Researchers: Private Wealth Continues To Grow
By Burt Carey
Rising stock markets and real estate helped the United States add a half million people to the list of millionaires in 2014, and globally the number of millionaires spiked sharply upward, according to new research released by the Boston Consulting Group this week.
The total number of millionaire households worldwide (those with between $1 million and $20 million of investable assets excluding their primary residence) is now 17 million, up from 15 million in 2013.
China added 1 million new millionaires, the most of any country in 2014. China now has 4 million millionaires, overtaking Japan as the country with the second highest number of millionaires. The BCG report states the U.S. has the most millionaires, 7 million, but a Deloitte study earlier this year put that number at 10.1 million.
If you’re looking to find the country with the highest percentage of millionaires per 1,000 households, you’ll need to look to Switzerland, where 135 out of every 1,000 households holds private wealth greater than $1 million.
“Potentially disruptive forces are everywhere,” said Brent Beardsley, a BCG senior partner and coauthor of the report. “The tightening regulatory climate, a more complex investing environment, highly demanding clients, technological evolution, and other trends are straining traditional models. As the pace and magnitude of change intensifies, wealth managers need to think more strategically.”
Even so, 73 percent of the world’s growth in private wealth – totaling $13 trillion – in 2014 was generated by market performance of existing assets, according to BCG, which has been compiling and reporting on private wealth data for 15 years. Just 27 percent, or $5 trillion, was new wealth created through more traditional business means.
Strong equity market performance in the U.S. was responsible for 78 percent of the growth in 2014. New wealth, which accounted for 22 percent of growth, can be attributed to a moderate 4 percent increase in gross domestic product. Stocks in U.S. markets rose by 9 percent, while bond growth was more modest at 3 percent. In Canada, equities (12 percent) and bonds (11 percent) were also strong gains.
The Asia-Pacific region, excluding Japan, enjoyed tremendous growth, posting a whopping 48 percent increase in equities on existing assets, a 39 percent increase in bonds, and 16 percent growth in cash and deposits. Japan’s growth in 2014 was slowed by a weakened yen despite otherwise strong performance of its Nikkei index.
Global private financial wealth grew by nearly 12 percent in 2014, reaching a total of $164 trillion. The U.S. leads in overall wealth, with $51 trillion. But for the first time, the Asia-Pacific region, excluding Japan, overtook Europe as the world’s second wealthiest region with $47 trillion. With continued growth, especially in the emerging economies of China and India, projected to reach $57 trillion in 2016, the Asia-Pacific region is expected to surpass the United States and will hold one-third of the world’s private wealth by the year 2019.
Overall, the world’s wealthy now hold 41 percent of global wealth, up from 40 percent in 2013.