In a stark departure from last year’s collapse of the world’s largest financial institutions, the number of wealthy households increased by more than 12 percent in 2010 to about 12.5 million millionaires, according to a new study by The Boston Consulting Group.
At the top of the charts, the United States had by far the most millionaire households with a reported 5.2 million on record, followed by Japan, China, the United Kingdom, and Germany. The BCG released results of the year-long study this week, revealing some shocking numbers with global wealth continuing a solid recovery in 2010, increasing by eight percent, or $9 trillion, to a record of $121.8 trillion.
This is about $20 trillion above where it stood just two years prior during the depths of the financial crisis.
David Weliver, a published financial advisor, said millionaires today know that their next employer, customer, or partner may be anywhere.
“Millionaires work feverishly towards their goals at all costs,” Weliver said. “The difference between dreamers and performers is not the number of ideas one has, but how one focuses on executing the best ideas.”
He said rather than looking forward to an annual three percent raise, millionaires today dream of working for themselves.
The report also showed Singapore continued to have the highest concentration of millionaire households; 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 with locations in Qatar, Kuwait, and the United Arab Emirates. The country with the fastest-growing number of millionaire households was Singapore, with 170,000 – up nearly a third from 2009.
Some may expect amid the growing economic strains across the globe, and especially in the United States, that there would be markedly less rich people. But analysts say the strong performance of the financial markets accounted for the lion’s share of the increase with some 59 percent of the growth in profitable earnings.
Financial analysts also say from 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.”
He said North America continued to have the highest proportion of wealth held in equities with 44 percent, up from 41 percent in 2009.
Tjun Tang, another BCG partner who worked on the report, said that the firm expects global wealth to grow at a rate of 5.9 percent from 2010 through 2015 to about $162 trillion – driven by the performance of the capital markets and the growth of GDP in countries around the world.
Tang said wealth will grow fastest in emerging markets. In India and China, for example, it is expected to increase at a compound annual rate of 18 percent and 14 percent, respectively.
As a result, the Asia-Pacific region’s share of global wealth is projected to rise from 18 percent in 2010 to 23 percent in 2015.
But in Japan, the amount of wealth is expected to decrease slightly in 2011 and then grow slowly for several years. The impact of the recent disaster on private wealth is still unclear, but it could put further stress on financial growth.
“As much as the sustained recovery of global wealth reaffirms wealth management’s place as a relatively stable and attractive part of the financial services world,” Tang said, “it also masks important and lasting changes to the dynamics of this industry. Perhaps more than ever, a wealth manager’s adaptability will determine how well it prospers from the continued growth of wealth.”