World’s wealth suffers record 15% drop

“The global high net worth population and the wealth it holds have shrunk thide_money_070920_mso nearly 2004 levels, the steepest decline in history, according to the ┬álatest Merrill Lynch/CapGemini World Wealth Report 2009.

Following a year-long period of unprecedented volatility, the world’s population of individuals with assets of at least $1m dropped 14.9% from the year before, to 8.6 million.

For ultra-high net worth individuals, those with at least $30m of assets, the fall was even more dramatic. The report said their numbers had shrunk by 25% to 78,000 globally.

Nick Tucker, market leader for the UK and Ireland at Merrill Lynch Global Wealth Management, said: “Despite the negative results in 2008, HNWI wealth is forecast to grow to $48.5 trillion globally by 2013, advancing at a rate of 8.1%, with Asia-Pacific forecasted to overtake North America as the largest region by wealth.”

All regions saw their wealth drop in 2008, said the report. Although some areas were more resilient than others. Latin America, which has 100,000 high net worth individuals, only lost 0.7% of its wealthy. North America, which has 2.8 million HNWIs, lost the most, with their numbers falling 19% last year.

Decreases in the European HNWI popualtion varied by country: a 12.6% drop in France but only a 2.7% drop in Germany. In the UK, the number of HNWI fell by 26.3% amid a drop in real estate, stock market capitalisation and a slowdown in GDP growth.

The US saw its HNWI population drop 18.5%, however it remains the single largest home to HNWIs with 2.5 million or 28.7% of the total HNWI population. Second largest is Japan, with 50% of high net worth individuals in the Asia region.

Ed Merchant, head of financial services for the UK and Ireland, Capgemini, said the global HNWI population is still concentrated in the US, Japan and Germany, but it is shifting to Asia, especially China.” [Source: Wealth-Bulletin]

What this report doesn’t tell you is that inevitability wealth will recover and increase. Fluctuations in levels of wealth is par for the course. Every day a news story comes out telling us the world’s wealthy are suffering as they only have as much money as they did in 2004 (erm…hello!?), only for the next days story to estimate there will be another 10 million new millionaires in the US alone by 2016.

Of course putting too much emphasis on wealth alone, particularly in the fundraising sector, can be a dangerous thing. We might all be chasing potential high value donors, but all indications show that even when a person’s wealth does decrease, their philanthropic committment remains strong. This might mean a temporary reduction in donations but philanthropy is something that becomes embedded in a person’s psyche, and it is extremely rare that a committed giver suddenly becomes Mr Scrooge (apart from bankruptcy obviously). The value in these kind of reports is in providing an overview of global wealth. We understand so little about it that these reports, though largely based on estimations, can be a valuable insight into a world which we want to tap into and we should invest time in understanding it better.

Categories: High Net Worth Individuals, Recession

Resource Type: Blog

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