Consumer households have almost $30 trillion of investable assets, $70 trillion of total assets, and over $55 trillion of net worth. Consumers have over $69 trillion in total assets, which includes illiquid assets such as retirement plan assets held in 401K or pension plans, personal assets such as homes and land, as well as other illiquid assets such as small business holdings and limited partnerships. These assets total $12.2 trillion, $27 trillion, and $7.5 trillion, respectively. It is interesting to note that consumer household liabilities total only $13.3 trillion, which accounts for only about 20% of total assets. This is due to the fact that wealthy households, which control the vast majority of all consumer assets, typically hold very little consumer debt such as credit cards or auto loans. Netting total household assets and total household liabilities, consumers have a total household net worth about $56 trillion.

Consumer households control almost three-quarters of all investable assets, more than half invested via financial advisors. A popular misconception by many financial professionals and consumers alike is that the large institutions control the majority of the investable assets, when in fact it is the consumers. Furthermore, most of the leading-edge investment trends continue to come from the institutional markets, and should so in the future.

More specifically, high and moderate net worth consumes control over half of all investable assets. Lower net worth households only control 4%, while in comparison ultra high net worth households control 13%. Retirement plans and endowments & foundations control 29% and 1% respectively.

Investable Assets

Consumer households have over $23 trillion in investable assets, an increase of over 40% since 2002. Consumer household investable assets have been growing at an annual rate of 7% since 2002. Investable assets grew the largest between 2002 and 2003, jumping 15% to $18.4 trillion.

Consumer household investable assets net flows have decreased to negative $516 billion, a decrease of almost $1 trillion since 2003. Investable assets net flows hit its high in 2003, accumulating $323.4 billion in net flows. However, net flows slipped in 2004 to $181.6, a decrease of over 40%. Since 2003, net flows fell from its high at $323.4 to its current low at negative $516.8.

Consumer households have two-thirds of their investable assets in brokerage accounts. Consumer household investable assets have been invested relatively consistent since 2002, with two-thirds invest in brokerage accounts and the other one-third invested in banking accounts and other vehicles.

Financial Assets

Consumers have $12.2 trillion in retirement plan assets, an increase of almost 50% since 2002. Retirement plan had its largest increase between 2002 and 2003, increasing 18% to $9.7 trillion. Since 2002, retirement plan assets have increased 24% to its current point at $12.2 trillion.

Consumer households’ retirement plan assets are distributed mostly between government pension plans, private defined benefit plans, and defined contribution plans, with annuities only accounting for a little more than 10% of assets. Collectively, all four retirement plan types share of assets have remained steady.

Household Assets

Consumer households have $27 trillion in personal assets, an increase of almost 50% since 2002. Personal assets have grown steadily since 2002, having its largest increase of 11% in 2004 to $22.5 trillion.

Consumer households’ personal assets are dominated by residential real estate assets, accounting for over 80% of assets. Residential real estate assets have been slowly increasing its market share, growing to 85% in 2007 to 81% in 2002. Other personal assets market share has been shifting to residential real estate, loosing 4% of its market share since 2004.

Consumer households have over $4 trillion in other illiquid assets, an increase of over 50% since 2002. Other illiquid assets had its largest increase between 2002 and 2005, growing 33% to $10.4 trillion. Post 2005, other illiquid assets began to slow down, and have remained relatively constant.

Consumer households have over $69 trillion in household assets, an increase of 30% since 2004. Collectively, investable assets, retirement plan assets, personal assets, and other illiquid assets have increased around 50% since 2002, bumping up assets for consumer households to its over $69 trillion. The individual components shares of assets have remained relatively steady with investable assets and personal assets dominating household assets by over two-thirds.

Household Liabilities

Consumer households will continue to increase their liabilities. Consumers have $13.4 trillion of household liabilities, an increase of over 50% since 2002. Consumer liabilities had its largest jump in 2005 to $12.7 trillion or an over 40% increase. Since 2005, consumer liabilities have increased relatively slower than in the past, only growing 6% to $13.4 trillion in 2007.

Consumer households hold much of their liabilities in mortgages, accounting for almost three-fourths of liabilities. Mortgage debt has increased its share of liabilities by 5% since 2002. The gain in 5% by mortgage debt was sourced from consumers using credit for purchases. Since 2002, consumer credit has decreased 5% to its current share of assets at 18%. Other liabilities have remained constant since 2002, only accounting for less than one-tenth of consumer household liabilities.

Household Net Worth

Consumer households have over $56 trillion in net worth, an increase of almost 50% since 2002. Interestingly, liabilities have outgrown assets by a 20% margin, this slowing an increase of household net worth. Consumer household net worth has been increasing at an annual rate of over 8%, experiencing its highest increase in 2003, jumping over 13% to $44 trillion

To better understand the developments in consumer wealth, liquefaction, & the retirement income challenge, executives can purchase Tiburon's Consumer Wealth research report where the key learnings highlighted above are covered in greater detail. Please contact Sarah Sage at SSage@TiburonAdvisors.Com.

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