Nomura Research Institute, Ltd. (NRI: Tokyo, Japan; Akihisa Fujinuma, Chairman and President, CEO & COO) has estimated the size of Japan’s personal asset management market as classified by the amount of net financial assets owned in 2007, and projected the size of the inheritance market up through 2025.

In estimating the size of the market, NRI classified it by the amount of net financial assets owned, such as savings and deposits, equities, bonds, investment trusts, single-premium insurance/annuities, etc. (debts are deducted), into five segments of HNWIs (high net worth individuals), affluent, mass affluent, upper mass retail and mass retail. This estimate revealed that the size (the number of applicable households and the amount of financial assets owned) of the affluent and HNWI markets consisting of households holding net financial assets worth \100 million or more was 903,000 households and \254 trillion as of 2007 (Figure 1).

The size of the affluent and HNWI markets as of 2005, which was announced in 2006, was 865,000 households and \213 trillion, meaning that the market size has been expanding over the past two years. This increase in the number of applicable households and in net financial assets is considered chiefly attributable to the fact that stock prices continued to increase from 2003 to midyear 2007.

Since 2005, because real estate prices have increased principally in the three major urban areas of Tokyo, Osaka and Nagoya, there have been moves among people in the affluent and HNWI segments who own real estate in these areas to sell these holdings to obtain financial assets. Accordingly, the increase in land prices has also caused the number of applicable households and the amount of financial assets owned to increase.

NRI also projected the inheritance market up through 2025 (Figure 2). The number of heirs is expected to increase from 840,000 in 2007 to one million in 2015, and the total amount inherited such as real estate and financial assets will increase from \85 trillion in 2007 to \102 trillion in 2015.

Because most personal financial assets and real estate are owned by seniors, the inheritance market will continue to expand with the aging of the population pyramid in the future.

With the increase in the number of people in the affluent and HNWI segments and the transfer of assets to the next generation through inheritance, a major change is expected to occur in the thinking of Japanese people about the management of financial assets and real estate. For example, financial assets held by the newly emerged affluent and HNWI segments and those inherited by the next generation are likely to lead to a shift from “savings to investments” to effectively utilize personal financial assets in Japan. Financial institutions are required to develop products/services that meet these market changes.

In the future, NRI will continue to analyze trends in the affluent and HNWI markets, and propose appropriate businesses targeting affluent customers of financial institutions.

	The upper row of each segment indicates the amount of financial assets and the lower row indicates the number of applicable households
	Figures for 2007 are estimated by NRI based on the Annual Statistics Report (2006) of the National Tax Agency, Vital Statistics (2006) of the Ministry of Heath, Labour and Welfare, Household Projections for Japan (March 2008) of the National Institute of Population and Social Security Research, National Survey of Family Income and Expenditure (2004) of the Ministry of Internal Affairs and Communications, and Survey of 10,000 Consumers (2006) by NRI.
	Figures for 1997, 2000 and 2003 are estimates made in 2004, and those for 2005 are estimates made in 2006.

Figures are estimated by NRI based on the Vital Statistics (2007) of the Ministry of Heath, Labour and Welfare and Population Projections (2007) of the Ministry of Internal Affairs and Communications in addition to the statistics used for Figure 1 above.