US loses strength as a private wealth magnet while Canada holds its own

Mehdi Kadiri, Managing Partner and Head of North America at Henley & Partners

The United States has plummeted to 6th place in the Top 10 countries globally in terms of net inflows and outflows of millionaires projected for 2022, according to the forecast high-net-worth-individual (HNWI) figures published by Henley & Partners in the Henley Global Citizens Report, which tracks private wealth and investment migration trends across the globe.  

How does the US HNWI rank globally?

The largest wealth market in the world by some margin, accounting for 32% of total global private wealth and 36% of the world’s millionaires (HNWIs with wealth of USD 1 million or more), the United States is still forecast to attract more HNWIs than it loses to emigration.

A net inflow of 1,500 is projected for 2022, but this is a staggering 86% drop from 2019 levels, which saw a net inflow of 10,800 millionaires. Canada is 9th in the top 10 globally in terms of projected net high-net-worth-individual inflows for 2022, with a net plus 1,000 millionaires expected — a drop of 55% compared to 2019 when the net inflow was 2,200.

What were the findings of Henley & Partner’s study?

The Q2 report released by international residence and citizenship by investment advisory company Henley & Partners exclusively features the latest projected 2022 net inflows and outflows of millionaires (namely, the difference between the number of high-net-worth-individual (HNWIs) who relocate to and the number who emigrate from a country) by New World Wealth, highlighting the top 10 countries in terms of both net inflows and net outflows.

Spike in demand from US nationals for investment migration options

Commenting on the geopolitics of millionaire migration in the Henley Global Citizens Report, award-winning journalist Misha Glenny says private wealth growth is bound to remain anemic in the US this year as political unpredictability looms. “In November, the mid-term elections are likely to return a Republican House and possibly the Senate, too,” Glenny commented.

“With culture wars between Democrats and Republicans mounting with the leaked decision of the Supreme Court to overturn the Roe vs. Wade ruling, some fear we are entering another period of dramatic instability such as that which characterized the Trump years. As a result, some HNWIs will doubtless think twice before committing their wealth to the Americas.”

Although Indian nationals topped the charts for the number of residence and citizenship by investment program enquiries received by the firm over the last quarter, US citizens were next in line, following American growth figures of 208% in 2020 and a further 26% in 2021.

US HNWI growth rate dwarfed compared to emerging economies

Mehdi Kadiri, Managing Partner and Head of North America at Henley & Partners, stated that the US remains one of the world’s largest consumers of investment migration programs.

“The number of applications we received in Q1 was significantly higher than numbers we processed pre-pandemic, like 2018 or 2019. There has been a paradigm shift in how citizens of highly developed countries like the US perceive the risk mitigation and optionality value of a portfolio of alternative residences and citizenships in multiple jurisdictions,” Kadiri said.

In terms of forecast HNWI growth over the next decade, the Henley Private Wealth Migration Dashboard predicts that the number of dollar millionaires and billionaires will increase by only 20% in the US, compared to emerging economies in Africa like Mauritius, Uganda, and Nigeria, which are forecast to grow by between 40% and 80%. India’s HNWI growth is also projected to be 80% by 2031, while Sri Lanka’s growth projection is a remarkable 90%.

How does Canada’s HNWI rank globally?

Canada offers several pathways to permanent residence and is the second most popular investment migration destination in terms of global web enquiries in 2022 (after Portugal) in the world. Canada also ranks 8th on the 2022 list of the world’s 10 wealthiest countries by ‘total wealth’ (the W10), with an average net worth of USD 164,360 per capita.

Yannick Archambault, Partner and National Leader of the KPMG Family Office in Canada, said the country has always been a popular destination for citizens. “Canada offers a high quality of life, a safe, politically stable environment, and a world-renowned education system.”

“Canada is also recognized for its commitment to human rights and inclusive, multicultural society — which provides a welcoming environment to those from diverse backgrounds.”

“Given these advantages, Canada is forecast to see a 30% increase in its HNWI population over the next decade. This segment of the population brings fresh ideas, new businesses and personal wealth that help bolster economic growth and investment in Canada,” Yannick said.

Why Canada is more popular compared to the US

Andrew Amoils, Head of Research at New World Wealth, says the US is notably less popular among migrating millionaires than in its heyday, perhaps owing to the looming prospect of higher taxes, and rising crime rates in the big cities. “Traditionally, most millionaires who move to the US are in the entertainment, financial services, and technology sectors.”

“Many successful tech entrepreneurs move to America, and hotspot Silicon Valley, to take their firms to the next level. America has seen significant internal migration of high-net-worth individuals over the past five years. They have flocked to destinations like Austin, Greenwich, and Palm Beach, while big cities like Chicago, LA, and New York have been losing millionaires.”

Matthias Ribback, who manages multi-asset portfolios for US clients of Vontobel Swiss Wealth Advisors AG, said “High inflation has become a trending topic among investors, central bankers, and even politicians hoping for their re-election. The YoY increase in the United States Consumer Price Index (CPI) as of April has been 8.3%, a level not seen in decades.”