News Column

The Rich Are Doing Very Well, Thank You

June 20, 2013

Staff Reports -- HispanicBusiness.com

high net worth invididuals

It's not your imagination. Despite murmurs to the contrary, the world's high net worth individuals are not only doing OK, they're thriving.

Spurred by recoveries in the equity and real estate markets, high net worth individuals (HNWIs) have seen a resurgence in spare money for investment, according to World Wealth Report 2013 by Capgemini and RBC Wealth Management.

HNWIs are people with more than $1 million in assets not counting their primary residence, collectibles, consumables and durable consumer goods. There are 12 million HNWIs around the world, with 1 million joining the elite group during the year, according to the report.

All global regions showed strong growth among HNWIs except Latin America. That region led in 2012, but dropped off this year because of slow GDP growth and difficult equity markets, the report said.

The investable wealth of HNWIs jumped by 10 percent in 2012, reaching a record $46.2 trillion. The group's investable wealth declined 1.7 percent in the year prior.

Back in black

North America moved back into the top slot as the largest NHWI market in 2012, with 3.73 million HNWIs, but the Asia-Pacific region was a close second with 3.68 million. North American HNWIs in sum owned $12.7 trillion in investable wealth, while Asian-Pacific HNWIs owned $12 trillion.

"HNWI population increases were strong in 2012," Jean Lassignardie, chief sales and marketing officer at Capgemini Global Financial Services, said in a statement. "However, North America's lead in both population and wealth is likely to be eclipsed again in the future by Asia-Pacific."

Asian-Pacific HNWIs enjoyed "a higher overall wealth growth rate at 12.2 percent, compared to North America's 11.7 percent," Lassignardie added.

However, "For the past three years, (the U.S., Japan and Germany) accounted for roughly 53 percent of the world's high net worth individuals," the Wall Street Journal reported in its India edition.

Meanwhile, ultra-high net worth individuals, who own $30 million or more in investable assets, saw an even higher growth of wealth than ordinarily rich people at about 11 percent.

Caution in investing

Despite achieving record levels of wealth and continued market improvements, the rich remained cautious through 2012, focusing more on preserving their bounty than on growing it. A third of HNWIs focused on holding onto their money, while just over a quarter looked for ways to grow it.

About 30 percent of HNWIs kept their money in cash and deposits, according to the report. North American HNWIs showed a liking for equities, while Latin-American and Asian HNWIs preferred real estate.

"Despite a marked focus on capital preservation and high cash allocations, high net worth individuals achieved a record level of wealth in 2012, suggesting further growth lies ahead if trust and confidence in the markets increase further," said M. George Lewis, group head, RBC Wealth Management & RBC Insurance.

Wealth among high net worth individuals is expected to grow by 6.5 percent a year over the next three years, according to the report. The Asia-Pacific region is expected to outpace the world with growth of 9.8 percent.

The report also said that the investment management industry is finding renewed confidence among investors -- a claim that surprised at least one financial blogger. "(That was) something I didn't expect to read today," wrote Lauren Foster at the CFA Institute.


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