The number of rich investors continues to grow despite last year’s market meltdown, according to Rob Hegarty, an analyst with Boston research firm the TowerGroup.
But brokers might also want to lower their sites a notch to target the “semi-affluent,” who will move up in the wealth rankings in the next few years, Hegarty says.
The number of millionaires is growing at a 10% compounded rate annually. By 2003, Hegarty says, there will be 11.27 million people who will have $1 million or more in investable assets, up from around seven million people today.
Even more promising is that these prospects’ assets are growing at 14% annually and they will control $42.3 trillion by 2003, up from $28.5 trillion today, according to Hegarty.
Advisers would be wise to focus on the semi-affluent (between $500K to $1 million) because “they will become tomorrow’s affluent,” Hegarty says.
He says that the top 1% of the population controls 31.1% of the world’s wealth, while the next 9% control 30%. The remaining 90% control a mere 40% of the world’s money.
Chiming in with its own survey, Merrill Lynch found that one-third of high-net-worth individuals (HNWI ) reside in North America, about 2.54 million people, up 2.4% over last year. Moreover, despite last year’s 10.5% drop in the S&P 500, their combined wealth grew by 9% to $8.8 trillion. Europe accounts for 26.8% of the HNWI population, followed by Asia at 18.2% and Latin America at 12.3%.
Since 1986, the number of North American HNWIs has grown 313%. But the fastest growth has come in Asia, which saw the number of HNWIs grow by 600%, followed by Europe, at 440%.
Moreover, the ultra rich, those with more than $30 million in investable assets, rose by 3% to an estimated 57,000 people, according to Merrill’s survey.
Merrill Lynch is slightly less optimistic about asset growth than TowerGroup, predicting that assets will only grow at an 8% clip, not the 14% projected by TowerGroup. Nonetheless, the future looks rosy for advisers who can crack that market. The key, says Hegarty, is to get them early and show that you can “manage their life cycle from cradle to grave.”
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