A recent report revealed that the number of ultra-wealthy people worldwide increased significantly during the 2023 financial year. The report suggests that the number of people with net worths exceeding $30 million increased by 8% in the previous year.
Interestingly, most new inductees into the ultra-wealthy hall of fame are domiciled in the US.
Close to Half a Million People Can Now Be Called Ultra-Wealthy
According to the 2024 World Ultra Wealth Report by Altrata, 426,330 individuals are worth over $30 million. The report categorizes this set of people as ultra-high-net-worth (UHNW) individuals.
The report also found that the combined wealth of these UHNW individuals spiked by 7% in 2023, thanks to a year-end stock appreciation. As of last year, their combined wealth stands at $49 trillion.
The Emergence of First-Generation Wealth
In the United States alone, the population of UHNW individuals increased by 13%, bringing their 2023 poll to 147,950. As it stands, the US hosts 34% of all the UHNW individuals in the world.
This figure somewhat reflects how influential the United States can be concerning the global economy.
Wealth Will Become Ubiquitous in Some Years
Estimates in the Altrata report suggest the global population of UHNW individuals is poised to reach close to 600,000 by 2030. In addition, their combined wealth should rise from $49 trillion to $68 trillion.
So, this is a wake-up call for companies with capabilities or potential in wealth management. There will be a considerable boom in the ultra-wealthy market, and these companies better be prepared for the projected increase in demand.
The Ultra-Wealthy and Luxury Brands are Growing in Close Stride
In addition, it is a little surprising that luxury chains like LVMH are spreading their tentacles. The average income earner would probably ask themselves if such luxury organizations get patronage at all.
However, the Altrata report affirms that with proactive expansion, the current infrastructure of luxury brands may be stretched to the limits a few years from now. Why? The market they service is getting larger.
Both Product and Service Industries Would Need to Adjust to the New Development
The industry of expensive accessories and premium services is not the only one to be affected by the increase in the number of UHNW individuals. High-end real estate will also revolutionize most major cities worldwide.
In addition, the report also claims that “The market for personal luxury goods and lifestyle services has expanded rapidly, driven by the more varied interests and demands of a progressively diverse global UHNW population.” This explains the recent diversity in the products of some luxury brands.
How Ultra-Wealthy Families Manage Their Estate
Likewise, families are becoming more interested in conserving wealth and transferring it to the next generation, which explains why some ultra-wealthy folks are investing in high-priced properties around the world.
The Altrata report said about the new foray into real estate, “There has been a similar trend across high-end real estate around the world, alongside an increasing focus on family wealth transfer planning and legacy transition amid a surge in first-generation wealth.”
Countries are Looking to Attract Ultra-Wealthy People
The new generation of ultra-wealthy are likely to get adventurous with their riches and alter the customary narratives about wealth management. For example, the Arnault family of LVMH are quite patriotic about their French origins and may stay put even in the face of tax policies that do not favor the wealthy.
However, first-generation UHNW individuals will likely escape to financial safe havens when harsh financial policies are instituted in their country of residency.
The Pareto Principle of Wealth Distribution
In 2023, about 30% of global luxury spending came from ultra-wealthy people, totaling $118 billion. Consequently, this means that ultra-wealthy people around the globe made luxury purchases of about $40 billion in 2023 alone.
However, the 2023 luxury expenses incurred by UHNW individuals pale in comparison to their combined investable assets, which stand at $38 trillion.
The Ultra-Wealthy are Equally the Largest Givers
However, most charitable organizations involved in social interventions often receive donations from the ultra-rich. The ultra-rich contribute up to 38% of all global philanthropy, amounting to about $190 billion.
So far, New York has the highest number of ultra-wealthy people, worth more than $30 million. The population of UHNW in New York is 16,630.
ALSO READ: There Is a Great ‘Horizontal Wealth Transfer’ Coming, and Women Are Set To Inherit $9 Trillion!
Localization of the World’s Richest
In ascending order, Tokyo, Los Angeles, and Hong Kong have 6,445, 8,955, and 12,546 UHNW people, respectively.
The report also suggested that the growth in the number of UHNW individuals in the US will continue at a steady pace in 2024, thanks to emerging industries and interest rate cuts. In countries where fiscal policies are not too favorable, ultra-wealthy people may migrate to tax havens.
How Emerging Industries Produce New Generation of Wealth
New and sustainable tech domains will dominate the specialization of first-generation ultra-wealthy people. According to the report, “There will be new and varied opportunities for wealth generation and asset diversification; these will be underpinned by structural trends such as the green-energy transition.”
However, all these are likely to cause a shift in workplace practices and organizational standards of operation. Indeed, even manufacturing and service quality control benchmarks will shift considerably.
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