Origins and destinations of offshore wealth in 2012. Western Europe was the top origin, and Switzerland was the top destination. Graphic: Boston Consulting Group

[cf. Shadow banking grows to $67 trillion industry, regulators say]

By Robert Frank
31 May 2013

(CNBC) – The wealthiest 1 percent now control 39 percent of the world's wealth, and their share is likely to grow in the coming years, according to a new report.

The world's total private wealth grew 7.8 percent last year to $135 trillion, according to the Boston Consulting Group's Global Wealth report [Global Wealth 2013: Maintaining Momentum in a Complex World]. The top 1 percent control $52.8 trillion, and those worth $5 million or more control nearly a quarter of the world's wealth.

That concentration is likely to increase in the coming years as the wealth of the wealthy grows faster than overall global wealth. The number of millionaires in the world surged by 10 percent year, reaching 13.8 million. The study predicts that global wealth will grow around 4.8 percent a year over the next five years—though millionaires will see their wealth grow nearly twice as fast.

Those worth $5 million or more will see their wealth grow 8 percent, while those worth more than $100 million will see their wealth grow 9.2 percent. The $100-million-plus group will see their share of global wealth grow to 6.8 percent in 2017 from the current 5.5 percent.

What's driving the wealth of the wealthy? It depends on the country. In the developed world—the U.S. and Europe— it's mainly stocks. And stocks have been on a tear this year in the U.S., which has mainly benefited the top 5 percent, who own 60 percent of all individually held stocks. [more]

Richest 1% control 39% of world's wealth and growing

Illustration of a river flowing over a blocking wall, for the Boston Consulting Group report 'Global Wealth 2013: Maintaining Momentum in a Complex World'. Graphic: Boston Consulting GroupBy Brent Beardsley, Jorge Becerra, Bruce Holley, Daniel Kessler, Matthias Naumann, Tjun Tang, and Anna Zakrzewski
30 May 2013

(BCG) – The global wealth-management industry is becoming increasingly complex. With the mature economies of the “old world” and the developing economies of the “new world” moving at different speeds, wealth managers in different regions are grappling with complicated sets of problems. In essence, the core challenge in the old world is how to make the most of the modest growth that is expected in traditional markets, while players in the new world are trying to capture a substantial share of the wealth that is being created in rapidly developing economies. Diverse strategies will be required on either side of the divide to succeed—and to maintain the overall momentum that the industry realized in 2012.

At the same time, regardless of their home market or principal region of activity, wealth managers globally still have much in common. All must find ways to gather new assets, generate new revenues, manage costs, maximize IT capability, comply with regulators, and find winning investment solutions that lead to deep and long-standing client relationships. Indeed, the battle for success in this increasingly complex industry landscape will intensify throughout the rest of the decade.

In Maintaining Momentum in a Complex World: Global Wealth 2013, which is The Boston Consulting Group’s thirteenth annual report on the global wealth-management industry, we explore the current size of the market, the present state of offshore banking, and the performance of leading institutions in a wide range of categories. We also thoroughly assess the key trends that are shaping the industry landscape, as well as outline steps that wealth managers must take to position themselves advantageously. Our goal, as always, is to present a clear and complete portrait of today’s wealth-management industry, as well as to offer thought-provoking analysis of issues that will affect all types of wealth managers as they pursue their growth ambitions in the coming years.

Global Wealth 2013: Maintaining Momentum in a Complex World

By Brent Beardsley, Jorge Becerra, Bruce Holley, Daniel Kessler, Matthias Naumann, Tjun Tang, and Anna Zakrzewski
30 May 2013

(BCG) – Offshore wealth, defined as assets booked in a country where the investor has no legal residence or tax domicile, rose by 6.1 percent in 2012 to $8.5 trillion, with Western Europe the predominant source and Switzerland the most popular destination. (See the exhibit below.) Despite this increase, stronger growth in onshore wealth led to a slight decline—to 6.3 percent from 6.4 percent, compared with 2011—in offshore wealth’s share of global private wealth. Offshore wealth is projected to increase moderately over the next five years, reaching $11.2 trillion by the end of 2017.

The offshore model remains viable because wealth management clients—particularly those in the high-net-worth (HNW) segment (with at least $1 million in wealth) and the ultra-high-net-worth (UHNW) segment (with more than $100 million)—will continue to seek diversification, along with broad private-banking capabilities, specialized expertise, high-quality service, discretion, and domiciles with relatively high levels of economic and political stability. In fact, some wealth that had previously been repatriated, notably by investors based in Western European countries, has partly flowed back offshore owing to the highly differentiated value propositions that offshore domiciles can provide. [more]

Trends in Offshore Wealth



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