Justin and Jared break down the key insights from UBS’s Global Wealth Report. We look at how wealth is growing across different demographics, why median wealth in the U.S. is outpacing other countries, and what the rise in everyday millionaires really means. We also dig into unique factors driving this trend, including equity ownership and mineral rights, and what they mean for oil and gas professionals. Finally, we connect the dots between wealth distribution, consumer behavior, and economic resilience, giving you practical takeaways to strengthen your financial planning and investment strategy.

For more information and show notes visit: https://www.bwmplanning.com/post/111

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional

Welcome to Financial Planning for Oil and Gas Professionals, hosted by certified financial planners Justin Brownlee and Jared Machen of Brownlee Wealth Management, the only podcast dedicated to those of you in the oil and gas profession to help you optimize investments, lower future taxes, and grow your wealth.

Learn more and subscribe today @brownlee wealth management.com.

Welcome back to another episode of FPONG Financial Planning for Oil and Gas Professionals.

This week on the podcast, we're going to unpack UBS's Global Wealth Report.

They have this big meaty PDF about the nature of wealth around the globe.

We're going to talk about some of our favorite charts.

We're going to talk about some of the second order effects, and then also, of course, what do we think it means for oil and gas professionals?

Justin, before we get into it, surprise segment.

Okay, question for you.

You don't know what's coming.

Here we go.

Brownlee Wealth Management turns six this month.

So I'm curious for you.

As I reflect on the last six years and think about how much we've accomplished, how much better it's gone than we've expected, I'm curious for you, is there anything that you did or maybe focused on at the beginning that didn't matter as much as you thought it would, or anything you didn't focus on that mattered way more than you thought it would?

You know what I mean?

What did you over or underestimate related to our business?

Jared that's a tough question.

If I go back six years ago to the beginning, I do remember being overwhelmed, just inundated.

I'd put it this way, in my prior job.

So I'm a director at a much, much larger investment firm.

And when you're at a giant company, the infrastructure of your day at work, you don't really realize that there are 50 or 60 little things that they've taken care of, they've thought of.

Someone has set up the phone, someone has set up the Internet, someone set up the utilities, the 12 different softwares that you use.

Someone vetted and compared all of those softwares to all of the competitors and they integrated it into your system.

And so I remember being consumed with, well, which softwares should we use?

What should the kind of stack of different necessary service items look like?

And I think that probably matters less than I thought it would because in the first few months of setting things up, you're just consumed with that.

And then, Jared, there are some things that you and I really thought pretty, pretty deeply with this business, and we were pretty bullish on the idea of having a significantly lower client per advisor count.

And so it's pretty common for, I mean, if you have 5, 10 million or 100 million or 500,000 or any amount of money, any amount of money that you're handing to an investment firm, that's a big deal.

And you're, you're likely paying them a lot of money.

And so the typical firm, and this is true of, I would say, over 95% of firms where money is held in America today, you're typically in a situation where you're one of hundreds of clients for your advisor.

And so there's not a lot of proactive planning.

You're not always calling the number and getting a human to answer the phone or respond to your email quickly.

And those are things that you and I were very bullish on.

We wanted to change that.

We wanted to be significantly more proactive rather than reactive.

And I think the other thing is just having a fee structure that makes sense.

Vast majority of firms still charge 1% a year.

You hand them $5 million, they're going to charge you maybe a little discount, but still 40, $45,000 a year.

And our premise was that we should have a fee structure that makes a lot more sense.

It should be a fixed fee structure.

And so I think we were bullish on those things, and we couldn't be bullish enough.

Those mattered even more than we could have ever imagined, which has been fun.

And I think that's a big reason for our growth.

But I think that's my answer.

That's a good question.

Love it.

Cliff Notes.

Lean into your special sauce, whatever it is.

Yes, awesome.

Well, for our small but mighty YouTube following, we're going to have pictures of all these charts in the video.

