Millionaires hold nearly half of all personal wealth globally

03 September 2019 Consultancy.uk

While the global economy is said by some experts to be showing the early signs of a recession, one small club of super-wealthy individuals is still enjoying a bull run. Nearly half of all global wealth is now held by millionaires, according to a new study from Boston Consulting Group.

While it is commonly accepted that the global economy has recovered since the global financial crisis of 2008, the distribution of this wealth means that in many cases, the divide between rich and poor has been emphasised. The gap between rich and poor is not only wider than it was at the turn of the century, but those with the least are comparatively worse off.

Contrary to the idea that ‘a rising tide lifts all boats’, over 3 billion of the 7.7 billion people alive today live on less than $2.50 a day; while of those, more than 1.3 billion live in extreme poverty of less than $1.25 a day or go hungry. Meanwhile, a 2017 Oxfam report contended that the eight richest people in the world now own as much wealth as the poorest half of the world.

The Share of Wealth Held by Millionaires Will Continue to Increase

Further illustrating this world of two halves, a new report from Boston Consulting Group (BCG) has revealed that the portion of wealth held by millionaires is set to grow continuously in the near future. While the study only accounted for the private financial wealth of the adult population, making for figures very different from Oxfam’s, the study still found that globally inequality is on the rise. The compound annual growth rate (CAGR) for individuals with less than $1 million in US currency to their name – who hold half of the world’s wealth according to BCG’s adjusted estimations – sat at 4.8% in 2018, compared to 8.6% of those with $20 million – $100 million, and 7.7% of those with more than $100 million.

This trend was most excessive in North America, where 4.1% of the 366.6 million people alive on the continent hold 65% of all its wealth. 95.8% of the population therefore saw their wealth grow at just 3.6% CAGR (the inflation rate of the US, which accounts for most of this, was 2.44% in 2018), meanwhile those with $20 million – $100 million enjoyed almost double-digit growth, and those holding over $100 million saw CAGR of 6.9%.

Global Wealth Grew by 1.6% in 2018 and Should Grow by 5.7% from 2018 - 2023

BCG found the greatest concentration of millionaires was in North America, continuing a long-standing pattern. Western Europe was more equitable, by contrast, with those of wealth under $1 million collectively holding 59% of the region’s wealth. The remnants of the welfare state in these countries – including the UK, France, Germany, the Netherlands and the Nordics, among others – coupled with a level of progressive taxation mean that wealth remains marginally better distributed there than in the US. Meanwhile, growth of wealth across different wealth groups hovered around the same 4% average.

BCG expects global wealth to grow at an accelerated rate over the coming four years. The firm found that global wealth rose by a sparse 1.6% in 2018, thanks to a steep decline in equity market performance which had a significant impact.

However, despite these recent challenges, the past five years have seen a substantial increase in global wealth overall. From 2013 to 2018, investable assets – equities, investment funds, currencies and deposits, and bonds – grew by a CAGR of 5.5%. In line with this, according to the study, as markets recover from 2018’s bumpy road, global wealth should continue to grow by 5.7% until 2023.


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