Sept. 15 (Bloomberg) -- Europe replaced North America as
the world’s richest region last year as measured by assets
under management, a survey by the Boston Consulting Group said.
     North America, defined as the U.S. and Canada, had $29.3
trillion in assets under management, compared with $32.7
trillion in Europe in 2008, according to the survey released
today by the Boston-based firm. The U.S. remains the wealthiest
country at $27.1 trillion and has the highest number of
millionaires -- almost 4 million. Japan’s global wealth is No.
2 with $13.5 trillion and more than 1 million millionaire
households.
     Global wealth dropped for the first time since the survey
started in 2001 as assets under management decreased 11.7
percent to $92.4 trillion last year from $104.7 trillion a year
earlier. The credit crisis sent stock indexes to their worst
annual losses since the Great Depression and slashed the value
of real-estate holdings, hedge-fund and private-equity
investments in 2008. The Standard & Poor’s 500 Index dropped 38
percent last year, the steepest annual decline since 1937.
     “For the last few years, the industry was blessed with
very substantial growth, markets kept rising and people kept
getting richer and pumping more money to wealth managers,”
said Monish Kumar, a partner and managing director in the
firm’s New York office. “That era came to a crashing halt in
2008.”
 
                      Latin America Grows
 
     The biggest drop occurred in North America, where wealth
plunged 22 percent, according to the survey. The second-biggest
decline was Japan, where wealth fell almost 8 percent in local
currencies. Europe declined 5.8 percent. Latin America, defined
by the survey as Mexico, South America and Central America, was
the only region where wealth grew, by 3 percent.
     Wealth is expected to begin a “slow recovery” in 2010,
according to the survey. Assets under management will grow at
an average annual rate of 3.8 percent from the end of 2008
through 2013 to $111.5 trillion.
     “We believe wealth will come back, but we remain
conservative,” said Peter Damisch, a partner and managing
director in Boston Consulting Group’s Zurich office. “Before
2013, we won’t get back to 2007 levels.”
     The number of millionaire households globally fell to 9
million from 11 million, with North America and Europe both
experiencing decreases in the number of millionaire households
by 22 percent, according to the report. The results are similar
to a survey released in June by Capgemini SA and Merrill Lynch
& Co. that found the number of millionaires slipped 15 percent
to 8.6 million.
 
                      Singapore Millionaires
 
     Singapore has the highest concentration of millionaires
with 8.5 percent of the nation’s households having more than $1
million in assets under management, the report said.
     The amount of offshore wealth declined to $6.7 trillion
last year from $7.3 trillion in 2007 as regulators pressured
countries such as Switzerland to cut down on bank secrecy.
Switzerland accounts for 28 percent of offshore assets with the
United Kingdom at 23 percent. Singapore and Hong Kong may grow
as offshore centers because of their proximity to other Asian
countries and sophistication of Asian banks, the report said.
     Investors have had their confidence “shattered” by
markets, scandals and failed financial institutions, according
to Bruce Holley, a senior partner and managing director at
Boston Consulting Group’s New York office and topic expert for
wealth management and private banking for the U.S. That has
resulted in a shift to lower-risk asset classes and investments
that are liquid and simple, he said.
 
                     Brokerages Lose Clients
 
     Brokers including Morgan Stanley Smith Barney in New York
and Zurich-based UBS AG may lose a combined $188 billion of
assets this year as advisers moving to independent firms take
clients with them, Boston-based consultant Cerulli Associates
said last week.
     The largest brokerages’ share of assets under management
is expected to drop to 40.7 percent by the end of 2012 from
47.7 percent, according to the Cerulli report.