Merrill Lynch World Wealth Report


Merrill Lynch have just published their annual “World Wealth Report”, a well respected survey of trends in High Net Worth Individual markets. High Net Worth Individuals (HNWIs) are defined as those with over $1million of net investable assets.

The main points are:
1. Globally, the number of HNWIs dropped 14.9% to 8.6 million. Their combined wealth dropped 19.5% to $32.8 trillion. These are the sharpest falls since the survey began in 1997. The Ultra HNWI (over $30 million) figures fell by 24.6% and 23.9% respectively – due to more exposure to high risk assets like equities.
2. The UK saw one of the sharpest falls in HNWIs – 26.3% to 362,000. This is attributed to high exposure to investment property & equities, the decline in the exchange rate and a high exposure to financial services.
3. A major trend globally has been for HNWIs to respond to the credit crunch by cutting risk and pulling back on international diversification. Globally, “home region” weightings rose by an average of 6.8%. There is no data in the survey on international financial centres (IFCs) but lower international diversification (whatever the reason) is likely to be hitting IFCs particularly hard.
4. In cutting back on risk HNWIs have also switched to cash and bonds – these are lower margin areas for wealth managers. The net result of fewer HNWIs, with less to invest and investing in lower margin areas is a huge squeeze on wealth managers.
5. Overall there has been a decline in philanthropic giving, although the picture has held up fairly well in Europe with the major cut back being in the US.

George Hodgson


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