So if you're not a YouTube video, you're not a YouTube watcher.

That might be a good place to catch this episode.

Of course, we'll link to it and of course include attachments of all the graphs we talk about.

Justin, let's go to one of my favorite, one of the more interesting charts in here.

There's so many good ones.

This one is on page four.

And it looks at average.

So.

And I would call this the post Covid bump.

It looks at.

And it looks at average, average wealth and it looks at median wealth.

And a couple of interesting things here.

US wasn't even in the top 10.

It was the 13th fastest grower for average wealth.

And for Median wealth, it was the best performer by a country mile.

And I'm kind of, I'm kind of surprised that we weren't in the top 10 for median because, like, it just kind of astounds me, you know, American excellence.

But I think this is a message of good news, right?

Like, I think if average were growing faster, that would mean the wealth is growing, but it's not really it.

That means the rich are getting richer, right?

The wealth isn't really being evenly distributed.

So, you know, the fact that the U.S. economy, you know, oh, and also these numbers are all net of inflation, but the fact that the United States grew wealth in excess of 40% net of inflation from the median, that's remarkable.

That means these gains are being realized across a bunch of different income and net worth rungs.

So that's bullish.

I have a couple theories as to why that is, but what do you think we can attribute that to?

I think first and foremost, like you said, Jared, this is a really big deal.

What it means is that every segment of US wealth is advancing.

So it's not a situation where people with $5 billion now have $35 billion.

And that accounts for all of the growth in American wealth.

Incredible statistics.

Incredible amounts of people advancing into the millionaire category, advancing into the 5 to 10 million, the 20 million plus, and in the hundreds of millions and billions.

So every facet, every level of American wealth is advancing and growing.

And just as encouraging as each level growing, maybe more encouraging, the velocity of new money in America continues to be astounding.

So the amount of people that are coming from nothing and reaching those levels is, it's, it's very encouraging and it really just reinforces, you know, something that, that we've talked about before.

America is the greatest place in the world to build wealth.

And I've got a couple of other thoughts as to why this is.

But Jared, I'd love to hear your thoughts.

Yeah, I mean, I think a couple of theories as to why the US has performed so much better.

I think we have institutionalized equity ownership.

Right.

There's a chart on page 41 that looks at the wealth allocation by country and it looks at five, five different representative markets, looks at United States, Switzerland, Singapore, UK and Australia.

And the percentage of equity ownership for us is the highest of any of those countries.

In that representative sample, it's 37% and the next highest is 20%.

Wow.

We have institutionalized equity ownership.

And the best way to comp, you know, one of the best ways to compound your wealth is to Own assets and companies that grow future earnings.

Right.

It's really that simple.

And with 401k plans and different retirement plans and the rise of digital brokerage, it's easier than ever to own equities.

And we just have a culture of ownership.

I also think equity returns matter.

The US has trounced other countries in terms of the performance of their equity markets over the last five years.

Over an emerging markets, a developed markets equivalent, the US market has just.

We have higher participation in the stock market and we've had a really run in the stock market the past four years.

That's right.

Jared, we've said this idea before and I feel like every time I talk about it I have to give a disclaimer that this sounds like the stupidest, most ignorant, just elementary level idea.

And it's so simple that it really does almost sound stupid.

Your investment convictions, your investment philosophy better include as a foundational point the idea that asset prices are probably going up over time.

So if one of your foundational convictions as an investor is that asset prices are probably going up, that sounds very simple, but it helps avoid pitfalls.

Jared, how often have you heard people say, well, I'm waiting for a pullback or the idea what goes up must come down?

No, that's not true at all.

Over the long haul, I mean, over any amount of time, asset prices typically go up.

So your investment philosophy better start with the idea that I need to be an owner of assets.

If you are banking on there being a bubble, if you are banking on there being a pullback, well, at some point in time that's going to be right.

Sure.

