Survey: Ranks of rich thinned in 2008
There were far fewer wealthy people at the end of last year, and those millionaires and billionaires that remained saw their assets plunge in value, according to a new study.
There were far fewer wealthy people at the end of last year, and those millionaires and billionaires that remained saw their assets plunge in value, according to a new study.
The number of high-net-worth individuals in the United States with net assets of at least $1 million, excluding their primary residence, fell 18.5% in 2008 to 2.5 million, from 3 million in 2007, according to the annual World Wealth Report.
The global high-net-worth population dropped 14.9% last year to 8.6 million, from 9.89 million in 2007, according to the widely followed report issued by Paris-based Capgemini and New York-based Merrill Lynch & Co. Inc.’s Global Wealth Management unit.
The unprecedented declines wiped out three years of robust growth of high-net-worth individuals who saw average annual increases of more than 7%.
“Everyone thought they decoupled [from the global financial crisis] last year, but that was not the case,” said Dan Sontag, president of Global Wealth Management.
The report did, however, predict a rebound in the amount of wealth held by high-net-worth individuals to $48.5 trillion by 2013, from $32.8 trillion in 2008.
At that time, the report forecast, the Asia-Pacific region was expected to overtake North America as the region with the most high-net-worth investors. And 2008 saw China overtake the United Kingdom as the fourth largest country ranked by the number of high-net-worth individuals, trailing the United States, Japan and Germany.
At present, the wealth management industry is experiencing a significant movement of money and clients, Mr. Sontag said.
As a result of the financial crisis, high-net-worth investors have begun to look much more closely at asset allocation, he added.
“Last year was about preservation, not appreciation,” Mr. Sontag said. “With no safe havens, high-net-worth individuals ended up with significant amounts of cash in their portfolios. As markets recover, they will have the flexibility to readjust their strategies and reinvest in new, developing opportunities along the way.”
Cash-based holdings of high-net-worth individuals around the world have increased 7% since 2006 and accounted for an average of 21% of overall portfolios in 2008, according to the report.
Fixed-income allocations accounted for 29% of global portfolios last year, a 2-percentage-point rise from 2007, the report stated.
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