Just 11 per cent of households control nearly three-quarters of the UK’s investment wealth, a report from financial services consultancy Ethos Partners has found.
The inaugural Ethos Atlas report found 3.2mn wealthy households control £3.9tn in investment assets, while 18.7mn households, representing 65 per cent of the population, hold just 2 per cent.
Ethos argued its research exposes a “dramatic wealth barbell” effect that has accelerated since the 2008 financial crisis, with the pandemic disproportionately benefiting higher-earning households.
The report also detailed how this inequality has changed since the 2008 crisis, pointing out that the housing boom and strong stock market growth over the past 30 years has favoured those with high incomes and existing wealth.
Meanwhile, lower GDP growth, decline in real wages, and high inflation has left the average house with lower disposable income.
We’re seeing mainstream adoption of cryptocurrency as a legitimate asset class and portfolio diversification tool
The study specified that households aged 55 and over control 60 per cent of total investment assets, with those over 65 holding £1.7tn, representing 30 per cent of all UK household investment wealth.
This concentration is set to increase further through 2050 due to the impact of compounding on large pools of investment assets.
Ethos managing partner, Penney Frohling, argued the traditional concept of “retirement” is becoming obsolete for many households.
“We’re seeing 1mn self-employed self-employed over 60, a 33 per cent increase in a decade, with 20 per cent of them over 70,” she explained.
Investment types
Additionally, the report revealed 12 per cent of UK adults now hold cryptocurrency — virtually matching the 13 per cent who use stock and shares Isas.
Half of crypto holders cite portfolio diversification as their primary motivation, challenging assumptions about speculative trading.
“This isn’t just about young people gambling on digital assets,” Ethos Atlas co-author, Martin Windle, explained.
“We’re seeing mainstream adoption of cryptocurrency as a legitimate asset class and portfolio diversification tool”.
Despite this surge in cryptocurrency investment, property remains the largest asset class at £5.6tn, representing 43 per cent of onshore wealth.
The report also pointed out that, despite market volatility, cash has “consistently” represented 30 per cent of industry assets under management since 1995.
However, it identified £1.2tn sitting in instant-access accounts as a potentially “fertile hunting ground” for equity investment, but argued caution is required given cash’s position as the “cornerstone” asset class in all household portfolios.
tom.dunstan@ft.com
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