But your ability to take advantage of that is extremely limited, especially if we're talking about an incredibly efficient market that is public equities.

And frankly, other markets are also becoming quite efficient as well.

So really, whatever the asset is, your investment philosophy needs to really have this thought that frankly, I should be an owner.

I should be an owner at all times and I should not be trying to get in and out at the right time.

By and large that needs to be a foundational principle that you adhere to.

Yeah, I mean, but this, this has me encouraged.

Right.

If you look at this chart, most countries had acute like growth in average and median.

Right.

But the gains just wasn't evenly distributed.

Right.

But most countries wealth is growing and in America the median is growing, which makes me super bullish.

Justin, I.

One other thing that we didn't mention that I think could play a factor in this.

The United States is kind of one of A few countries that has allowed private ownership of minerals.

Right.

If you look at most countries, those are nationalized.

Those are like a national resource.

And you can really only just own the surface.

And so I think that idea, especially as we record this podcast from Texas in Fort Worth, like, I think about the downstream consequences if we were like other countries in that way.

Yes.

So, you know, especially for oil and gas listeners that are very aware of that reality, I think.

I think that also matters and it materially, if you think about the economic footprint of energy, Jared, there are a.

Few things that stick out to me.

If I am trying to answer, why is America doing so well?

Why is American wealth growing at the velocity it is?

I think the first thing I point to is something you just mentioned, and there's two parts to it.

One is institutionalizing ownership of great companies.

I think there's a couple of things in history that have just exploded that idea.

The first 401k didn't happen until the early 80s.

There wasn't mass adoption until the late 80s, 90s.

But then the second thing is the creation of the Roth IRA.

And it is, frankly, Jared, it's easy.

Even if you have no ownership in your company at all, it is easy to automate the investment of tens of thousands of dollars a year into great companies.

And so you just mentioned the US Has a culture we own.

American citizens own significantly more assets in the stock market than most other countries.

That's a big deal.

But then the other point that you just mentioned, mineral rights, that's a.

It's an enormous deal.

The second and third order effects of hundreds of years of enormous wealth that we're talking about private wealth in the hands of citizens with mineral rights, that is a huge economic force.

Jared, I also think there's something.

Part of me wonders, is some of this a culture thing too?

America typically works significantly longer hours than other countries.

I was pretty blown away.

About a year, six months or a year ago, Scott Galloway was giving data on just income demographics across the US and he pointed out that Mississippi has one of the lowest incomes in the entire US but he then pointed out that if Mississippi was able to kind of relocate or if this was like a college football conference realignment, if Mississippi realigned to Europe, they would have one of the highest incomes in all of Europe.

And so that's a pretty big deal.

And then I also think there's just a culture of deciding that we are going to be a business friendly country and regulations that support that.

And obviously we hope that that continues in the coming decades.

The Amalfi coast, the Gulf coast, either way, economically similar.

That's right.

Wow.

Think about that.

Okay.

All right, next chart I want to talk about.

This one's on page 28 and I think this is a really important one.

So looking at a longer period of time and 10 so the offer, all adults on average wealth compounded at 3.4%.

For people with 10K to 100K, it was 2%.

For 100K to a million, it was 3%.

Greater than 1 million 4.7%, 1 to 5 million 6.1% and greater than 5 million 8.2%.

I think this idea is so important.

Right.

So the higher rungs are growing their wealth at a higher rate than the lower rungs.

But I think the implication for this is inflation is not evenly distributed.

Right.

Like, like if I have $5 million and there's a lifestyle assumed with $5 million and my peer group is growing their wealth at 8%, I think inflation's gonna run hotter than the core CPI headline that we're getting.

Right.

Cause there's two things.

One, that demographics, wealth is growing faster than other demographics.

And two, there's economic mobility.

So people are entering that rung.

Yes.

Right.

And so like a lot of, okay, CPI is down to 2.4%.

Great.

If we looked at spending for a family and we said, oh, hey, you have a country club membership.

