There are now half a million high net worth individuals in Britain¹

The numbers of wealthy individuals in the UK has more than tripled in the past year, far outstripping population growth; buoyed by property price rises, a generally stronger share market and a steadily improving economy.

The number of affluent individuals increased by 45.4% over the year compared to population growth of only 0.63%.

There are now approximately 501,866 high net worth (HNW) households in the UK according to the latest CoreData Research UK HNW Report² and accounting for approximately 2% of total households in Britain.

This represents a net increase of 181,769 HNW households and means more than half a million of approximately 25 million households are now deemed wealthy.

The meteoric rise in the number of HNW individuals can be partially attributed to the strong performance of equity markets this year which, until the correction in September, saw several indices hitting record highs.

The increase in affluent households has been accompanied by a growth in income inequality from 0.323 in 2011/12 to 0.332 in 2012/13.

There is no doubt the equity rally in the first three quarters of the year helped buoy the number of HNW investors in the UK. However the future may not be as rosy – interest rate hikes on the horizon, the end of quantitative easing and additional regulation suggests markets are not in for an easy time and push some people back outside the classification.

Further findings reveal UK HNWs tend to be very risk averse and defensive when investing and the majority are not willing to take more risk. This could serve them well in the potentially tumultuous markets ahead.

When it came to their investment goals, HNWs in the UK are aware of their financial objectives but express a lack of clarity on how to achieve them. Less than a half of UK HNWs have clear financial plans and just about a third have a financial plan that is helping them achieve their goals.

Only approximately four out of 10 HNWs know the annualised return they need to reach their short term and long term goals, which suggests affluence does not necessarily correlate with financial savvy.

¹  A HNW individual is defined as someone who possesses more than $1 million USD in net financial assets.

² UK HNW Report 2014: Investment Attitudes & Behaviours.