Monday 02 April 2001
On Monday 2nd April 2001, market analyst Datamonitor launches the Global Wealth Service*, a series of independent research reports and consultancy covering the international wealth management market. Findings from the research reveal that the 'millionaire's club' may have been growing over the last few years, but it is not only the super-rich that are getting richer. In fact the number of 'mass affluent' individuals, the number of people that have substantial sums of money but may not yet have broken the magic £1million barrier, boomed in the latter years of the 1990s. Mass affluent individuals are likely to be male, aged 35+ and live in the South-East.
The number of millionaires in Britain has grown at over 17% per year since 1995 to 73,990 in 2000 while 7.9% of the population can be classed as 'mass affluent', having liquid assets of £30,000-£200,000. Substantially larger than the 'millionaires club', the number of individuals falling into the mass affluent category has grown at 12% since 1995. The combined wealth held by the new mass affluent reaches £313 billion, almost three times more than the not unimpressive amount of £120 billion held by the 'millionaires club'.
Money Makes Europe Go Round
Over the past decade a tremendous amount of wealth has been created around the world. In the past five years alone, European wealth has nearly doubled, to reach £3.7 trillion (€5.8 trillion) by 2000. This wealth is in the hands of 22.8 million people, almost a quarter of whom have liquid assets of more than £200,000 (€300,000). Datamonitor's research find that the number of wealthy individuals in Europe is set to grow strongly between now and 2004:
- Every day in 2001, as many as 1,265 new high net worth individuals (defined as those individuals with liquid assets of over £200,000) and 3,320 new mass affluent individuals will be created across Europe.
- By 2004 there could be as many as 30 million mass affluent and high net worth individuals, holding up to £5.4 trillion (€8.6 trillion) in liquid assets.
Such strong growth has been driven by the booming economy since recovery from the recession of the early 1990s. The second half of the 1995-2000 period witnessed significant rises in property prices, growth in businesses and a strong stockmarket. Growth in assets has therefore been fuelled both by capital growth and also the creation of new wealth through the strong economy and low unemployment. The emergence of the Internet and subsequent surge in dot.com organisations has also created significant levels of new wealth. Furthermore, government policy has prompted an increased awareness among customers of the need to create significant asset pools for retirement, as the State becomes unable to support the ageing population and the dependency ratio soars.
The Rich are Getting Richer
Both the number of prosperous individuals and their liquid assets have increased in the latter half of the 1990's. 8 million people moved into the 'mass affluent' liquid asset bands across Europe, either as a result of investment returns, increased compensation, inheritance or other windfall. At the same times, the rich are getting richer; many of the individuals in the high net worth asset bands moved higher within those bands. Between 1995 and 2000, for example, the average liquid assets in the €3 million + asset band increased from €10.5 million to €11.6 million.
Mass Affluent: White, Male aged 35+ and Living in the South-East
Analysing data from the MORI Financial Services nationwide survey, Datamonitor has been able to identify the key demographic features of the mass affluent market. The total sample size was 48,192 interviewees across Great Britain, of which 4,038 were mass affluent.
The majority of mass affluent consumers are aged over 35, with the greatest number falling into the 35-54 age bracket. Retired and older individuals are also a very significant sector of the mass affluent market, with those aged 55 and over accounting for 38% of the mass affluent market.
The mass affluent market in Great Britain is dominated by men, with men outnumbering women in this category by more than two to one. London and the South-East are the most popular addresses for the mass affluent in the UK, with 38% of this group living in these areas.
White Europeans constitute nearly 90% of the mass affluent market in the UK, while Indians, Black Caribbeans, Black Africans and other ethnic groups together compose 4% of the mass affluent population.
Wealthy But Not Wise?
On average 62% of the mass affluent market has direct equity holdings, while 17% of mass affluent consumers hold no investments at all. Young people dominate the group of mass affluent individuals not holding investments, partly because they prefer to spend their disposable income and because they are not sufficiently aware of the need/benefits of investment. This could be a lucrative area for providers to develop dedicated investment and education/advice services to this group. Only 40% of mass affluents hold ISAs, meaning that 60% are missing out on tax exemption on these investments. The flexibility of the ISA product, particularly because of its cash component, means that it is a product suited to the needs of most investors.
A physical presence is vitally important for mass affluent services, with 69% of mass affluent individuals preferring to make their arrangements face-to-face. Over 20% of the total mass affluent market are also happy to make their arrangements over the telephone, although a greater proportion prefers to use the post. A small, but significant number of mass affluents arrange their finances through a computer. Despite the popularity of online services generally, a physical presence should be well supported by remote services, that is, multi channel distribution is key for this market.
Operators Keen to Launch Wealth Services
"Wealth levels are set to increase; by 2004 there could be as many as 4.9 million mass affluent individuals in the UK. There has been a surge of interest in the mass affluent, as financial service providers have rushed to take advantage of a growing market. An important measure of the success will be the 'share of customer wallet' that a provider can take. To achieve a significant 'share of wallet' competitors must deliver sustained performance on invested assets, together with sufficient product range and multi-channel distribution," comments Michele Gorman, Datamonitor financial services lead analyst.
Technical details
Further details and charts available from Yasmeen Khan in the Datamonitor Press Office on 020 7675 7487 or email ykhan@datamonitor.com Michele Gorman is available for comment
* Datamonitor's Global Wealth Service is a strategy and planning tool for operators in the wealth management market. The Global Wealth Service comprises reports, monthly briefings, competitor profiling and custom solutions. At the core of the Global Wealth Service are ten market reports that focus on the customers, strategies and technologies in the wealth market. Each report gives market data and analysis on the issues impacting the high net worth and mass affluent segments. The core geographical markets covered are Europe and the US.
Datamonitor are independent market analysis experts that publish a wide portfolio of strategic business information. Datamonitor has expertise in the following industry sectors: Automotive, Consumer Markets, Energy, Financial Services, Healthcare, Technology. See www.datamonitor.com for further details.