Britain’s millionaires still feel like they are cash poor
In 2021, global wealth grew by 12.7 per cent according to the latest Credit Suisse Global Wealth Report, published this week. There are now over 60 million millionaires in the world, more than twice as many as in 2011, a mere decade ago. Britain has 4,180 people who are worth over $100m each, and a massive 2.85 million people in the UK are millionaires. Most of them live in London and the Southeast.
But what do we know about these seemingly minted households?
While there is a huge amount of diversity amongst the relatively well-off, here are three observations that I can make after serving many tens of thousands of these privileged families in the UK over the past two decades.
Firstly, most millionaires don’t think they are rich, and very few would ever describe themselves as wealthy. That’s partly because humans are social creatures, which is an anthropologist’s way of saying that we naturally locate ourselves in a hierarchy. So, a person earning £30,000 a year identifies someone who earns £100,000 as wealthy. But that person often looks “up” and sees a chief executive officer on the board of a PLC earning a million – and identifies that person as loaded. And the data supports that the nominally rich don’t think they are rich – a study by Ameriprise Financial showed that only 13 per cent of millionaires defined themselves as wealthy.
But there are other reasons why those with high levels of assets often don’t feel rich. Many have costly outgoings and, while these would be classed as nice-to-have problems by some, they create real anxieties and stresses. Many hold shares they can’t easily sell, houses with mortgages that need heating and maintenance, kids in expensive education, and a sense that much of their income is eaten up by the “basics” – albeit those basics are likely to include enjoyable holidays and a decent car. Very few asset millionaires, certainly in London, have anything close to a million in liquid cash.
A large and growing number of the affluent have inherited their wealth. This challenges a common preconception that most wealth is created by the individuals themselves. Statistics from Barclays indicate that during the next decade, some of the wealthiest people in the world will trigger the largest transition of wealth in history, transferring more than $15tn to their families – a sum greater than China’s annual GDP. That’s a lot of new millionaires – but not all are go-getting entrepreneurs or dedicated professionals. For every Stelios, Gates, or Kardashian, born into rich or affluent families, who then went on to grow their family fortunes, there are others who settle into relative decline. And that’s often ok for society – how else would social mobility work?
Well-off people very often spend their money in ways that can help broader society. This may seem obvious but is worth pointing out – when people are described as “multi-millionaires” this can lead some to conclude that they are somehow inefficient hoarders of wealth. And some do hoard – which, in normal times without excessive inflation, is bad for the economy. But well-off people are, of course, also typically the high spenders who, per capita, contribute more to economic growth when they spend, and when they are taxed; they help sustain a large chunk of the cultural, culinary and civic life in London and elsewhere. And right now, we need and want more efficient high spenders to help fuel us all through the rough economic seas ahead.
So, thank goodness we have 2.85 million millionaires – even if most of them don’t feel like one.