accelerated markedly in 2012. According to the recently released Global Wealth
2013 report by the Boston Consulting Group (BCG), private financial assets
worldwide reached $135.5-trillion in 2012 – a 7.8% increase from the prior year
and a marked recovery from the tepid 3.6% growth in 2011.
Strong global equity markets were the primary driver of this wealth increase.
In the U.S., the S&P 500 was up 16.0% while the surprise of last year was
the robust 17.9% return of international stocks fueled by major policy
initiatives in Europe and Japan. Unfortunately, many Canadians, over-invested in
our resource laden market, missed out on much of this global bull market.
A growth spurt of 1.2 million new millionaires took the total count worldwide
to a record 13.8 million households. There are now over 50% more millionaires
than there were in the dark days of 2008. The global liquidity wave engineered
by major central banks has not only avoided a depression, but it has swollen the
ranks of the wealthy.
The U.S., with some 5.9 million millionaires, remains the unquestioned leader
as the home of the most millionaires. However, the relative standings of other
countries are changing largely because the developed world remains mired in
subpar growth while emerging markets have prospered. China moved from a 5th
place ranking in 2006 to 3rd in 2012 and is expected to edge ahead of 2nd place
Japan. Spain and Belgium have disappeared from the top 15 ranking, replaced by
Russia and India. This is a telling reminder that the fortunes of the wealthy
are still tied to their domestic economies.
If you want to rub shoulders with millionaires, the place to go is Qatar
where 14.6 out of every 100 households have financial assets of at least
$1,000,000. If that does not quite suit your fancy, you might prefer Switzerland
which hosts 11.6 millionaire households out of every 100. Although the U.S.
remains home to the greatest number of billionaires, Hong Kong boasts the
highest concentration of these uber-wealthy – 15.1 out of every million
BCG estimated that Canada had 373,000 millionaires in 2012 comprising 2.8 out
of every 100 households. Considering that BCG defines millionaires the
old-fashioned way – those having at least $1,000,000 in liquid financial assets
– and leaves out the value of residences, vacation properties, and private
businesses, this is not an inconsiderable number. Thanks to our stability during
the global credit crisis and its aftermath, our standing in terms of the number
of millionaires has improved greatly. In 2006, we ranked 15th but by 2012, we’d
moved past the likes of France and Italy to a 6th place ranking.
The percentage of private assets held offshore continues to shrink. With
fiscally challenged governments everywhere hunting for money, tax authorities
have cracked down on offshore tax evasion. In 2002, offshore assets accounted
for 7.4% of total private wealth. By last year, it had fallen to 6.3%.
Placing assets offshore actually has more to do with safe havens than tax
havens. More than one-quarter of the private financial wealth of Latin America,
the Middle East and Africa was held off-shore in 2012. In comparison, North
Americans held less than 2% of their financial assets elsewhere.
The strongest future growth in wealth is expected among penta-millionaires –
those with $5 million or more. They simply have more to invest. The developing
world will also continue to enjoy a growing share of the world’s wealth.
Fortunately, wealth creation is not simply for the wealthy. BCG expects 80%
of the new wealth to come from saving. This is what every family seeking future
prosperity should be doing.