World’s Richest Back to Pre-Crises Levels

June 29, 2010 International Tax Cooperation

Dirty MoneyA new report has been released, profiling the numbers and affluence of high net worth individuals (HNWI) worldwide. The report also investigates the effect of the global economic downturn on HNWIs’ choice of investments.

Last week, Merrill Lynch Global Wealth Management and international consultancy firm Capgemini released The 14th Annual World Wealth Report 2010. The publication investigates global levels and distributions of individuals with investible incomes exceeding USD 1 million. According to the publication, the global population of HNWIs grew by 17.1 percent in 2009, to a level of 10.0 million individuals worldwide. North America remained as the densest high wealth area, with an approximate 31 percent of the international HNWI population. The Asia-Pacific’s HNWI numbers rose by 25.8 percent in 2009, reaching 3.0 million individuals and equaling Europe for the first time. In 2009 the cumulative global HNWI wealth rose by 18.9 percent, reaching a level of USD 39.0 trillion. The Asia-Pacific region saw the largest wealth growth, with an increase of 30.9 percent, reaching a level of USD 9.7 trillion. European HNWI’s were reported to have a total wealth of USD 9.5 trillion.

The report also highlighted the shifting pattern and preferences of HNWIs in regards to management of their assets. Throughout the financial crisis, HNWIs chose to invest in more predictable return opportunities, with an increased preference for fixed-income instruments and greater levels of geographic diversification. The publication revealed a resurgence of investors opting to collect luxury items and assets that they deem to hold tangible long-term value. In all regions, except North America, an increase in philanthropic giving is expected. To accommodate the shifting attitudes, investment and consultant firms catering to HNWIs are also altering their focus, and reportedly concentrating on appealing to investor’s emotions and relying on aspects of behavioral finance to regain their trust.

At its 2009 level, the global HNWI wealth is only USD 1.7 trillion below 2007, and USD 6.2 trillion higher than 2008. The Asia-Pacific and Latin America regions currently have even more HNWIs then seen in late 2007. The total global wealth of HNWI has also recovered close to its pre-crisis level, being only USD 1.7 trillion below figures recorded for late 2007.

Photo by Caro Wallis