Global HNW Population Swells, Report Says
The ranks of the rich are growing and the already-rich are getting richer, last year topping pre-recession levels and in some cases shifting wealth dominance from one region to another, according to a report that urges wealth managers to get proactive in meeting their clients' post-crisis needs instead of simply chasing returns.
The population of high-net-worth individuals (those having investable assets of $1 million or more) during 2010 increased 8.3% to 10.9 million and their financial wealth grew 9.7% to S$42.7 trillion, compared with 17.1% and 18.9% respectively in 2009, according to the 15th Annual World Wealth Report. The global population of ultra-high-net-worth individuals (investable assets of $30 million or more) grew by 10.2% in 2010 and their wealth by 11.5%. The study was released Wednesday by Merrill Lynch Global Wealth Management and Capgemini, a consultant and technology and outsourcing services provider.
While growth rates in population and wealth were more modest than the double-digit levels of 2009, the 2010 figures surpassed 2007 levels in nearly every region, with Asia-Pacific posting the strongest rate of HNW population growth among the top three markets-increasing 9.7% to 3.3 million HNWs compared to Europe's 6.3% growth to 3.1 million to become the second-largest region for both wealth (Asia beat Europe in this category in 2009) and population, right behind North America.
The global HNW population remains highly concentrated in the U.S., Japan and Germany, which together account for 53% of the world's wealthy. The U.S.-still the single largest segment-has 3.1 million HNW individuals, which account for 28.6% of the global HNW population, according to the report.
While more than half of the world's HNWs still resides in the top three countries, their concentration "is fragmenting very gradually over time," said Jean Lassignardie, global head of sales and marketing for Capgemini Global Financial Services, "and will continue to erode if the HNWI populations of emerging and developing markets continue to grow faster than those of developed markets." India, for example, in 2010 became home to the world's 12th largest population of HNWs, entering the top 12 for the first time.
Where are the world's most wealthy investing their money? The report notes that commodities accounted for 22% of all alternative investments in 2010, up from 16% in 2009. By the end of 2010, 33% of HNWs were in equities, up from 29% in 2009; allocations to cash/deposits dropped to 14% from 17 % in 2009; and fixed-income investments dipped to 29% from 31%. Real estate, especially in Asia-Pacific (with the exception of Japan), was said to have performed well throughout 2010, representing 31% of investors' aggregate portfolio at the end of 2010, up from 28% a year earlier and above the 19% global average. The report indicates that in 2012 HNWs are likely to further increase their equity and commodities allocations, while reducing their allocations to real estate and cash/deposits.
The report concludes that management firms and advisors need to provide wealthy clients with "a broader and more integrated set of capabilities" to better help them manage the complex post-crisis mix of goals, concerns and priorities they face today, and examines the benefits of utilizing so-called enterprise value.
While trust and confidence in their wealth management advisors and firms have rebounded significantly from 2008, investors remain cautious. "Firms and advisors must continually demonstrate their value and relevance to help HNWIs meet their changing and complex needs," said John Thiel, head of U.S. Wealth Management and the Private Banking & Investment Group, Merrill Lynch Global Wealth Management. For further information, go to www.capgemini.com/worldwealthreport.
In other news ...
Hedge funds of funds must adapt or perish, according to an article in the summer issue of aiCIO magazine entitled, "The End of the 3 and 30," published by Asset International, which concludes that a large number will fold regardless of what they do. Recent research indicates that 32% of investors currently allocating to funds of funds will invest directly in the next three years, with another 8% poised to follow suit. Lackluster performance and the inability to avoid a number of high-profile hedge fund blowups have convinced many institutional investors that funds of funds cannot justify the extra 1% and 10% they charge on top of the traditional 2% and 20%; also, access to highly regarded hedge fund managers is no longer an allure, according to aiCIO. Go to www.assetinternational.com for further information.
RBC Wealth Management ranks highest in investor satisfaction among full service brokerage firms, according to the J.D. Power and Associates 2011 U.S. Full Service Investor Satisfaction Study, said RBC. The study measures overall investor satisfaction based on seven factors: investment advisor, portfolio performance, account information, account offerings, commissions and fees, Web site and problem resolution. RBC scored particularly well across the study's highest-weighted factors: investment advisor, account information and investment performance. The firm's overall score climbed 21 points over last year, when it ranked second in the findings. Go to www.rbcwm-usa.com for further information.
