Australia’s high-net-worth ranks growing quickly
Australia is one of the top ten countries for creating high-net-worth individuals (HNWIs), with 134,000 of us now having investable assets of more than US$1 million excluding homes, with this group holding a collective US$422 billion in 2004.
This compares with 117,000 high-net-worth individuals holding combined wealth of US$368 billion in 2003, according to the 2005 World Wealth Report released last week by Merrill Lynch and Capgemini.
According to the head of Merrill Lynch’s global private clients group, Tom Alexy, strong gross domestic product (GDP) growth and healthy consumer confidence contributed towards Australia’s continued strong performance.
“An increase in Australia’s GDP of 3.5 per cent and an increase of 23 per cent in the Australian Stock Exchange (ASX) combined to provide the momentum for 2004’s strong HNWI growth,” he said.
Capgemini Australia’s head of wealth management, Gregory Smith, said Australian HNWIs tended to have more highly diversified portfolios than HNWIs in other countries.
“The major trend we witnessed in 2004 was a movement out of real estate and into equities,” he said.
This trend was reflected globally, according to the report, although HNWI investors in other countries tended to hold more alternative investments, such as private equity and hedge funds, than Australian investors.
The report also identified a growing number of individuals globally holding investable assets between US$5 million and US$30 million.
Smith said individuals whose wealth fell into this range faced challenges in managing their increasing wealth, but were not being adequately serviced by current models of advice.
“Those HNWIs, whom we have termed “mid-tier millionaires”, are facing added complexity and a desire to have customised solutions,” he said.
The report found mid-tier millionaires required better service than millionaires with between US$1 million and US$5 million, whose planning needs could generally be satisfied by a dedicated financial advisor.
Smith said the paradox for such individuals was that they typically increased the number of specialist providers to manage their wealth, but continued to add complexity.
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