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Wednesday, June 11, 2003

Ranks of US Wealthy Decline

by: Sean Hanna, Editor in Chief

More than one investment management firm has put together a power point presentation built on the assumption of a sharp rise in the number of affluent investors. But what happens if the World does not cooperate with these plans? Last year the number of wealthy individuals in the US actually declined, according to the 2003 World Wealth report published today by Merrill Lynch and Cap Gemini Ernst & Young. Take note, that was not an assumption on any of the presentations witnessed heretofore by the MFWire.com reporting staff.

All counted, the estimates that the number of high net worth investors in the U.S. fell by 100,000 to two million. North America and Latin America were the only regions in the world to see a drop in the number of high net worth investors.

"In North America, high net worth investors wealth declined 2.1 percent, or $200 billion, to $7.4 trillion over 2002," said James Gorman, president of Merrill Lynch's Global Private Client group. "There also was a 1.9 percent decline in the number of HNWIs in North America, down to 2.22 million individuals."

Gorman explained that the drop was attributable to losses in the U.S. stock market. Indeed, he noted that the net worth of affluent investors declined far less than the 22 percent drop in the value of the Standard & Poor's 500 index over 2002. Gorman said that reflects this group's strategy of wealth preservation.

Meanwhile, Asia added most to the ranks of the wealthy.

The global wealth of high net worth investors grew 3.6 percent to $27.2 trillion. In addition just fewer than 200,000 joined the ranks of this exclusive group, bringing the total number to 7.3 million people in 2002. However, even these growing numbers were a slowdown from recent years.

"This was the lowest growth rate in the seven-year history of the World Wealth Report," he noted. "The number of ultra-HNWIs rose 2% to 58,000 people, and their combined wealth grew an estimated 3.6 percent," Gorman added.

Gorman defines ultra-high net worth investors as having financial assets of more than $30 million.

Region Wealth Change HNWI Change
Europe $8.8 4.8% 2.6 3.9%
North America 7.4 -2.1 2.2 -1.9
Asia/Pacific 5.7 10.7 1.8 4.9
Latin America 3.6 2.7 0.3 -3.6
Middle East 1.1 4.6 0.3 4.7
Africa 0.6 4.3 0.1 4.9
Worldwide 27.2 3.6 7.3 2.1

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