Navigating the complexities of South Africa’s high-net-worth sector 

By Hymne Landman, CEO: Wealth Management at Momentum Investments Group

We are firsthand witnessing the increasing challenges facing our economy. Rising crime rates, economic pressures, and a significant emigration trend are reshaping the landscape for high-net-worth individuals (HNWIs) in South Africa. This sector, once considered stable and lucrative, now faces unprecedented volatility and uncertainty. The pertinent question is whether the sector is shrinking or if we are lowering the bar for what constitutes high net worth. Additionally, it is crucial to consider how investment platforms and financial advisers can differentiate their offerings to meet the evolving needs of HNWIs. 

The South African high-net-worth sector is undoubtedly under strain. The economic environment, characterised by slow growth and rising inequality, has made it harder for individuals to achieve and maintain high net worth status. Concurrently, increased crime rates and political instability are prompting many HNWIs to seek safer havens abroad. This trend is not just anecdotal; data supports a significant outflow of wealth and talent, impacting the local economy and investment landscape. 

According to the African Wealth Report 2024 by Henley & Partners and New World report, South Africa’s millionaire population has declined by 20% over the past decade (2013 to 2023). This decline is attributed to two main factors: emigration and the decrease of wealth due to economic circumstances.  

Despite these challenges, the report also highlights that South Africa remains home to over twice as many HNWIs as any other African country, with 37 400 millionaires, 102 centi-millionaires, and 5 billionaires. For the purposes of the report, a HNWI is defined as someone with liquid investable wealth of USD 1 million or more. * 

This suggests that while the number of wealthy individuals has decreased, there is still a significant high-net-worth sector in South Africa. The report also predicts a 65% growth in Africa’s millionaire population over the next 10 years, indicating potential for future wealth creation despite the current challenges. 

In response to these dynamics, there is a noticeable shift in how high net worth is defined. While traditional benchmarks still hold, there is a broader recognition of the need to adapt to the changing environment. This includes a more inclusive approach that acknowledges the varied forms of wealth accumulation, including entrepreneurial ventures and non-traditional investments. 

In this challenging climate, investment platforms must go beyond offering standard services. Differentiation lies in a deep understanding of the unique needs and concerns of HNWIs. This involves a multifaceted approach, including the ability to customise investment solutions to align with specific investment needs and goals, leveraging cutting-edge technology to provide real-time reporting so that clients can make informed decisions and global mobility solutions to help clients understand tax implications, investment opportunities and regulatory requirements in multiple jurisdictions. 

Financial advisers play a pivotal role in this ecosystem. They are trusted partners who form the bridge between clients and investment platforms. Their role is multifaceted and includes guiding clients through the current economic turbulence with robust financial plans and investment strategies to ensure that they are prepared for a range of possible outcomes. 

Long-term planning is challenging in an environment where factors impacting financial security can change rapidly. Financial advisers must emphasise the flexibility of the financial plans they create for clients and educate them about the importance of staying the course and not making impulsive decisions based on short-term market movements. Clear, consistent communication is essential to maintain trust and confidence. 

Given the current economic climate, a diversified portfolio is more critical than ever, and clients should consider holding various asset classes across geographical boundaries. 

With an increasing number of HNWIs becoming global citizens, planning for global mobility is essential. A solid understanding of jurisdictional nuances, seamless financial transition and cross-border planning is critical. 

The high-net-worth sector in South Africa faces significant challenges, but with the right strategies, investment platforms and financial advisers can help clients navigate this complex environment. By focusing on personalised solutions, tax considerations, leveraging technology, and providing holistic wealth management, we can differentiate our services and meet the evolving needs of HNWIs. Together, we can help clients achieve their financial goals, even in the face of economic volatility and global mobility. 

Financial advisers and investment platforms must collaborate closely to deliver exceptional value and ensure that HNWIs can confidently pursue their financial objectives, irrespective of the uncertainties that lie ahead. This partnership is the cornerstone of a resilient and thriving high-net-worth sector in South Africa. 

Investing is a personal journey. At Momentum Wealth, we believe that an investment platform should be personal and personalised too, for the client and for our financial adviser partners. 

Speak to your Momentum consultant or visit momentum.co.za to learn more. 

* Source: The Africa Wealth Report 2024 | Henley & Partners (henleyglobal.com)  

Momentum Wealth (Pty) Ltd (FSP 657) is an authorised financial services provider and part of Momentum Metropolitan Life Limited, an authorised financial services (FSP6406) and registered credit (NCRCP173) provider.