Private banks, which in recent
years have been rushing headlong to expand Asian businesses, should
find new research on wealth trends over the next decade sobering
reading. It projects that developed, rather than emerging markets,
will provide the lion’s share of wealth. PBI takes a look
at Deloitte’s millionaire research.


Line graph showing the total number of millionaire households in developed marketsThe
conventional view that Asia-Pacific is the place to be for wealth
managers looking to grow their business has been questioned in new
research projecting wealth trends out to 2020.

The study, from the Deloitte Center
for Financial Services, signals that personal wealth among the rich
in the developed world will continue to hugely outstrip that in the
emerging economies, dominated by Asia.

Deloitte’s study sees millionaire
households among 25 key economies more than doubling their wealth,
growing from an estimated $92trn this year to $202trn in 2020.

Wealth in Deloitte’s study includes
financial assets (stocks, bonds and other investments) and
non-financial assets including primary residence, durables,
business ownership and other assets.

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Line graph showing the total number of millionaire households in emerging markets


Developed markets hit
$177trn by 2020

The broader definition compares to
the 2010 Merrill Lynch/Capgemini World Wealth Report which
estimated total high net worth (HNW) wealth at $39trn.

Merrill Lynch/Capgemini’s study
only considers HNW liquid investable assets and excludes
collectibles, consumables, consumer durables and real estate used
for primary residences.

“In spite of exceptional growth in
emerging markets, it is developed markets that are expected to
remain the global centres of wealth over the next decade, in terms
of both the amount of wealth held and the number of millionaire
households,” Deloitte’s study suggests.

By contrast, emerging markets by
2020 will only boast $25trn of wealth versus the $177trn amassed by
rich households in the Western nations.


US still a magnet to

Bar chart showing individual investible assets in Chinese HNWIAt the end of
this decade, America will remain the world’s top country for
millionaires, accounting for nearly half of the world’s population
of high net worth individuals.

The study estimates the number of
millionaire American households will increase from an about 10.5m
in 2011 to 20.6m in 2020.

The aggregate wealth of millionaire
US houses will likely reach $87trn by 2020, up from $39trn
currently, Deloitte forecasts.

Still, growth in emerging markets
will remain high.

Deloitte forecasts that in emerging
markets, the growth over the next decade is potentially “quite
impressive”, at 260% versus the 107% growth expected in developed


Private banks still eager
on emerging markets

Merrill Lynch/Capgemini’s World
Wealth Report
found that, in 2009, Asia’s millionaire ranks
rose to 3m individuals, matching Europe for the first time. Asian
millionaires’ combined wealth surged 31% to $9.7trn, surpassing
Europe’s $9.5trn. In North America, the ranks of the rich rose 17%
and their wealth grew 18% to $10.7trn, the report calculated.

Still, there are good reasons to
stay with the potential of Asia, bankers say. For example, Swiss
private banking, seeking to make good the shortfall of revenues
from its traditional offshore banking business, sees Asia as a
substitute market.

Banks like Julius Baer even bill
Asia nowadays as its “second home” after Switzerland. LGT has moved
out of the German market and continued to build its 25-year-old
business in Asia.

Bar chart showing total wealth growth in developed markets and emerging markets 2000-2020

Emerging markets: growing,
growing strong

When it comes to wealth segments,
Deloitte analysis suggested that although the growth in the total
wealth of millionaire households in the emerging economies will
outpace the West, the latter will continue to remain home to a
significant share of millionaires.

In the developed markets, the $5 to
$30m segment will likely grow substantially over the next decade.
The $1 to $5m segment will comprise the largest group both in
developed and emerging markets.

As for individual countries, China
is likely to be among the top 10 wealthiest economies by as soon as
2015, with an estimated $3.6trn in wealth.

Deloitte forecasts that India is
likely to experience the largest growth in total millionaire wealth
over the next decade at 405%. For China, the projection is close on
India’s heels, at 394%. Brazil scores a 257% growth rate and
Russia, 241%.

By segment, South Korea may have the largest number of
millionaires among emerging economies, with 1.51 households by
2020. China will follow closely with 1.5m householders.

Bar chart showing the highest proportion of UNHW residents



See also:

Chinese private banks in pole position

The Long March to offshore wealth