China to overtake US as world’s largest NWB market

Posted by Anton Murray Consulting on 6 Apr, 2015

Households with financial assets of US$100,000 to US$2 million comprise the world’s fastest growing wealth segment when measured by growth trends across 32 countries around the world. Yet its growth dynamics, lifestyles, values and investing habits are generally underreported compared with other segments.

New wealth builders (NWBS) today have US$88 trillion in global assets and are expected to grow at a compound annual growth rate (CAGR) of 7.1%, to reach US$145 trillion by 2020. Since 2010, the group has grown faster than any other wealth sector– including high net worth or mass market segments–and is forecast to grow even faster in the next decade, says a new Economist Intelligence Unit (EIU) global report, sponsored by Citi, The New Wealth Builders.

“As self-made professionals and entrepreneurs, NWBs defy stereotypes. They make progress through hard work and philanthropy; they embody the positive aspects of globalization and travel regularly,” said Erica Klein, editorial director of thought leadership–Americas at The Economist Group.” Their wealth is largely self-made– nearly eight in 10 NWBs acquired their wealth in the last 10 years while fewer than 3% attribute their wealth to inheritance of any kind.”

“NWBs represent an increasingly important phenomenon in the world economy driving growth in savings and economic activity more generally. They are typically self-made, socially conscious and sharply focused on growth,” said Jonathan Larsen, global head of retail banking and head of consumer banking, Asia-Pacific, Citi.

Citi serves customers including NWBs around the world by providing retail and wealth management services through Citibank, Citigold and Citigold Private Client.

· New wealth builders currently represent the largest concentration of wealth in the world, led by North America and Asia-Pacific.

· According to the data, in 2020 China will outstrip the US by a factor of two to one with US$53 trillion in assets versus US$27 trillion for the US.

· Looking at growth rates in NWB households around the world, Latin America will outpace all other regions, followed closely by Asia-Pacific. Growth in NWB households across Latin American countries will average 11.1% over 2014-2020.

· Asia-Pacific (10.1%) will secure second place in regional NWB household CAGR.

· Russia and CEE (9.0%) will take third spot in rankings by region.

· NWB segments post slower growth in Western Europe (2.5%) and North America (2.0%), more mature economies with large NWB populations.

· Of the countries tracked in the survey, the top five NWBs segments forecast to grow the fastest between 2014 and 2020 were all in Asia: India, Indonesia, the Philippines, Thailand and Vietnam.

 

Self-made and socially conscious

· New Wealth Builders do not consider themselves wealthy

· They are self-made; their wealth is earned, not inherited

· They are charitable, philanthropic and invest with a conscience

· They are global citizens – their lives transcend international borders

· New Wealth Builders are tech savvy, with the majority banking digitally, and they place a premium on time savings and simplicity

 

Sharply focused on growth

· As their name implies, the majority of wealth builders are seeking asset growth and are opportunistic in their investing strategy

· Wealth builders say that economic and political instability pose the biggest threat to their wealth creation

· Passion investing is truly a passion, and a way of leaving a legacy to their heirs

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