London-based wealth-management research firm thinks Capgemini has it wrong. The wealth-management industry has an inflated sense of its market, according to a the Scorpio Partnership, a London-based wealth-management consultancy.

Scorpio says the industry's benchmark report on the high-net-worth market, Capgemini's World Wealth Report, exaggerates the size of the market by including assets that wealth managers can't reach such as property and private equity.

Off by a mile

Individuals and families with at least $1 million in "financial assets" held, collectively, $37.2 trillion in 2006, says Capgemini, which produces its annual wealth report in association with Merrill Lynch.

Capgemini measures global wealth by taking national statistics and adjusting them against national market indexes. It counts private-equity holdings stated at book value as well as cash deposits and all publicly quoted equities, bonds and funds. It excludes collectibles, consumables, consumer durables and real estate used for primary residences.

Scorpio, which bases its findings on data from 400 wealth-management firms, says the amount of "bankable" global private-wealth assets was actually $24.4 trillion in 2006.

"As much as $12.8 trillion of total high-net-worth assets cannot be managed by private banks," says Scorpio, referring its quibble with the Capgemini figure.

Scorpio also sees the global private-wealth assets growing to $35.5 trillion by 2011. The corresponding figure out of Capgemini is $51.6 trillion.

Narrow view

To be clear, by "private bank" Scorpio means any big financial-service firm with a private-client focus. In this view, Citi Smith Barney is a private bank -- or part of one anyway. And by Scorpio's definition, "bankable" assets are those that are strictly on deposit or under management.

Scorpio has a point about Capgemini, but it's tenuous. If you hive off private equity and non-residential real estate and go strictly by what private banks or wealth-management entities tell you they actually touch, then you'll undoubtedly arrive at a smaller figure than one based on an attempt to achieve a more inclusive view.

And there's a point to trying to look beyond "bankable" assets. Put simply, some wealth managers think they're doing a better job of helping clients manage their holdings, risks, liquidity when they're doing it in the context of their total wealth. (In that sense, there's an argument to made for including collectibles -- think of net worth locked up in antique cars, yachts and wine cellars.)

In other words, Capgemini's bigger number comes closer to reflecting a holistic approach to wealth management; Scorpio's narrower view is -- well, just that. -FWR

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