wags the dog in many cases.

Secondly, the report highlights a sea change in the degree of scrutiny to which the wealthy subject their investments, existing and potential. It has become far more intense and detailed of late. This is hardly a surprising development after the knocks and shocks of the last few years, but it does mean that investors are looking hard at how well companies in their portfolio are managed – their strategies, products, markets and prospects. And that, inevitably in an IT-dependent age, sharpens the Board's focus on IT and how well the company is supported, and seen to be supported, by its core systems capabilities.

Thirdly, of importance to financial services CIOs specifically, the report shows how the global financial crisis has caused a lasting shift in investor psychology, and a shift to which wealth management firms must respond, with new information and analytics (and therefore technology) playing a vital part in that response. HNWIs had their confidence shaken in 2008 and as a result are seizing a more active role in investment decisions. They are, for example, looking to their advisors for much more detailed and convincing 'scenario analysis' of their proposed investment plans, with future probabilities based on objective reviews of all the relevant historical data.

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