Last updated: 16:31 / Monday, 9 June 2014
Cerulli’s Report

The Midas Touch: Wealth Preservation and the World's High-Net-Worth Investors

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The Midas Touch: Wealth Preservation and the World's High-Net-Worth Investors
  • Latin America's private wealth sector presents a golden opportunity for global asset managers who want to tap into the region
  • There were 1,587 billionaires in the world with a total net worth of US$6.5 trillion
  • Making it onto this elite list is, however, no guarantee of future prosperity the Brazilian: Brazilian Eike Batista sets an example
  • The best providers don't service high-net-worth individuals, they service HNW families

The priorities for a high-net-worth individual (HNWI) are: protecting their wealth in order to afford a comparable lifestyle throughout their retirement, actively growing their assets to support the needs of their families, and leaving an adequate estate to their loved ones.

In this issue of The Cerulli Edge-Global Edition, they focus on the high-net-worth market, including the main drivers of growth in demand for funds in the Gulf Co-operation Council (GCC) countries, the most effective points of entry to tap into Latin America's wealthy, and an examination of the wealth erosion that takes place in American high-net-worth families.

Regarding to Latam, the study concludes that Latin America's private wealth sector presents a golden opportunity for global asset managers who want to tap into the region. Economic growth and unprecedented wealth accumulation has prompted an increasing number of HNWIs to examine how they are able to preserve and enhance their assets.

At the last count, there were 1,587 billionaires in the world with a total net worth of US$6.5 trillion (€4.8 trillion). John D. Rockefeller is widely acknowledged to have been the first, achieving that status in 1916. The United States currently tops the leaderboard with 492 billionaires, but it has taken almost a century to get to this point. China, which had no dollar billionaires as recently as 2002, already has 152, and is second on the list, and Russia, which only freed itself from the shackles of communism in 1991, is third with 111.

That wealth is also spreading, with new billionaires in Algeria, Lithuania, Tanzania, and Uganda. London boats the greatest number of billionaires of any city with 72, (although only one-third were actually born British), followed by Moscow with 48, and New York with 43.

Making it onto this elite list is, however, no guarantee of future prosperity. Eike Batista is a case in point. In 2012, the Brazilian was the world's seventh richest man with an estimated worth of US$30 billion. But in less than two years, a series of poor investment decisions has seen that pile almost disappear-and he now has to make do on less than US$300 million.

"The wealthy have something in common, and it isn't just money. Worldwide, 95% of wealth creators and 91% of wealth inheritors are married. So the best providers don't service high-net-worth individuals, they service HNW families." says Barbara Wall, Europe research editor at Cerulli Associates. "To service these families, Cerulli has identified six key factors that providers should pay careful attention to."

"Wealth preservation might not be the most pressing problem facing this elite," notes Cerulli senior analyst Angelos Gousios. "However, they would do well to heed the advice of an ancient Chinese proverb-'Wealth does not pass three generations'- because it is just as relevant today as it was then."

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