High Net Worth population rises to over 10 million, with assets reaching $40.7 Trillion, as average HNWI Wealth surpasses $4 Million for first time, reveals 2008 World Wealth Report.

With a strong and lasting reputation as the industry benchmark for HNWI (HIgh Net Worth Individual) market sizing at the global, regional and local levels, the Capgemini-Merrill Lynch World Wealth Report represents a 20 year collaboration.

State of the World’s Wealth

HNWI SECTOR GAINS IN 2007

• 10.1 million individuals • worldwide held at least US$1 million in financial assets, an increase of 6.0% over 2006
• Global HNWI wealth totaled US$40.7 trillion, a 9.4% gain from 2006, with average HNWI wealth surpassing
  US$4 million for the first time
• The Ultra-HNWI “wealth band” experienced the strongest growth, gaining 8.8% in population size and 14.5% inaccumulated wealth
• Emerging markets, especially those in the Middle East and Latin America, scored the greatest regional HNWI
  population gains
• India, China and Brazil had the highest HNWI population growth at the country level
• HNWI financial wealth is projected to reach US$59.1 trillion by 2012, advancing at an annual growth rate of 7.7%

2007: A Story of Two Halves

For the global economy, 2007 was a transitional year that began and ended with sharply opposing macroeconomic environments: Momentum that was carried over from 2006 sustained unabated growth in the early months. By the latter end, heightened uncertainty and instability marked the deep change that was underway.

Overall, market performances were solid in 2007. However, closer analysis of the key drivers and inhibitors of wealth reveals how the many fundamental changes that took place over the course of the year led to deteriorating economic conditions in key markets, including the United States and several mature European nations.

Evenly split, the two halves of the year tell very different stories: steady global growth in the first six months, followed by sharply diverging paths between mature and emerging economies in the second half.

In early 2007, strong economic gains spurred impressive performances in equity markets and various investment products, reflecting high levels of investor confidence. Robust growth in emerging markets, driven by high commodity prices and rising domestic demands, supported solid growth in mature economies. Stock markets worldwide performed well into the summer, led by Latin America and Emerging Asia, which saw roughly 25% and 17% growth, respectively, through July.1 A variety of investment products performed well during the first half of the year; for instance, total announced private equity deals worldwide were on pace to shatter their 2006 record.

The second half of 2007, however, revealed a distinct and growing divergence between mature and emerging economies—with the advantage going to emerging nations. Whether hobbled by the downturn taking hold in the United States or challenged by the slowed growth of a major trading partner, with few exceptions, the performances of mature economies weakened significantly in the closing months of the year. In the European Union, for example, growth was dampened by a confluence of key market forces: slowing domestic consumer spending, a result of high levels of personal debt amid tightening credit conditions; a drop-off in exports brought on by easing demand in the United States, which received nearly 24% of E.U. goods and services shipped abroad; and an appreciating euro.

Growth slowed among other global powers as well: In Japan—the world’s second-largest economy—a decline in housing investment and low levels of consumer confidence took their toll.4 In essence, a long period of “easy money” in mature economies was routed by financial and credit market turmoil. ...

Visit World Wealth Report 2008 Website

Fast-Breaking Headlines

• World’s High Net Worth population breaks 10 million mark with India, China and Brazil showing highest growth
• World wealth grows 9.4% to US$40.7 trillion with average HNWI wealth surpassing US$4 million for the first time
• North America: Growth Slows in 2007 As Cooling Housing Market, Tight Credit, and Financial Market Turmoil Converge
• Europe: U.S. Downturn Affects Mature Economies; Sharp Increases in Commodity & Gas Prices Benefit Russia, Eastern Europe
• Asia-Pacific: HNWI Population & Wealth Boom in India & China
• Trends show clients in growth markets require flexible service models
• As environmental awareness rises, Green Investing gains traction

Download World Wealth Report 2008

PDF format, 2.4MB, 40Pages. Provided by Capgemini U.S. LLC.

