Super-rich ranks growing again

MARKET misery may be cutting into membership of Britain's Millionaires Club, but their numbers will rebound and top 100,000 for the first time by 2006, it is claimed today.

Meanwhile, the seriously rich are as well off as ever. They are increasingly bringing their loot onshore, tempted by low tax rates, more 'wealth managers' and freedom from an ever-tightening anti-money laundering net that the US is throwing over tax havens.

Last year's stock market falls, and the hi-tech wipe out in particular, cut the number of millionaires from 69,600 to 68,700 according to research firm Datamonitor, which classes a millionaire as someone with more than £1m in liquid assets.

Between them, the remaining millionaires hold about £108.5bn in liquid assets. Millionaires who work for their money fared worse than those who inherited it, but worst hit of all were people with between £ 100,000 and £250,000 in liquid assets.

The richer people are, the more likely they are to have seen it all before, so they insulate themselves from market falls by diversification and alternative investment vehicles - a lesson sadly missed by first-time millionaire Derek Trotter in TV's Only Fools and Horses. Having eventually achieved that elusive millionaire status, Del Boy soon found himself back to square one thanks to a stock market crash.

It is the very rich who will do most to drive the market up, piling in their cash when they sniff recovery. Most of the extra 30,000 or so extra millionaires that the return of the good times will create are to come from the self-made and the elderly, says Datamonitor's £1995 report UK High Net Worth Customers. The next big thing in wealth management is 'the Muslim effect', where there is a 'huge' gap because few UK financial institutions bother with Sharia-compliant equity and mortgage products. Sharia, Muslim religious law, forbids financial transactions that can be classed as usurious.

'There is a huge well of UK Muslim money waiting in cash to be pumped into equities once the right products become available,' said Datamonitor global wealth analyst Nicholas Stephens.

There are about 1.75m Muslims here, nearly 3% of Britain's 60m population. Based on the number of Muslims registered at UK mosques, that would suggest a market for Islamic-friendly savings and investments of getting on for 400,000. This could mean more than 5,000 wealthy individuals, with liquid assets of £3.6bn.

But there is a big gap in wealth management for millionaires of any and no faith who live outside London, for few private banks have a presence there.

The 'unquestioning devotion' of the rich to one private bank is on the way out and they do not take to online-only wealth management,