Did you know that there were 73,110 ultra-high-net-worth (UHNW) individuals in America in 2016, an increase of 6.7% from the year before, out of a global UHNW population of 226,450 individuals classified as Ultra High Net Worth with $30 million or more net worth. During our day to day business of coaching and consulting with investment managers all over the world, we often have to counsel them that they are indeed barking up the wrong tree. So many emerging managers, be they hedge funds, private equity funds or venture capital funds and investment advisors find themselves struggling because their message is weak, their identity and vision is obscured and diluted by ‘politically correctified beigeness’. They are usually struggling to raise assets and have a complete identity crisis as to whether they are in a B2B business (is that a B2FoF, B2E, B2C, B2FO business) or a B2C business. Contact me to talk more about this, I will explain, I promise.
Every year, the team at Wealth-X produce stunning reports about the Ultra High Net Worth Wealth Industry and where they are hiding (or not). Click here to open a new browser window and visit their site.
- A RISE IN THE GLOBAL ULTRA WEALTHY POPULATION AND ITS TOTAL WEALTH. In 2016, the world’s ultra high net worth (UHNW) population – individuals with $30m or more in net worth – grew by 3.5% to 226,450 individuals, a partial recovery from a sharp fall a year earlier. Their combined wealth also increased in 2016, expanding by 1.5% to $27trn. The average net worth of the ultra wealthy declined for the first time since 2013.
- NORTH AMERICA AND ASIA THE GROWTH FRONT-RUNNERS AS LATIN AMERICA FALTERS. There were sharp regional fluctuations in dollar-denominated wealth creation, with North America (+5.1%) and Asia (+3.5%) recording the only significant rises in wealth in 2016. The picture was subdued in Europe, with the ultra wealthy population and its total wealth edging slightly lower, while fortunes remained largely unchanged in the Middle East. Latin America and the Caribbean registered a significant fall and Africa also posted a decline.
- DIVERGING PERFORMANCE ACROSS THE WORLD’S MAJOR ECONOMIES. Currency movements were a key driver of UHNW wealth trends in 2016, contributing to solid gains in the US, Japan, India and Indonesia, but generating substantial losses in the UK, Russia, Mexico and Brazil. Buoyed by a stronger dollar, rising equity markets and a robust tech sector, the US consolidated its dominant position as the world’s leading UHNW country.
- THE NEW YORK METROPOLITAN AREA BOLSTERED ITS POSITION AS THE WORLD’S LARGEST UHNW CITY. Two other global financial hubs, Hong Kong and Tokyo, maintained their top-three city status. London remains the largest UHNW city in Europe, but its lead over Paris narrowed sharply. Though China has the world’s third-largest ultra wealthy population, Shanghai came in joint 29th, emphasising the point that robust wealth creation is occurring not just within its top-tier cities.
- LIQUID ASSETS ACCOUNT FOR THE LARGEST SHARE OF HOLDINGS. The stock of liquid assets (primarily cash) owned by the ultra wealthy stood at $9.6trn in 2016, accounting for the largest share (35.4%) of UHNW holdings. Abundant liquidity also reflects a continuing ‘search for yield’ and underlines the enormous spending potential of the world’s ultra wealthy.
- OPPORTUNITIES AND CHALLENGES FOR THE INDUSTRIES THAT CATER TO AND TARGET THE ULTRA WEALTHY. Rapid advances in technology, growing demand for ‘experiential’ luxury, the movement towards increasing global transparency and rising philanthropic engagement have implications for the wealth management, luxury goods and not-for-profit sectors in the years ahead.
- SOLID GROWTH EXPECTED ACROSS THE ULTRA WEALTHY SECTOR. Despite the heightened geopolitical instability, the global ultra wealthy population is forecast to rise to 299,000 people by 2021, an increase of 72,550 compared with 2016 levels. UHNW wealth is projected to rise to $35.7trn, which implies an additional $8.7trn of newly created wealth over the next five years. The trend towards a more balanced global distribution of ultra wealth across the different regions will continue.