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Merrill Lynch Global Wealth Management and Capgemini release 13th annual World Wealth Report

Following a year-long period of exceptional volatility the world’s population of high net worth individuals (HNWIs ) was down 14.9% from 2008.

24 June 2009

  • HNWI population and wealth shrink below 2005 levels –
    HNWI wealth drops to $32.8 trillion
  • World’s High Net Worth Population now stands at 8.6 Million; wealth expected to reach $48.5 trillion by 2013
  • Number of UK High Net Worth Individuals falls 23.6 percent


Following a year-long period of exceptional volatility in 2008, the world’s population of high net worth individuals (HNWIs1) was down 14.9 percent from the year before and the population of ultra high net worth individuals (Ultra-HNWIs2) fell 24.6 percent, according to the 13th annual World Wealth Report, released today by Merrill Lynch Global Wealth Management and Capgemini. The decrease in population was matched by a 19.5 percent drop in HNWI wealth to $32.8 trillion. The unprecedented declines wiped out two years of robust growth in 2006 and 2007, reducing both the HNWI population and its wealth to below levels seen at the close of 2005. Ultra-HNWIs suffered more extensive losses in financial wealth than the HNWI population as a whole. Consistent with the drop in the Ultra-HNWI population, the group’s wealth decreased 23.9 percent.

“This year’s World Wealth Report shows a distinct shift from our reports in recent years,” said Ed Merchant, Head of Financial Services, UK and Ireland, Capgemini. “After a year of significant volatility, we are seeing a shift in HNWI activity and priorities. There are currently opportunities for wealth management firms and advisors to understand and effectively address increased client concerns by helping to navigate through the uncertain economic times and build relationships that will continue well into the future.”

Global HNWI population is still concentrated, but shifting

Specific regions continue to host large percentages of the total global HNWI population, namely North America, Asia, and Europe. The top three countries for HNWI population - US, Japan, and Germany - together accounted for 54 percent of the world’s HNWI population in 2008, up slightly from 53.3 percent in 2007. China’s HNWI population surpassed that of the UK to become the fourth largest in the world. Hong Kong’s HNWI population shrank the most in percentage, down 61.3 percent to 37,000.

The US saw its HNWI population drop 18.5 percent; however, it remains the single largest home to HNWIs with 2.5 million, or 28.7 percent of the total global HNWI population. Decreases in the European HNWI populations varied by country: 12.6 percent in France but only 2.7 percent in Germany, for example. In Japan, home to more than 50 percent of all HNWIs in the Asia-Pacific region, the total HNWI population decline was mild at 9.9 percent, in marked contrast to declines in Hong Kong. The low impact is credited to the Japanese slowdown in macroeconomic growth that started in 2007.

HNWI Wealth is forecast to resume growth as global economy recovers

Overall HNWI financial wealth is expected to grow to $48.5 trillion by 2013, advancing by an annual rate of 8.1 percent. North America and the Asia-Pacific regions are predicted to lead in wealth growth, with Asia-Pacific surpassing North America by 2013. These regions will be spurred by increasing US consumer spending and the extension of the autonomy of the Chinese economy, already sparking a new increase in consumer demand.

HNWIs sought refuge in cash, fixed income, and domestic investments

HNWIs reduced their exposure to equities across the globe, and increased the proportion of their assets in safer and simpler investments in 2008. More income was allocated to fixed-income investments, cash and liquid assets. Additionally, HNWIs allocated slightly more of their financial assets to real-estate holdings, which rose to 18 percent of the total global HNWI portfolio – an increase of 4 percent from 2007.
The proportion of cash-based holdings also significantly increased, to 21 percent of overall portfolios and up 7 percent from 2006. Japan, where the savings rate has been traditionally high, had the largest number of HNWIs moving to cash-based holdings, at 30 percent. North American HNWIs, in contrast, held the lowest amount of cash or deposits as a percentage of their total portfolios at 14 percent, up 3 percentage points from 2007.

“Last year was about preservation, not appreciation,” said Nick Tucker, Market Leader for the UK and Ireland, Merrill Lynch Global Wealth Management. “With no safe havens HNWIs 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.”

UK’s economic woes hit wealth

In the UK the number of HNWIs fell 26.3 percent in 2008 from the previous year amid a drop in real estate, stock market capitalisation and a slowdown in real GDP growth. House prices, according to Halifax, plunged on average by 21.3 percent in 2008, while the FTSE ended the year 51.4 percent lower. While real GDP grew 3.0 percent in 2007, growth slowed to just 0.7 percent in 2008. This, combined with banking sector troubles, led to a slump in investor confidence and a decline in wealth. Since October 2008, the Bank of England has slashed rates by 450 basis points to a record-low of 0.5 percent.

About Merrill Lynch Global Wealth Management

Merrill Lynch Global Wealth Management (GWM) is a leading provider of comprehensive wealth management and investment services for individuals and businesses globally. With approximately 16,000 financial advisors and more than $1.1 trillion in client assets, it is among the largest businesses of its kind in the world. More than two-thirds of GWM assets are with clients who have a net worth of $1 million or more. Within GWM, the Private Banking & Investment Group provides tailored solutions to ultra high net worth clients, offering both the intimacy of a boutique and the resources of a premier global financial services company. These clients are served by more than 160 Private Wealth Advisor teams, along with experts in areas such as investment management, concentrated stock management and intergenerational wealth transfer strategies. Merrill Lynch Global Wealth Management is part of Bank of America Corporation.

About Capgemini

Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working - the Collaborative Business Experience - and through a global delivery model called Rightshore®, which aims to offer the right resources in the right location at competitive cost. Present in more than 30 countries, Capgemini reported 2008 global revenues of EUR 8.7 billion and employs over 90,000 people worldwide. More information is available at www.capgemini.com.

Capgemini’s Financial Services Global Business Unit (FS GBU) brings deep industry experience, enhanced service offerings and next generation global delivery to serve the financial services industry. With a network of 12,000 professionals serving over 900 clients worldwide, the FS GBU collaborates with leading companies in banking, insurance, and capital markets to create tangible value.

For more information please visit www.capgemini.com/financialservices.

Rightshore® is a trademark belonging to Capgemini.

Note to Editors/Reporters:

To download the 2009 World Wealth Report, please visit www.capgemini.com/worldwealthreport.

Capgemini Contacts:    
Emma Hedges (EMEA)    
Weber Shandwick for Capgemini    
capgeminiemeapr@webershandwick.com     
+44 (0) 207 067 0512

Merrill Lynch Contacts:
Sara-Louise Boyes (EMEA)
saralouise_boyes@ml.com
+44 (0) 20 7996 3557    






[1] Individuals with net assets

of at least $1 million, excluding their primary residence and consumables.







[2] Individuals with net assets of at

least $30 million, excluding their primary residence and consumables.