FSL Chain Mail (14th July 2021)

FSL’s Chain Mail is a regular blog containing links to news articles that we think are worth sharing.

Despite the COVID-19 pandemic, the world’s wealthy population has continued to grow, both in terms of increasing in actual number and increasing in the value they own.  This edition of Chain Mail looks at the latest reports that highlight the trends in global wealth.

The Wealth Report 2021 by Knight Frank reports that the world’s Ultra High Net Worth (UHNW) population increased by 2.4% in 2020, reaching an all-time high.  The US and China contain the most UHNW individuals in the world and Asia is expected to see the fastest growth of this population over the next five years.  To be considered an UHNW individual, they must have a net worth of at least $30m.  Net worth is a measure of someone’s current financial position, and is calculated as the value of their assets minus their liabilities where assets are anything that can be sold for money and liabilities are any debts or financial obligations that they may have.

The report shows that almost 80% of the world’s UHNW individuals live in just 20 countries.  The Top 5 are the US, followed by China, then Germany, the UK and France.  Of these top 5 countries, the UK was the only one to see a decrease in UHNW individuals over the past 5 years (a drop of 8%).  China saw the largest increase amongst the top 5 (+137%).  However it was Saudi Arabia, in 12th position, that had the highest increase overall, +227% since 2015.

Research conducted by the Boston Consulting Group, Credit Suisse and Capgemini all provide similar results.

The Global Wealth 2021 from the Boston Consulting Group highlights 2020’s key wealth trends behind the boom in financial assets as a spike in savings caused by people unable to spend on leisure under lockdown.  This coupled with strong stock markets and supportive central banks saw cash and deposits soaring by 10.6%, the largest annual increase in 20 years.

Credit Suisse’s Global Wealth Report 2021 states that more than 5m people became millionaires across the world in 2020.  This translated to more than 1% of adults worldwide becoming millionaires for the first time and in the UK a big factor was the rise of house prices.

The World Wealth Report 2021 from Capgemini points towards “a decoupling between financial markets… and the underlying real economy”.  The pandemic accentuated this highlighting tech stocks as an example of this boom, benefiting from the shift to working from home and social distancing.

This is positive news for the wealth management industry with the potential to look for growth not just within the UK but from wealthy investors across the globe.

Look out for our next edition with more FSL Chain Mail links.