Altarius Asset Management Limited, the Malta?based asset management branch of Altarius Group, has launched a fund platform, PARAGON S.I.C.A.V. plc, one of Malta's first independent fund platforms exclusively open and dedicated to third-party managers and family offices, according to the firm. Registered as a P.I.F., PARAGON is highly flexible in terms of investment strategy, liquidity, reporting and leverage. It does not attract income or capital gains tax; its open-architecture allows clients the opportunity to nominate their own service provider; and the fund does not require any minimum AUM. or lockup period, said Altarius. Go to www.altariusam.com for further information.
Automation updates to Northern Trust's Hedge Fund Monitor enable clients to enter multiple trades on a single screen, including multiple trades on a single portfolio, and to instruct a single trade and allocate it across multiple portfolios, as well as access performance, liquidity and compliance data throughout the day, according to the company. Go to www.northerntrust.com for further information.
Dublin-based Research and Markets has released "Wealth Management 2011-2012: The Key Dynamics for Growth," a report that in the wake of the financial crisis examines issues such as the continued viability of wealth management and products that offer above-average profit and future growth. The report, said the company, is "a roadmap for success in a sector that needs to find a new strategic blueprint." Go to www.researchandmarkets.com for further information.
Gemini Fund Services LLC, based in Hauppauge, N.Y., and which provides independent advisors with comprehensive, pooled investment solutions, has launched the Northern Lights Fund Trust II. The focus is on alternative investment funds, and like the first Northern Lights Fund Trust, is a shared mutual fund trust of independent funds managed by separate advisors. Assets in the original trust doubled in 2010 and increased by another 20% in the first quarter of 2011 and has almost 70 funds and more than $5.6 billion in assets, according to Gemini. Go to www.geminifund.com for further information.
Events
The Palestine Capital Markets Day will be held June 24 at the London Stock Exchange to present investment opportunities in the exchange and in the Palestine economy. Go to www.pex.ps for further information.
The Dow Jones Private Equity Analyst Limited Partners Summit will be held June 28-29 at the Grand Hyatt in New York. For further information, go to lpsummit.dowjones.com or call 212-416-2951.
Family Office Outsourcing: A 360° View, the next event in the Family Office Metrics 2011 Master Class Series, will be held August 17 in New York City. Go to www.familyofficemetrics.com for further information.
The 5th Annual High Road to Success Conference will be held September 14-16 at the Mulberry Inn in Savannah, Ga. Hosted by Huckstep and Associates and Ziegner Technologies, the event is designed for nonprofit organizations that use Sage Fund Accounting, Sage Abra HRMS and Sage FAS Nonprofit Fixed Assets. Early-bird pricing on registration is available through July 14. Go to highroadconference.com for further information.
Working With Family Dynamics: Becoming An Effective Family Advisor, a workshop designed for professional financial and business advisors who currently work with ultra-high-net-worth families, family enterprises and family offices, or hope to, will be held November 6-8 in Cedar Hill, Tex. Register before August 30 for the early-bird discount. Contact Dennis T. Jaffe at [email protected] or call 214-871-3204.
On The Move
Cedrus Investments, a global boutique investment firm in Grand Cayman, has appointed Denise Gower as vice president of business development. Previously, Gower was head of marketing for Cayman Finance and worked at the offshore legal and fiduciary services firm Ogier.
Prudential's Wealth Management Solutions has named John Yackel senior vice president and director of sales and relationship management. Previously, Yackel worked for Fortigent LLC, where he developed new relationships with institutions and advisors who serve ultra-high-net-worth clients.
Religare Global Asset Management, the multi-boutique asset management arm of Religare Enterprises Limited, has appointed Alan Berkshire as president, North America. Berkshire, a founding partner of Estancia Capital Management LLC, also served in various executive positions at Nuveen Investments Inc.
Northern Trust has appointed John F. Hoffman, a former senior vice president at U.S. Trust's high-net-worth planning group, as president of its New York Personal Financial Services business. As of March 31, Northern Trust had assets under custody of $4.4 trillion, and assets under management of $662.2 billion.
Institute for Private Investors (IPI), a membership group providing investment education and networking for wealthy families, has appointed Kathleen M. McBride, former wealth editor-in-chief of AdvisorOne, as director, responsible for overseeing content across IPI programs and conferences.
Brinton Eaton, an advisory firm based in Madison, N.J., has hired Mary Ellen Hancock as a financial advisor who will provide family office services to affluent clients. Previously, Hancock worked at Wells Fargo Private Bank.
Hatteras Funds, an alternative investment specialist in Raleigh, N.C., has hired Frank Burke, previously at GenSpring Family Offices and Wells Fargo Family Wealth, as an associate of public investments.
-Cort Smith