Australia's high-net-worth population slumped in the rankings of a global wealth study as millionaires shifted their portfolio to cash amid share market uncertainty.
According to Capgemini's annual World Wealth Report, the number of Australian high-net-worth individuals (HNWIs) fell by 4.32%, from 278,000 to 266,000 between 2017 and 2018.
Australia fell from ninth place to the 10th spot, overtaken by Italy. The US remains home to the largest HNWI population (5.3m), followed by Japan (3.2m), Germany (1.4m) and China (1.3m).
One of the key drivers of the decline was the flight to cash last December, the report said, following the global share market turbulence.
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Cash comprised 28% of HNWI portfolios, replacing equities which slipped to second place (26%), followed by fixed income (18.1%), real estate (15.6%) and alternatives (12.9%).
Capgemini Australia head of banking Philip Gomm said Australian equity markets look to have rebounded in recent times, giving cause for quiet optimism.
"With property markets now seemingly to have bottomed, a reduction in the cash rate, relaxation on APRA lending affordability guidelines, investor friendly government policy reassured and tax incentives in place to encourage consumer spending, now may be the right time to re-enter local equities and property markets," he said.
On an aggregate basis, the number of millionaires declined by 3% after seven consecutive years of growth.
Asia-Pacific accounted for half of the global decline of US$2 billion. China accounted for the large drop in wealth by 53%, while Europeans lost US$500 billion.
Despite the shrinking portfolios, the 2500 HNWIs surveyed from across the globe said their trust and satisfaction in wealth management firms remains steady.
However, there are significant opportunities for wealth firms to proactively address rising HNWI expectations, as an unsatisfactory service experience was the biggest reason for HNWIs to switch firms in 2018, the report said.
Anirban Bose, Capgemini financial services chief executive, said while the volatile economic environment of 2018 led to HNWI wealth decline globally, wealth managers have been extremely successful in maintaining strong levels of client trust.
Capgemini classifies HNWIs as having US$1 million of investable asset or more that excludes primary residence, collectibles, consumables and consumer durables.