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World has never been so rich

Global Wealth Continues Its Strong Recovery with $9 Trillion Gain, but Pressures on Wealth Managers Persist, Says Study by The Boston Consulting Group.

Propelled by growth in nearly every region, global wealth continued a solid recovery in 2010, increasing by 8.0 percent, or $9 trillion, to a record of $121.8 trillion.1 That level was about $20 trillion above where it stood just two years prior during the depths of the financial crisis, according to a new study by The Boston Consulting Group (BCG).

Findings from the study appear in BCG’s eleventh annual Global Wealth report titled Shaping a New Tomorrow: How to Capitalize on the Momentum of Change, which was released today at a press briefing in New York. Among the other key findings:

  • North America had the largest absolute gain of any regional wealth market in assets under management (AuM), at $3.6 trillion, and the second-highest growth rate, at 10.2 percent. Its $38.2 trillion in AuM made it the world’s richest region, with nearly one-third of global wealth.
  • In Europe, wealth grew at a below-average rate of 4.8 percent, but the region still had a gain of $1.7 trillion in AuM.
  • Wealth grew fastest in Asia-Pacific (excluding Japan), at a 17.1 percent rate. In the Middle East and Africa, growth was somewhat above the global average, at 8.6 percent. In Latin America, wealth grew by 8.2 percent. Together, these three regions accounted for 24.4 percent of global wealth in 2010, up from 20.9 percent in 2008.
  • Wealth declined by 0.2 percent in the Japanese market to $16.8 trillion. As recently as 2008, Japan accounted for more than half of all the wealth in Asia-Pacific. In 2010, it accounted for about 44 percent.
  • In terms of individual countries, the nations showing the largest absolute gains in wealth were the United States, China, the United Kingdom, and India.

The strong performance of the financial markets accounted for the lion’s share (59 percent) of the growth in AuM. Its impact was amplified by the ongoing reallocation of wealth. From year-end 2008 through 2010, the share of wealth held in equities increased from 29 percent to 35 percent. “During the crisis, cash was king,” said Monish Kumar, a BCG senior partner and a coauthor of the report. “Since then, clients have been steering their assets back into riskier investments.” North America continued to have the highest proportion of wealth held in equities—44 percent, up from 41 percent in 2009.

“The wealth management industry has overcome tremendous adversity over the past several years, and the sustained recovery of global wealth bodes well for its future,” added Kumar, who is the global leader of asset and wealth management at BCG. “But the positive signs should not be misread as a return to normal. A number of disruptive forces, including increased regulatory oversight and changes in client behavior, are rewriting the rules of the game—both literally and figuratively.”

Millionaire households represented just 0.9 percent of all households but owned 39 percent of global wealth, up from 37 percent in 2009. The number of millionaire households increased by 12.2 percent in 2010 to about 12.5 million.

  • The United States had by far the most millionaire households (5.2 million), followed by Japan, China, the United Kingdom, and Germany.
  • Singapore continued to have the highest concentration of millionaire households, with 15.5 percent of all households having at least $1 million in AuM. Switzerland had the highest concentration of millionaire households in Europe and the second-highest overall, at 9.9 percent.
  • Three of the six densest millionaire populations were in the Middle East—in Qatar, Kuwait, and the United Arab Emirates.
  • The proportion of wealth owned by millionaire households increased the most in Asia-Pacific, at 2.9 percentage points, followed by North America, at 1.3 percentage points.
  • The country with the fastest-growing number of millionaire households was Singapore, with 170,000—up nearly a third from 2009.

This year, for the first time, BCG published figures on the countries with the highest number of “ultra-high-net-worth” (UHNW) households, defined as those with more than $100 million in AuM. The United States had the largest number of these super-wealthy households (2,692), while Saudi Arabia had the highest concentration of UHNW households, measured per 100,000 households, at 18, followed by Switzerland (10), Hong Kong (9), Kuwait (8), and Austria (8). China experienced the fastest growth in the number of super-wealthy households, which jumped by more than 30 percent to 393.