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US Adds 500,000 New Millionaires In 2023 Driven By AI

Happy business woman under a money rain made of dollars

The US led the world in creating millionaires last year, adding 500,000 and greatly boosting fortunes at the top, a new study finds.

America's millionaire population grew by 7.3 percent in 2023.

It reached 7.43 million people with combined fortunes of $26.1 trillion, a seven percent increase from 2022. 

The research is from the Capgemini Research Institute for Financial Services.

It defines millionaires as people with investible assets of $1 million or more.

This excludes their primary residence, collectibles, and consumer durables.

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Despite higher interest rates, the stock market rebounded at the end of 2023

Extensive government spending and stimulus powered the increase in US wealth. 

The number of Americans worth $30 million or more rose by 7.5 percent to 90,700.

Their combined wealth surged to $7.4 trillion. 

Internationally, the number of millionaires grew by 5.1 percent to 22.8 million, their combined fortunes are a record $86.8 trillion

Globally, ultra-high net worth people, who account for one percent of the millionaire population, now hold 34 percent of their total wealth.

Elias Ghanem is global head of the Capgemini Research Institute for Financial Services.

He questioned whether the wealth boom fueled by low interest rates, liquidity, pandemic stimulus, and AI could continue amid global conflicts, elections, rising interest rates, and potential economic slowdowns.

Internationally, the number of millionaires grew by 5.1 percent to 22.8 million, with combined fortunes reaching a record $86.8 trillion. 

The Asia-Pacific region saw the strongest growth in millionaires after North America, followed by Europe, Latin America, the Middle East, and Africa.

Regarding investment behavior, the wealthy shift from safe, wealth-preserving assets to aggressive growth investments. 

Their cash holdings have decreased from 34 to 25 percent of their portfolios.

However, fixed-income holdings increased from 15 to 20 percent, and real estate investments rose from 15 to 19 percent. 

Stock holdings dropped to 21 percent, their lowest level in over 20 years, despite major stock averages performing well in 2023.

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Ghanem predicts private equity and private credit will attract the most investment from wealthy individuals in 2024, as two-thirds of millionaires plan to invest more in private equity. 

He sees this as a good entry point for long-term investment.

As the wealth and number of wealthy individuals rise, competition for managing their fortunes intensifies. 

Wealth management firms aiming to serve ultra-high net worth clients must better understand their clients' broader financial and family dynamics. 

These clients increasingly need value-added services like succession planning, taxes, and concierge services. 

Firms must also contend with family offices offering better privacy, personalization, and independence. 

Ghanem suggests that wealth management firms should partner with family offices and provide a comprehensive suite of financial and non-financial products to remain competitive.

He said: "They need to provide the whole ecosystem.”

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