Posted by: Frederik Balfour on June 26, 2008
Want some sobering news? The rich keep getting richer and the super rich are getting super-super rich even faster than the rich. For those of us struggling to make our mortgage payments, that’s more depressing news, unless of course you happen to be rich, in which case it probably isn’t news at all, just something better kept a secret. But for rest of you non-rich reading this blog, allow me to share some of the sobering statistics I gleaned at a press conference today held by Merrill Lynch and Capgemini for the release of their Annual World Wealth Report.
This class of well-heeled folks amassed a combined wealth of $40.7 trillion last year, up 9.4% from 2006. That’s trillion, not billion, a 14 digit figure so long it doesn’t even fit on the screen of my hand-held calculator.
So who are these wealthy folks? According to the report, it refers to anyone with at least $1 million in assets, excluding their principal residence. This lucky group of people, known as high net worth individuals, or HNWIs, saw their numbers increase by 9.4% last year to 10.1 million strong. On average, each one of them was worth about $4 million. That kind of money is already nothing to sneeze at, but if you are expecting a private banker to return your call right away [scarcity of qualified wealth managers is a perennial problem for institutions catering to the affluent] you’ll need to pony up a lot more than a cool million. Most private banks won’t even consider taking you on unless you have at least $10 million to invest.
But that’s just for starters. The clients the banks are really falling over themselves to woo are the Ultra High Net Worth Individuals, or UHNWIs, defined by the report as those having at least $50 million to play around with. On average, these ultra deep pocketed folks are worth nearly $150 million bucks apiece.
If you will allow me to paraphrase F. Scott Fitzgerald in “The Great Gatsby”, the filthy rich are very different from you and me. In the time it has taken me to get this far in my blog, [about seven minutes] your average ultra high net worth individual is $196 richer, assuming a 5% annual return, which would yield them a cool $7.5 million.
What’s more, as I said at the outset, the uber-riche are amassing wealth even faster than your garden-variety multi millionaires. Merrill-Capgemini tells me that the UHNWI share of the combined wealth of HNWIs has increased from 35.1% in 2006, to 36.8%, or $15 trillion last year.
Now since this blog is called Eye on Asia, not Eye on the Rich, I better provide you with some Asian content. Although we will have to wait until the September release of the Asia Pacific Wealth Report from Merrill and Capgemini to get the full picture on how fast the region’s affluent class is growing, here are a few tidbits to whet our curiosity. India was the world’s fastest growing HNWI market in the world, seeing a 22.7% gain to 123,000 individuals. China grew marginally slower at 20.3% but has nearly four times as many HNWIs at 415,000, making it the fifth largest HNWI population in the world. Hong Kong has 95,000 HNWIs.
Tune in again soon and I’ll tell you how the rich spend their hoards.