In 2023, the United States saw a rapid increase in the number of millionaires, adding a staggering 600,000 new individuals to the millionaires’ club. This surge in wealth creation propelled the total millionaire population in the U.S. to 7.5 million people, marking a significant 7.3% growth compared to the previous year. According to a report by Capgemini, the combined fortunes of these millionaires reached $26.1 trillion, showcasing a 7% increase from 2022. The definition of millionaires by Capgemini revolves around individuals with investible assets of $1 million or more, excluding primary residences, collectibles, or consumer durables.
The top tier of the wealth pyramid witnessed the fastest growth in fortunes, with the number of Americans worth $30 million or more expanding by 7.5% in 2023 to reach 100,000 individuals. Their total wealth soared to an impressive $7.4 trillion, underlining the growing concentration of riches among the ultra-high net worth population. Globally, these ultra-rich individuals, comprising only 1% of the millionaire population, now command a staggering 34% of the total wealth, highlighting the widening gap in wealth distribution among the affluent.
While the U.S. experienced an unparalleled wealth boom fueled by various economic stimuli, the global scenario presents a more mixed outlook. The number of millionaires worldwide grew by 5.1% in the year under review, reaching 22.8 million individuals. Their collective fortunes hit a new pinnacle of $86.8 trillion. While North America stood out as the epicenter of millionaire growth, the Asia-Pacific region showcased robust growth of 4.8%, signaling a shifting wealth landscape on a global scale.
A notable trend among the wealthy has been the transition from conservative wealth preservation strategies toward more aggressive growth investments. The wealthy are gradually reducing their cash holdings from 34% to 25% of their portfolios, indicating a willingness to deploy capital. Concurrently, allocations to fixed income and real estate assets have increased, with stocks witnessing a decline to their lowest level in over two decades. Wealthy investors are diversifying into alternative investments such as private equity and private credit, viewing them as lucrative long-term prospects amidst market uncertainties.
As the wealth and population of affluent individuals burgeon, the competition to manage their fortunes intensifies. Firms vying for the loyalty of ultra-high net worth clients face a challenge in understanding their multifaceted needs. With ultra-wealthy individuals maintaining an average of seven wealth management relationships, firms must enhance their services by providing value-added offerings beyond financial management. Factors like family dynamics, psychological profiles, investment preferences, and lifestyle choices play a pivotal role in attracting and retaining ultra-wealthy clients.
Meanwhile, family offices, the private investment entities of wealthy families, are gaining prominence among ultra-wealthy investors. Over half of these individuals plan to establish a family office due to perceived advantages in privacy, personalization, and independence. Wealth management firms must evolve into comprehensive service providers offering a wide array of financial and nonfinancial products to compete effectively. By embracing a holistic approach encompassing global advisory, lifestyle services, insurance solutions, and next-generation planning, firms can position themselves as indispensable partners to ultra-wealthy clients.
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