CONTENTS:

State of the World’s Wealth......................................... 2
HNWIs Retrench to Safer,
More Familiar Investments.......................................... 14
Green Investing Gains Traction in 2007...................................................... 18
HNWIs’ Pursuit of “Passion Investments”
Is Not Deterred By Economic Volatility ....................................................... 21
Spotlight: Wealth Management Firms
Adapt to Meet Unique Needs
of Growth Markets............................................................... 24
Aligned Service-Delivery Models Can Drive Significant Value........................ 26
A Rightly-Sized and Executed IT Strategy
Can Reduce Risks of Entering a New Growth Market.................................. 28
Wealth Management Firms Encounter New Challenges
When Addressing Growth-Market Needs.................................................... 30
The War For Talent Intensifies.................................................................... 31
Appendix A: Methodology............................................. 34
Appendix B: Select Country Breakdown......... 35

To Our Readers,
In our 12th year evaluating what are considered to be the key indicators impacting the global high net worth marketplace, we are pleased to present the 2008 World Wealth Report. Together, Capgemini and Merrill Lynch utilize more than 20 years of collaborative experience to analyze the macroeconomic factors that drive and inhibit wealth generation and to better understand how they influence high net worth individuals (HNWIs) around the world.

By most standards, 2007 was a very eventful year—for the wealth management industry, and the entire global economy. The first half of 2007 consisted of steady worldwide growth, while the second half was marked by a sharp divergence between mature and emerging economies. The U.S. economic slowdown weighed heavily on key mature regions. However, strong performances in emerging markets boosted HNWI gains around the globe. Although real GDP and market capitalization, the two key drivers of wealth creation, were weaker than in 2006, world growth was strong in 2007 and drove solid increases in both HNWI populations and overall wealth.

Our 2007 findings reveal that HNWIs assumed a more defensive approach to asset allocation in response to marked changes in economic environments. Steering away from some alternative investments, HNWIs favored safer options on more familiar grounds. As investor confidence rebounds, our expectation is that HNWIs will gravitate once again to lessconservative investments—particularly to the high returns and growth opportunities offered in emerging markets.

This year’s Spotlight section focuses on the growing need for wealth management firms to create more customized infrastructure and service models to better target global HNWI growth markets. To meet the needs of increasingly diverse HNWI populations, leading firms are assessing their capabilities and tailoring key delivery models to ensure that service is aligned with the unique needs of clients in any given market.

We are pleased to present you with this year’s Report and hope that you will find continued value in our latest insights.

Robert J. McCann
Vice Chairman and President
Global Wealth Management, Merrill Lynch & Co., Inc.
Bertrand Lavayssière
Managing Director
Global Financial Services, Capgemini

Capgemini – Financial Services

As one of the world’s foremost providers of consulting, technology and outsourcing services, Capgemini enables  its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working—the Collaborative Business Experience—and through a global delivery model called Rightshore®, which aims to offer the right resources in the right location at competitive cost.

Present in 36 countries, Capgemini reported 2007 global revenues of EUR 8.7 billion and employs over 83,000 people worldwide. Capgemini’s wealth management practice helps clients develop innovative growth strategies, understand and analyze customer segments, and successfully implement advisor and customer relationship-management solutions. Capgemini is co-author of the book WEALTH with Merrill Lynch.

For more information, please visit www.capgemini.com/wealth.

Merrill Lynch

Merrill Lynch is one of the world’s leading wealth management, capital markets and advisory companies, with offices in 40 countries and territories.

The firm has commanding positions around the world in its complementary core businesses: Global Wealth Management, which is comprised of Global Private Client and Global Investment Management, and Global Markets and Investment Banking.

Merrill Lynch’s Global Wealth Management group is a leading international provider of wealth management and investment services for individuals and businesses, with more than 740 offices, approximately 16,660 Financial Advisors and US$1.6 trillion in client assets. The Private Banking and Investment Group at Merrill Lynch is comprised of nearly 300 private wealth advisor teams that utilize global resources to provide financial advisory, banking and trust services to ultra-high net worth families.

As an investment bank, Merrill Lynch is a top global underwriter and trader of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world’s largest publicly traded investment management companies, with more than $1 trillion in assets under management.

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