This content is from: Portfolio

As Global Private Wealth Soars, the Rich Need a Strong Middle Class

With 1 percent of the population controlling 39 percent of all wealth, the ultrarich can move markets, but civil unrest threatens their fortunes.

  • Nick Rockel

To see where the world is going, follow the money. Last year global private financial wealth grew 7.8 percent, to $135.5 trillion, according to Boston Consulting Group. That’s more than double 2011’s increase of 3.6 percent. BCG projects that the total will hit $171.2 trillion by the end of 2017, a 4.8 percent compound annual growth rate. David Darst, New York–based chief investment strategist for Morgan Stanley Wealth Management, names three recent drivers of private wealth. “It’s real estate, it’s the stock market, and it’s the underlying businesses of a lot of these tycoons, whether they’re listed or they’re private,” he says.

As BCG reports, 1 percent of the world’s population now controls 39 percent of all wealth. “They tend to move in packs,” Darst says of the ultrarich, citing their ability to shift the real estate and art markets — and potentially even entire national economies in regions such as Asia and Africa. “A few people in Germany go there and they like it, and they decide they’re going to buy in, and the others copy.”

Noting that the No. 1 concern of the extremely wealthy is security, Darst points to recent riots in Brazil and  Turkey. The broader middle class must advance if those at the top hope to hang on to their riches, he warns: “It’ll be expropriated; it’ll be taxed; it’ll be attacked.” • •