How much has that inflated over the past 10 years?

You're looking at, oh, I have season tickets to a Rangers game.

How much has that inflated over the last 20 years?

Oh, I take a trip to Europe and I fly business class.

How much has that inflated?

Right.

A lot of those things that don't come through in the cpi.

I think just this idea of inflation not being evenly distributed is really just interesting to understand because you might see headlines of, oh, inflation is coming down.

But if your economic stratosphere is growing wealth faster than inflation, A, you have to keep your wealth growing and B, your inflation might run a little hotter as demand for these assets grows over time.

Jared, I think it's good news and bad news.

The good news, and there's projections in this UBS report for significantly more millionaires over the next five years.

I agree.

I think that is going to take place.

Now, what's interesting.

So the good news is when you are surrounded by a lot of wealth, it is much easier to become wealthy yourself.

And so it's a heck of a lot easier to build a wonderful career and build long term meaningful wealth if you plant yourself in Houston, Texas, relative to a random small town in Europe.

Right.

So it's just significantly easier to build a great career and build wealth if you plant yourself in a place that has a lot of money, velocity, wealth growth.

The bad news, Jared, that also means that some of those items you mentioned are going to be way more expensive.

So I saw in the news recently, Soho House is going private.

I believe so they just reached a deal.

They were a publicly traded company, now they're going private.

Now I'm going to premise this.

I don't know much about Soho House.

I It's apparently a private club started in New York City.

They don't have a golf course.

So I don't really understand exactly what the exclusive private offering they have is.

But it was, I here's loosely what I know.

It was a very exciting, exclusive private club of sorts.

And then it fell way off because their membership like 100x way more people joined.

And then as a result, it's harder to get the same experience when everyone's in.

But guess what, Jared, Every working white collar job in New York City can find the discretionary income to join.

So that's what happened there.

It's like, well, if everyone got a significant raise, some of those lifestyle things you're excited about, like business class to Europe, the price of all of those is going up because everyone can afford them now.

Yeah.

And I think that just like again, it's not a scarcity mentality where like, oh, they're like, you know, it's not this finite thing.

I think everybody wins.

Like you said, a rising tide lifts all boats.

But it is this idea that I think inflation's going to run hotter in different segments of the market.

And I think the idea of a K shaped recovery.

So there's the initial decline and then some things come back well, and other things don't come back well.

I think like that will also become a reality.

Right.

Like one of the awesome things about having so many wealthy people, there's a baseline amount of spending in the economy, it will continue to chug along.

If the stock market's down 20%, you have $8 million instead of $10 million.

How much is your discretionary expenses day to day?

Actually changing?

Probably not much.

Probably not much.

And larger spenders and higher net worth people are a big part of the economic engine.

So I think it makes us more resilient.

And so it's not all bad news.

I do think it's just fascinating and something to be aware of.

You know, Jared, you wrote in your notes, housing means very different things to people in different wealth rungs.

We've talked about this idea before.

And purchasing that same house today, if you are, you know, let's say you're 28 and so you kind of miss that boat.

Well, that's, that's a lot harder.

And so there's good news and bad news about how much wealth has grown.

Yeah, let's talk about Emily's or.

I don't know how they, that's E M I L L I is how they refer to them in this document.

But on page 37 they're looking at everyday millionaires or what I would, what we would like to call more aptly millionaires next door.

And like that's not that long.

That's like less, that's like a quarter.

Like it's less than a quarter century.

And that number has quadrupled.

Justin, what do you think of the takeaways from like, that's just a mind blowing statistic.

But like, is that a good thing?

Is that a bad thing?

What do you think it means for our listeners?

Okay, Jared, first thing is I don't think we need to create a term for everything.

A millie is a comically bad term.

Just say everyday millionaire.

And so I don't think we need to conjure up terms for everything.

Now first, this is an incredibly good thing.

So the amount of everyday millionaires has just increased to an unbelievable degree.

