North America back on top as wealth rebounds

The global high net worth individual (HNW) population and their total investable wealth both increased strongly in 2012, according to the annual World Wealth Report from RBC Wealth Management and Capgemini.

Numbers of HNWs, individuals with more than $1m in investable assets, rose by 9.2 per cent, an increase of 1m, to reach a record level of 12m, around 2m more than before the financial crisis.

Their investable wealth rose by 10 per cent to reach record highs of $46.2tn (€35.5tn), having suffered a decline in 2011.

North America is home to the most wealthy individuals with its 3.73m HNWs overtaking Asia-Pacific’s 3.68m, reversing last year’s positions.

“There may only have been modest GDP growth in the US and Canada but both benefited from strong equity market performance and growth in the real estate market,” said Stuart Rutledge, head of RBC Wealth Management in the UK and Caribbean, at the report’s London launch.

However Asia-Pacific is predicted to return to the top spot in the near future, since the region possessed some of the fastest growing individual wealth markets in 2012, including Hong Kong, India, Indonesia and China.

“The strong growth we are seeing in this area is expected to continue in the years ahead,” said Mr Rutledge. “We feel it is going to be driven by strong economic and policy fundamentals, which will support strong equity markets and real estate performance in those areas.”

All regions bar Latin America – which led the way in 2011 but fell back this year – enjoyed strong growth in population and wealth in 2012. Europe fared reasonably well despite its challenging economic environment, with a 7.5 per cent rise in population and 8.2 per cent rise in wealth.

Going forward, strong Asian growth should help drive global wealth levels by 6.5 per cent a year to a new high of $55.8tn by 2015, the report predicts.

New to the report this year was the Global HNW Insights Survey, carried out in collaboration with Scorpio Partnership, which surveyed more than 4,400 HNWs across 21 countries. The survey found that wealth preservation was the name of the game, with over 30 per cent of all assets held in cash or deposits, but suggested that despite investors’ lack of confidence in the markets, HNWs had a great deal of belief in their wealth managers and in their own ability to continue to grow their wealth.

HNWs also showed a preference for managing their wealth via a single firm and single point of contact rather than using a number of private banks, while wanting increased access to digital channels of communication.

“When a HNW finds a wealth manager that they trust, who they believe works for a firm that has multiple capabilities and solutions that meet their needs, they feel they can put more and more business with that individual and don’t feel the need to be multi-banked,” said Mr Rutledge.

He did however add that there were regional differences, with individuals in emerging markets more likely to be served by multiple wealth managers.