World's Wealthy Sitting On $10 Trillion In Investable Assets

Here's another possible bump in road to the global recovery: the wealthy are still sitting on trillions in cash.

The wealthy have kept a $10 trillion pile out of the world markets, according to a new report by wealth management firm Scorpio Partnerships.

The money management industry has only accessed 42 percent of the roughly $40 trillion of investable assets held by high-net worth individuals, the report notes.

Here's more from their annual benchmark report (hat-tip to Dealbook):

"The total assets under the control of the industry is now set at $16.5 trillion...However, in our analysis of market conditions the real total HNW [high-net worth] market opportunity is set at $26 trillion...Critically, this implies there is approximately $10 trillion of HNW assets that could be advised by banks but is not currently in the sector."

To capture the $10 trillion up for grabs, wealth management firms and advisers must regain the trust of wealthy clients who took big hits during the downturn. At least in the U.S. -- where 31% of the world's high-net worth individuals reside -- this is no easy task.

In June, the latest Spectrem Affluent Investor Confidence Index, from Chicago's Spectrem Group, fell by the largest amount since June 2009, reports the Wall Street Journal. "The index, which measures the investment outlook of households with $500,000 or more in investable assets, is now back in in "mildly bearish" territory, according to Spectrem," writes the Journal.

Comments

[Grand Supercycle]

02:41 AM on 07/15/2010

Perhaps the very wealthy also realise that the long term trend is BEARISH.

The equity global uptrend since March 2009 was a bear market rally contained within a much
larger downtrend that started in 2000.

As mentioned since last year - the March 2009 lows will not hold.
Other global equity indexes are similar.

http://stockmarket618.wordpress.com

[amygdalalama]

04:57 PM on 07/13/2010

What a coincidence - about the same amount of money as the Federal deficit.

[madashellvoter]

03:31 PM on 07/13/2010

And Senator Kyle wants to give them a tax break, but doesn't want to raise the deficit! Bull $hit!!!

[JNarragansett]

03:13 PM on 07/13/2010

I see a lot of people blaming Reagan and Adam Smith for this, but do you not see the uncertainty that has been injected into the market in recent years? Being a secured creditor is now not as important as being a creditor with influence in government. Talk about regulation and new taxes will keep money out until the uncertainty is resolved. Money staying out of the market because of government injected uncertainty is not the result of the "invisible hand."

[Greg Logan]

03:39 PM on 07/13/2010

ROFL

right wing talking point.

[JNarragansett]

03:48 PM on 07/13/2010

Fantastic rebuttal. Just to try and flesh out all of your great points, Would you suggest that secured creditors were not circumvented in terms of priority in the Chrysler bankruptcy or that such a change in the way bankruptcies are handled will have no effect on secured credit? Do you think that talks about taxes and regulation do not inject uncertainty into the market, or that uncertainty does not scare away cash? Can you explain how actions taken by the government to direct economic matters can be described as actions of the invisible hand of competition?

[Valda DeDieu]

06:01 PM on 07/13/2010

Glad you saw the humor. But their clinging to a skewered mirror of reality can get irksome.

[Veri]

11:30 AM on 07/13/2010

A true misllocation of resources by The Invisible Hand. However, High Finance wants to get ahold of this money. Just like they want Social Security. So High Finance can gamble it on the casino that produces nothing and has destroyed much.

Shuffling pieces of paper, charging high commissions to do so, and producing nothing that cannot be produced by more efficient - and less ego-driven means (greed) - would be the better solution.

However, High Finance is well on the way to winning this war. Because the poor do what they do best. Squabble with each other. Believe the propaganda of those who would harm them the most. And die.

Congratulations.

[Greg Logan]

03:41 PM on 07/13/2010

FAN -

Just like they do and have of the average American's $$ - and suck it into their massive maws. I lost 25k in 2002 crash - did not go back in - could have been my best decision (though I noticed that the NASDAQ has remained essentially flat).

Please note that NO MONEY HAS BEEN LOST - it just left your pocket and went to Goldman Sachs pocket because they do this stuff for a living....

[tzadtednitz]

11:13 AM on 07/13/2010

Cash is king during deflationary times.

[amyen]

10:41 AM on 07/13/2010

Just another example of why only fiscal stimulus by the government can help us now. Consumers aren't buying, businesses aren't investing, banks aren't lending, and rich people are sitting on piles of money waiting for someone to make the first move. The rich can afford to sit on their trillions for awhile while the rest of us look for jobs that aren't there and businesses close down. The only thing that can get the economy going again is more stimulus.

Oh, and the Dems had better bring up the fact that these trillions are sitting there next time any Repub mentions tax cuts for the rich to get the economy going. Obviously more money is NOT what they need.

[bonum]

01:45 AM on 07/13/2010

....and some people wonder why there are revolutions. I'm not a Marxist, but after studying the history of "haves vs. havenots" it scares me to think of how some democracies can crumble due to the greed of a minority

[Noisyguy]

08:09 PM on 07/12/2010

In the study’s white paper, “When Executives Rake in Millions: Meanness in Organizations,” professors from Harvard, Rice and the University of Utah argue that rising income inequality between executives and ordinary workers results in “power asymmetries in the workplace such that top executives come to view lower level workers as dispensable objects not worthy of human dignity.”

[Greg Logan]

03:42 PM on 07/13/2010

The Republican's and religious right have had this mentality for... DECADES! (Millenia?

[Kache]

03:58 PM on 07/12/2010

Look at the underlying story here. Banks are unable to attract $10 trillion because the wealthy simply don't trust people like Lloyd Blankfein and Jamie Dimon with their money. Gee I wonder why.

[Krakondack]

01:48 PM on 07/12/2010

Do none of you see that this cash is not in mattresses, but is in banks? That is reserve capital, without which those banks would be shut down. It is essential for loanmaking.

[Ampoliros]

02:14 PM on 07/12/2010

All those loans that the bank's aren't giving out?

[ThePeacemakers]

04:08 PM on 07/12/2010

They're complaining (in the article) really because the $10 Trillion isn't being invested in the "Wall St Casino".

And it's eyeopening because even sitting on cash in the banks...still a lack of loans (not that too many are in a hurry to get back into more debt.)

[Davest]

01:38 PM on 07/12/2010

I'm not exactly *sitting* on my money, but I sure as he.ll am not putting it into the stock market.

[Kache]

06:53 PM on 07/12/2010

Why would you even think of stocks? The health of an economy is not measured at the apex of the pyramid, it's measured at the base. The opportunities are always at the base, the apex is where dead money goes for it's funeral.

[trishinpitt]

12:46 PM on 07/12/2010

Sounds like our trickle down economy has a prostate problem.

[hypnotoad72]

12:55 PM on 07/12/2010

And the second-biggest kidney stone we've ever seen.

[Kache]

04:39 PM on 07/12/2010

That needs to be a Wall Street Journal headline!!

Fanned!

[runfastandwin]

12:40 PM on 07/12/2010

So much for Reaganomics. It is now officially a complete and total failure. Save for a few years at the end of the Clinton administration, that world view has held sway since 1981. Will Obamanomics replace it, or will we flounder around as in 1930-1937? Time will tell.

[Ampoliros]

02:15 PM on 07/12/2010

Failure? It worked exactly the way it was supposed to work, just not the way they said it would work.

[Greg Logan]

03:44 PM on 07/13/2010

YUP!! You got it - the rich became richer and we all paid them to do so....!!

[fifthmansix]

12:39 PM on 07/12/2010

of course the more money than brains club ,idoits with money . a fool and his money are republican right wing tea baggers who hate the middle class and brown and black people . duh!!!