The US added 600,000 new millionaires last year as AI fueled markets.

The U.S. outpaced the rest of the world in creating millionaires last year, adding 600,000 new millionaires and leading the way in powering record fortunes, according to a new study.

According to a report by , America’s millionaire population will grow 7.3 percent to 7.5 million in 2023. hold it. Their combined wealth reached $26.1 trillion, up 7 percent from 2022. Capgemini defines millionaires as those who have $1 million or more in investable assets that do not include primary residences, storage items or consumer durables.

While interest rates remain high, a stock recovery in late 2023 along with trillions of dollars in government spending and stimulus power the U.S. wealth machine.

Fortunes at the very top of the wealth ladder are growing exponentially. The number of Americans worth $30 million or more increased 7.5 percent to 100,000 in 2023, while their wealth reached $7.4 trillion.

Globally, ultra-high-net-worth individuals account for 1% of the millionaire population but now hold 34% of its total wealth, reflecting the increasing concentration of wealth even among the wealthy.

The big question is whether the wealth boom of the last decade, initially fueled by low interest rates and liquidity, and more recently by the Covid-19 pandemic stimulus and artificial intelligence, can continue. Global conflicts, elections, interest rates and a potential economic slowdown could slow the pace of wealth creation, said Ilyas Ghanem, global head of financial services at the Capgemini Research Institute.

The past 10 years have been extraordinary, Ghanem said. “We now have inflation, potential recession and geopolitical issues and elections. The environment is completely different.”

In fact, globally, the wealth picture looks more mixed than in the U.S. The number of millionaires worldwide rose 5.1 percent to 22.8 million last year, according to the report. Their combined fortune rose to $86.8 trillion.

After North America, Asia Pacific saw the strongest millionaire growth, at 4.8%, followed by Europe at 4%, Latin America at 2.7%, the Middle East at 2.1% and Africa at 0.1%.

While Asia outpaced North America’s millionaire population and growth in the years before the COVID-19 pandemic, the U.S. is once again dominant, Ghanem said.

When it comes to their investments, the wealthy are shifting their money from safe, wealth-preserving assets to more aggressive growth assets, according to the report. Their cash and cash-equivalent holdings have fallen from 34 percent of their portfolios at the start of 2023 to 25 percent in January, meaning they are starting to put their cash to work.

Their fixed income holdings increased from 15% to 20%, and their real estate investments increased from 15% to 19%. His stock holdings fell steadily to 21%, their lowest level in more than 20 years. While the major stock averages have performed well this year. S&P 500 There has been an increase of 12 percent so far. Nasdaq Composite Up to 14% – Wealthy investors are shunning a market driven by a handful of giant tech stocks.

Alternatives, particularly private equity and private credit, are likely to receive the most money from wealthy investors this year, Ghanem said. Two-thirds of billionaires plan to invest more in private equity in 2024, according to the study.

“Everything is cyclical and since private equity has not done well, this is a good entry point,” he said. “They realize that if they get in now, when it’s cheap, it’s a good long-term play.”

As the wealth and population of the wealthy continue to grow, the battle to control their fortunes becomes increasingly fierce. The winners will be those who provide the best services to ultra-high-net-worth clients, or those worth $30 million or more, Ghanem said. The ultra-wealthy will be the fastest growing customer base as well as the most profitable, Capgemini said.

They are also the most difficult to attract and retain: the ultra-wealthy have an average of seven wealth management relationships, up from three in 2020. More than three-quarters of the ultra-wealthy plan to change their primary wealth management firm by 2024.

Ghanem said the most important strategy for firms trying to win more business from the ultra-wealthy is to better understand customers. Companies may know their clients’ finances, but rarely understand their family dynamics, psychological risk profiles, investment biases, lifestyles or geographic diversity, he said.

As ultra-wealthy clients increasingly choose wealth management firms over value-added services — such as succession and next-generation planning, tax, concierge services and access to private deals — companies are looking deeper into their broader financial and family lives. Need to research.

Ghanem also said wealth management firms face an attack from family offices, which are the private investment arms of wealthy families. More than half of ultra-wealthy investors plan to set up a family office, and say family offices offer better privacy, personalization and independence.

Instead of trying to compete with family offices, wealth management firms need to become better partners by offering a full suite of both financial and non-financial products, he said. Firms that can offer truly global advice across multiple countries, including lending, lifestyle advice, insurance solutions, portfolio monitoring, real estate, travel and healthcare advice and next generation education. Will be the winner.

“They need to provide the entire ecosystem,” he said.