Posts filed under “Wealth Management”

Revisiting Plutonomics

“The Plutonomy is here, is going to get stronger, its membership swelling. Toys for the wealthy have pricing power, and staying power.”

-Ajay Kapur, global strategist at Citigroup



Today is the 8th anniversary of a fascinating set of observations via Robert Frank in the Wall Street Journal on income inequality.

8 years ago, long before most of us even heard of a French academic named Piketty (notably before Murdoch’s acquisition of Dow Jones) came along this gem:

 It’s well known that the rich have an outsized influence on the economy.

The nation’s top 1% of households own more than half the nation’s stocks, according to the Federal Reserve. They also control more than $16 trillion in wealth — more than the bottom 90%.

Yet a new body of research from Citigroup suggests that the rich have other, more-surprising impacts on the economy.

Ajay Kapur, global strategist at Citigroup, and his research team came up with the term “Plutonomy” in 2005 to describe a country that is defined by massive income and wealth inequality. According to their definition, the U.S. is a Plutonomy, along with the U.K., Canada and Australia.

In a series of research notes over the past year, Kapur and his team explained that Plutonomies have three basic characteristics.

1. They are all created by “disruptive technology-driven productivity gains, creative financial innovation, capitalist friendly cooperative governments, immigrants…the rule of law and patenting inventions. Often these wealth waves involve great complexity exploited best by the rich and educated of the time.”

2. There is no “average” consumer in Plutonomies. There is only the rich “and everyone else.” The rich account for a disproportionate chunk of the economy, while the non-rich account for “surprisingly small bites of the national pie.” Kapur estimates that in 2005, the richest 20% may have been responsible for 60% of total spending.

3. Plutonomies are likely to grow in the future, fed by capitalist-friendly governments, more technology-driven productivity and globalization.

-The Wealth Report

Fascinating stuff . . . well worth rereading the full piece.

Category: Politics, Wages & Income, Wealth Management

Risks to Family Wealth

Source: U.S. Trust

Category: Digital Media, Markets, Wages & Income, Wealth Management

Where the Wealthy Folk Are

Source: The Economist     There are 12 million people on the planet that had investible assets of more than $1 million dollars. Collectively, this group controls $46.2 trillion dollars (2012). A quarter of them live in America (3.4m); followed by almost a sixth in Japan (1.9m) and a twelfth in Germany (over 1m). China and Great…Read More

Category: Wages & Income, Wealth Management

Are You Trying to Get Rich — Or Stay Rich?

Last week, Bloomberg caused a minor stir with their story on C/NET founder Halsey Minor (How Halsey Minor Blew Tech Fortune on Way to Bankruptcy): “How do you sell the technology company you founded for $1.8 billion and five years later file for personal bankruptcy? For Halsey Minor, it may have been a fascination with…Read More

Category: Rules, Wages & Income, Wealth Management

High Net Worth Households in USA

click for bigger graphic Source: Census   This map is rather intriguing, showing the concentration of high wealth households in the US. It comes from the recent Census report of the same name. Maybe its a bit misleading on a map, but that sure looks like a lot of  high net worth households . ….Read More

Category: Wages & Income, Wealth Management

Forgetting History: Value Creation & Tax Burdens

  “Taxes are the price we pay for a civilized society.” -Oliver Wendall Holmes, Jr. Associate Justice of US Supreme Court (1902-1932)   Following last week’s Phil Mickelson discussion, I received lots of emails and comments from financial advisers, accountants and lawyers. A recurring theme was an ongoing, almost resigned surprise amongst the professional set…Read More

Category: Taxes and Policy, Wealth Management