In the words of George Lewis, group head of wealth management at RBC, "While more people surpassed the $1 million disposable income level in 2011, the aggregate wealth of high net worth individuals declined overall as market volatility took its toll."
He further added that most of the 0.8% population growth in HNWI came from a 1.1% increase in the $1-5 million wealth band.
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The report also adds that UHNWI with US$30 million or more in investable assets suffered some of the greatest losses as their numbers dwindled by 2.5% in 2011 and that their wealth declined 4.9%.
The losses have been attributed to the investor’s investments in riskier, less liquid securities, such as hedge funds or commercial real-estate.
Further, slowdowns in the equity market and GDP growth are also seen to have a role in the drawback with equity market capitalization sliding 18.7% and global GDP growth dropping to 2.7% in 2011 from 4.1% in 2010.
In the wake of investors being cautious in the situation, Lewis said "The impact on advisors is that many are facing uncertainty and are searching for capital preservation, which challenges profits for many business models."
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