The Wealthiest One per Cent
We often hear about the ‘wealthiest one per cent’ in our newspapers, we hear about them in news bulletins and if we following the business news or any form of economics or social justice stories we have definitely heard about them.
“The wealthiest one per cent now own almost half of all Global Wealth,” trumpet the headlines.
A new report from Credit Suisse highlights this fact and it is being widely reported in the press with stories from the Huffington Post to the Daily Telegraph to the Economist to the Guardian and many others all appearing. Charities regularly cite the rising inequalities in UK and global wealth and will often use reports like these to make their points.
I find this all incredibly interesting. The reports and articles often seem designed to conjure up all sorts of images of multi-millionaires, the super-wealthy, oligarchs, potentates and tech billionaires and it seems to engender a sense of injustice and perhaps a little envy at how well the top one per cent are doing compared to how the rest of us are all muddling along.
However, is this picture actually true or even fair?
A little less frenzied and breathless reporting and a little more analysis brings a fuller and perhaps more informed view of how this looks in the UK and to our clients.
Reading the Credit Suisse global wealth report beyond the headlines it becomes apparent that to access these reported lofty heights of wealth in UK terms actually requires a figure of rather less than billions or even millions and is around £500,000. This figure also allows for the inclusion of home equity. Whilst I accept that this can be part of an individual’s total net worth it is also very often the family home and may be mortgaged or have other loans secured on it so this figure is not quite so straightforward as the report might suggest.
Thinking therefore about the wealth of the clients we are privileged to look after this figure then does not seem quite so stretching in world terms.
To make the top ten per cent requires an even more modest £48,980. To put this into some sort of perspective, figures complied by the Office for National Statistics in 2012 reported that around 20 per cent of UK households have wealth above £600,000 so would easily qualify for the top one percent club. The ONS goes on to state that almost four-fifths of UK households have accumulated wealth of more than £40,000 and this gives them enough to be closing in one the top ten per cent of wealthiest wealthiest citizens.
The World Wealth Consultancy reports that London now has more millionaires than any other world city. This is due to its property prices and the UK’s long-standing commitment to pensions and investments as much as its attraction to the worlds wealthiest, many of whom choose to settle in the UK to live and to do business. They go on to say that one in every thirty five London residents now has wealth over the £500,000 figure or one per cent club qualifying hurdle I mentioned earlier in this article.
Whilst as a global citizen this inequality does worry me somewhat I think that taking the lead in the fight against global financial poverty is best left to those more informed, involved and qualified than I and I will continue to supporting the charities that I favour in their endeavours.
This article merely seeks to highlight the fact that we are all by virtue of hard work and applying ourselves to the tasks of saving and investment doing a little better than we might sometimes give ourselves credit for.
So it appears that maybe we should take some of the more sensationalist headlines with a little pinch of salt. The worlds top one per cent is largely us. Perhaps it is time for the headline writers and more sensationalist report writers to tone down the rhetoric and more closely redefine what they actually mean by true upper echelons of world wealth. Most of us are not ‘mega-rich’ by western standards, merely trying to secure the financial futures of ourselves and those of our families.
It does seem therefore seem rather unfair to me that they very often try to imply that hard working UK citizens should somehow feel that it is wrong to have committed to saving for their future financial security by giving up consumption today for a more secure later life in retirement. We may be towards the top of the global wealth tree but we also have the attaching high living costs and levels of taxation to contend with.
As the State gradually withdraws much of what we used to take for granted this only seems like common sense to me and I am sure to all of you.
If you wish to discuss any of aspect of wealth management or that of securing your financial future please don’t hesitate to contact us or call us on 0207 337 1390.
We would love to help.
Lee Robertson, CEO
Lee is a Chartered Wealth Manager and is listed in the definitive Spears Wealth Management Index as one of the UK’s top 10 wealth managers. He is a regular contributor to the financial press and is often on television discussing wealth management and investment issues.
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