Jared, I'm going to take it a step further.

We've talked about this in our office a lot over the past two years.

I don't think anyone has complete data on this.

There is no way that there is an institution that has strong enough data to fully, completely aggregate.

Okay, this family has 401 s at these two different institutions, brokerage accounts at these three different institutions.

But then they're also married, so their spouse has these assets.

Jared, just think about private Businesses, think about small businesses.

There is no possible way to accurately gauge how much are these millions of small businesses worth.

And so I firmly believe the end result of this is reports just like this one.

This is a great report and I'm glad we're doing a podcast on it.

Jared, I firmly believe this wildly underestimates the amount of wealth and wealth growth in America.

Yeah, I totally agree.

But man, I think, dude, I think this is a good thing.

I, I'll link to this in show notes.

But like, like they're not too long ago, the, the narrative was there is a looming retirement crisis.

Longevity is increasing.

People are retiring at a really fast clip.

Like, oh no, what's going to happen?

All of our systems are going to break.

Yep.

And like, you know, there's this Barron's article that says how to fix the global retirement crisis.

And it's like this is the best way to counteract that.

People having the financial wherewithal to provide for themselves well into old age.

That's right.

Right.

And so like I think like that helps with that.

Again, we're talking about, you know, America and like some higher net worth demographic people and a small percentage of the population, but a meaningful percentage of the population.

So I think this is just like a, in general, like a really thing and it helps with what we're talking about related to the global retirement crisis.

The productivity gains that could be harvested from technology.

We're kind of getting a second wave of that.

So I mean all of those things are bullish, but that number quadrupling in the last 20 years is an insane number to me.

And I think that can't help but leave you encouraged.

I think so much of the news can make you feel pessimistic, like the world is going to crap.

Things are, you know, this generation has the worst of any generation.

In some ways, yes.

But also in some ways, you know, it's never been a better time to try to make a name for yourself and build financial independence.

That's right, Jared.

We've also seen in the past two years.

We'll go back to your question at the beginning of this podcast.

So we started the firm six years ago.

A lot of the premise of what we were trying to build was that if you retire from an oil and gas company, you don't need to be an executive to retire with three to five million dollars.

Well, Jared, what we've seen is a lot of folks have, have really reached 8 to 10 million, 10 to 15 million.

And they are also not, not executives and not close to executives at these large companies.

So the result of this, why is this happening?

Well, it's pretty simple.

And so every year that passes, Jared, we are seeing the fruit, the result of, well, what does a 60 year old now today have given the fact that they were contributing four times the amount in their first five years as someone who retired 10 years ago.

And so it's an encouraging picture.

Yeah.

Final chart I want to show, page 21 shows the number of millionaires and United States there at the top 23.8 million millionaires is higher than the next nine countries combined.

And Justin, we've already talked about some of the reasons that is and kind of why we're bullish in the idea of don't bet against America.

But it does have me thinking about kind of one of the downstream second order effects of this.

I think there's an arbitrage to making your money in America and spending it elsewhere or thinking about where do I go where there's less density.

Right.

A great example of this, there's an article we'll link to and it compares taking your family of four to ski in Europe versus America.

And they're actually making an economic case that it could be cheaper to do that.

Right.

Like the Dolomites, which are just breathtaking, breathtaking mountain range in Italy.

Right.

Like there's this interesting idea to be had of like hey, if you know, and also if you think about that number of millionaires, there's places where it's concentrated.

So if you think about the idea of kind of what we were talking about of inflation not being evenly distributed, it's not evenly distributed against income rungs.

But also it's not even.

Or wealth rungs.

It's also not evenly distributed geographically.

Right.

The higher density, you know, if you're one of the.

My brother lives in a town called Louisville, Mississippi and there are I think 6,000 people in there.

I don't know the number of millionaires.

