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Crisis leaves rich even richer
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May 17, 1999: 8:51 a.m. ET
World's 6M richest people emerged from global turmoil 12% wealthier
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LONDON (CNNfn) - The world's rich people grew even richer -- 12 percent richer, to be exact -- even as financial crises flared across broad pockets of the globe in 1998, according to a new study.
Six million of the world's "high net worth individuals" -- defined as anyone with financial assets exceeding $1 million -- saw their personal fortunes swell 12 percent, to $21.6 trillion last year, new research by investment bank Merrill Lynch and Gemini Consulting shows.
The report also found that the net worth of the $1 million-plus plutocrats will grow more than 50 percent by the year 2003, to $32.7 trillion.
"The rise in HNWIs' (high net worth individuals') financial assets shows no sign of stopping despite last year's turmoil, which saw many HNWIs relying more than ever on the advice of their financial adviser," said Michael Giles, chairman of the Merrill Lynch International Banking Group.
Steven Beck, managing director of Gemini Consulting's North Europe region, noted that the wealthy elite with well-balanced portfolios weren't adversely affected by the crisis. Those that rode out the turmoil "made significant gains by year end."
The researchers said they had found a "sea change" in the private banking sector, which the report concluded has grown more dynamic and innovative thanks in large part to the rapid inroads of the Internet.
The profile of wealthy people has changed as well, as earned wealth has increased at a faster rate than inherited wealth, the report concluded.
"Today's HNWIs were found to be much savvier than those of the previous generation, taking an increasingly more active role in managing their wealth," a synopsis of the findings said. "They are information hungry, IT (information technology)-literate, mobile, global, and require more sophisticated financial products."
Among the wealthy sample surveyed in the study, Americans and Western Europeans accounted for 58 percent of the total. That percentage rose slightly in 1998, spurred by relatively robust local economies and stock performances.
Latin American and Asian elites, by contrast, saw more of their wealth, on a proportional basis, eroded.
The report said the wealthy buffered themselves from the financial tumult by reducing the size of their portfolios and moving more assets into cash and fixed-income bonds.
Those outside the United States, especially in Asia and the Middle East, tended to shift their assets from local currencies into U.S. dollars, while withdrawing from Asian markets.
"All in all, the study showed that only a minority of HNWIs were caught out by last year's volatility," the researchers said.
This minority included those who converted significant assets into cash and missed a late-arriving market upturn, and those whose assets were overly concentrated in emerging markets and hedge funds. 
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