Deep pockets get deeper worldwide, study finds
The world's wealthiest individuals are back in the black, according to the 15th annual World Wealth Report, released last week
The world’s wealthiest individuals are back in the black, according to the 15th annual World Wealth Report, released last week.
The annual study is conducted by Merrill Lynch Global Wealth Management and consulting firm Capgemini.
At the end of last year, there were 10.9 million high-net-worth individuals — those with more than $1 million in investible assets — worldwide, an increase of 8.3% from 2009. Their combined wealth totaled $42.7 trillion, 9.7% higher than in 2009.
Both the number of millionaires and their total wealth have surpassed pre-financial-crisis levels.
The so-called ultrahigh-net-worth population — those with more than $30 million in investible assets — grew by 10.2% to 103,000 and their wealth grew 11.5%. They represent less than 1% of the global high-net-worth population but account for 36.1% of the total wealth, or about $15.4 trillion.
Although the growth rates were much slower than those experienced after the dramatic rebound in global asset prices during 2009, the continuing improvement was welcome news to John Thiel, head of the U.S. segment at Merrill Lynch Global Wealth Management.
“We’ve had a volatile environment over the last four years,” he said. “It’s refreshing to see that we’re continuing to plod along.”
The United States has the most high-net-worth individuals, with 3.1 million, representing more than 28% of the world total. The three countries with the greatest number of wealthy individuals — the United States, Japan and Germany — account for 53% of all high-net-worth individuals.
Wealthy individuals, according to William Sullivan, global head of market intelligence for Capgemini Financial Services, are particularly concerned with capital preservation.
Nevertheless, they continue to reduce their allocations to cash and fixed-income instruments, and increase their investments in equities.
Cash and fixed-income assets as a percentage of their portfolios fell last year to 43%, from 48%, and allocations to stocks rose to 33%, from 29%. Average equity allocations in North America were at 42% at the end of the year.
The spotlight of the survey this year was the value of wealth management firms. The study found that the trust and confidence levels of high-net-worth individuals in both financial advisers and their firms rose substantially.
Not surprisingly, it also concluded that larger wealth management firms with a broader range of capabilities have a more favorable competitive position in the market.
“We’re not saying that smaller, niche firms can’t be successful, but the bigger firms are better positioned to serve these clients,” Mr. Sullivan said. “They also have a bigger challenge to make it work.”
It is critical that advisers buy into the idea, said Mr. Thiel, whose unit is a part of Bank of America Corp.
“The way you do it is to keep the focus on clients. We’re introducing advisers to all the capabilities and people who can provide services across the bank,” Mr. Thiel said.
“We want them to feel comfortable putting these people in front of their clients,” he said.
E-mail Andrew Osterland at [email protected].
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