But if I made a million dollars a year and I lived there versus Fort Worth, I could have a drastically different lifestyle because, you know, the dense, the millionaire density is way lower.

Right.

So I do think it's this kind of interesting idea of like, you know, thinking about, hey, where do you want to be and what's really important to you?

And is there any kind of value arbitrage that can be had by going to a Wichita, a St. Louis, a smaller town in Mississippi?

Again, don't upend your life for it.

But it is kind of an interesting thought exercise of, hey, if you're very cost conscious, how do you, you know, how do you increase the value of, of, you know, your wealth?

Jared, I have seen people say this each of the past five years with ski season, but the data you've compiled here is so interesting.

I mean, a ski trip in the Dolomites is about a third as, as expensive as Aspen.

Now, does the beer flow like wine in the Dolomites?

I don't know.

And what, and what is that beer flowing like wine worth?

Maybe, maybe that's the premium you're paying.

And again, it's more, it's more disruptive.

And again, once you adjust for flights, it's closer.

But that it's even an equation says a lot.

Yeah, but it gets back to the idea.

The number of millionaires in Italy is, as a percentage of the population, substantially lower in America.

So it's kind of what they can get away with.

So, Justin, I think a good place to wrap up is.

Man, I think no one knows anything, right?

Like, in summary, like, we're going into uncharted territory.

We've never seen these level of wealth before and we didn't even talk about wealth transfer.

Right.

Like, but I think that you have.

Can I say one thing about wealth transfer before we wrap up?

I'm going to try to keep this to 30 seconds so we will share some of this data again.

So take a look at the show notes Jared.

Some of the data on people's feelings about inheriting wealth are shocking.

So 80% of their research did not know the extent of the wealth that they would inherit.

And then one third really claimed to be totally lost.

They had no idea they knew they were inheriting some significant wealth, but they had no idea where accounts are located, a basic overview of what they were getting.

They had no idea how to get it.

So I do think that is a common theme.

If you have significant wealth that you're going to pass down to children or if you are the child and you know you're going to inherit something, a very common theme is we don't know what's going on or how this is going to take place.

So interesting.

There's a huge wealth transfer that's already started and is going to continue.

A lot of uncertainty, a lot of just lack of confidence for both parties.

Yeah.

But I mean, it's kind of like investing in the market at all time highs.

The market generally makes all time highs.

Right.

Right.

So like, so getting pessimistic isn't really a good call to action there.

It's like continuing to own assets.

Right.

Is just a great strategy.

I think it's also interesting there's not one mention of crypto in this whole thing.

Right.

So like, I think there's something to be said about the wealth building recipe is own securities, own businesses.

Right.

It's not really own real estate.

It's not even own crypto.

It's simple.

Right.

And I think the other final takeaway is think about, you know, value arbitrage and what's, what's important to you and your family and where can you get good mileage out of your money?

Justin, anything else you'd add before we wrap up?

I feel personally attacked for how much money I spent in California.

I think that's probably a bad place to get that arbitrage.

But it was so much fun.

But that's the thing, right?

Like knowledge is power and it's, you know, choose your own adventure.

Right?

Right.

And for you as a family is like, okay, is skiing important?

Is California important?

Justin and I, at some point we'll need to debate the merits of California versus Europe because he seems to think he has no need to go to Europe.

That's my, I'm, I'm pretty bullish on California.

So yeah, someone, someone talked me out of it.

Awesome.

Well, that's a good spot to wrap it up.

Of course, you know, go, go to our website and you can look at show notes, all the charts we discussed.

Also, love hearing from our listeners podcast@brownleewealthmanagement.com thanks, we'll see you next time.

Thanks for listening to this episode of the podcast.

You can subscribe or connect with us at brownlee wealth management.com or send ideas for future episodes to podcastrownleewealthmanagement.com thanks and we'll see you next time.

This podcast is for informational purposes only.

Nothing discussed during this show or episode should be viewed as investment, legal and tax advice.

If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.