The rich get richer, and ‘hog the proceeds of growth’

A record 13.7-million people are now classed as “high net-worth individuals” (HNWI), according to a survey of the planet’s most well-off citizens.

The collective wealth of HNWIs – defined as those with investable assets of at least $1-million, not including their main home, their art collection or vintage sports cars – rose by 13.8% to $52.6-trillion.

The latest wealth report by consultancy firm Capgemini and the wealth management arm of the banking group RBC found that almost 40% of those fortunes were accumulated in the last five years.

In order to distinguish the super-rich from the über-rich, a second category has been created within the survey dubbed “ultra-HNWI”, who have more than $30-million of assets to invest. There are 128 000 of these – an increase of 18 000 on the previous year – who collectively hold assets worth $18-trillion or more.

Frances O’Grady, general secretary of the British Trades Union Congress, said the report highlighted concerns that a “super-rich clique appears to be hogging the proceeds of growth for themselves” while real wages for ordinary workers are falling or are under pressure.

“A stock market-led recovery may be great for rich share owners, but it does nothing to improve the living standards of the majority,” she said.

“Unless we have more balanced and equal growth, starting with fairer wages for all, the benefits of recovery will pass many people by.”

Trailing the US
Despite the increase in the United Kingdom’s wealthy, Britain is far behind the United States in terms of the total number of HNWIs. In the US there are 4.3-million people with more than $1-million in investable assets, an increase of 16.6% on the previous year.

The top four global economic powers – the US, Japan, Germany and China – are home to 60% of the worldwide population of HNWIs. The Asia-Pacific region recorded the biggest growth in the number of HNWIs to 4.33-million. RBC and Capgemini analysts said the Asia-Pacific region will almost certainly overtake North America soon.

Switzerland, with its low taxes and banking secrecy, added 48 000 new HNWIs last year to jump to seventh place in the millionaire rankings with 330 000. With a population of eight million, it means one in every 24 people there has more than $1-million of assets to invest.

The analysts said the average age of the wealthy is falling steeply due to the number of new technology start-up millionaires and fortunes being split among the children of millionaire dynasties. The report claims the rich are showing more concern about the need to give something back and use their fortune to make a “positive impact on society”.

“The tendency of younger HNWIs to volunteer is consistent with the observation of a number of executives that younger HNWIs are looking to be more hands-on, while those over 60 are likely to focus on charitable giving or donations to acquire naming rights,” the report said.

George King of RBC said the über-wealthy’s choice of playthings has remained constant: holiday homes, super-yachts and private jets. But they are moving from cautious investments to riskier punts in the hope of making even more money, he said.

“A focus on wealth growth instead of preservation gained ground, particularly among the ultra-HNWIs,” the report said. – © Guardian News & Media 2014

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