Abstract
The high net worth market remains as attractive as ever, but is difficult to define, as lines are blurred among the types of money management firms. Major themes in this report include:
- The rich are getting richer, and the wealth market is projected to grow considerably over the next five years
- Individuals at all wealth levels tend to consider themselves financially savvy-only about a third to half of millionaires have a financial advisor
- Money management firms are extending their reach, catering to a broader based clientele, but may be sacrificing distinctiveness in the marketplace
- Across all wealth levels, banks are a preferred place for doing business
- New wealth markets, including women and Hispanics, offer considerable opportunity but must be approached with highly customized offerings
In this report, Mintel examines current trends and opportunities for firms and financial advisors servicing affluent, high net worth and ultra high net worth individuals. The report provides an overview of how firms are approaching this market and what factors are important to investors when selecting a firm. Also extensively analyzed are consumer attitudes toward financial institutions and their preferences among various types of firms, shedding light on how consumers differentiate among different organizations.
Table of Contents
- Scope and Themes
- What you need to know
- Scope of this report
- Abbreviations and terms
- Abbreviations
- Terms
- Executive Summary
- Major industry trends and recommendations
- Financial firms need to seek differentiation
- Distribution planning
- Consumers want to diversify investments--not consolidate
- The newest high net worth groups to pursue--Hispanics and women
- Consumer perceptions of financial institutions
- Industry overview
- Market Drivers
- Wealthy investors have increased access to financial information
- Figure 1: proportion of respondents who believe they are very good at managing money, September 2007
- Need for retirement planning
- Figure 2: Percentage of clients' assets controlled by financial planner, before and after discussion of retirement planning, 2007
- Competition for capturing asset transfers and rollovers continues to grow
- Figure 3: How pre-retirees and retirees communicate with financial institutions, 2007
- New wealth markets -- wealthy Hispanics
- New wealth markets -- wealthy women
- Figure 4: Source of wealth for women, 2007
- Figure 5: Top characteristics sought in a wealth advisor by women, 2007
- Figure 6: Individuals with whom women have discussed wealth and wealth transfer, 2007
- How are the wealthy planning their legacies?
- Figure 7: Prevalence of wealthy investors having wills, by age segment, January 2007
- Figure 8: How inheritance was typically spent by wealthy investors (multiple responses allowed), January 2007
- Legacy planning for business owners
- Heavy competition in the media
- The wealthy and education
- Market Size
- Size of the global wealth market
- Figure 9: Millionaire households: The top five countries, 2006
- Size of the U.S. wealth market
- Figure 10: U.S. household wealth, 2007
- Figure 11: Number of millionaire households 2001-06
- Figure 12: Counties with the most millionaire households, 2006
- Employment status of wealthy investors
- Figure 13: Retirement status of millionaires, January 2007
- The Wealth Managers
- Who is managing global wealth?
- Figure 14: Top 10 global wealth managers, 2007
- Who is managing U.S. wealth?
- Figure 15: Top 25 wealth managers in the U.S., 2007
- What are the wealthy investing in?
- Different levels of wealth: different levels of interest in specific
investments
- Figure 16: Level of interest among wealthy investors in certain investments, by investable assets, 2007
- Where do the wealthy get financial information?
- Figure 17: Percent of millionaires consulting source for investment information, January 2007
- Risk tolerance among wealthy investors
- Figure 18: Risk tolerance total market and by investable assets, January 2007
- Overall Investment strategies of wealthy investors
- Figure 19: Portfolio asset allocation of wealthy investors, January 2007
- Differences in investment strategies among wealthy investors: impact of
age and level of wealth
- Figure 20: Investment strategy, January 2007
- Investment goals: do they differ by age?
- Figure 21: Percentage citing top investment goal, by age, January 2007
- Investment in alternatives: Which investors are interested?
- Figure 22: Current use of alternative investments, by type of wealth management firm, 2007
- Figure 23: Why alternatives are being used or considered, 2007
- Investment in separate accounts
- Figure 24: Net cash flow comparison separate accounts vs. mutual fund advisory, Q3 2006-Q2 2007
- What are the preferred provider channels for wealthy investors?
- Figure 25: Primary provider channel (company with largest portion of investments), January 2007
- Figure 26: Preferred investment providers, by age, September 2007
- Figure 27: Preferred retirement savings providers, September 2007
- What factors influence the choice of primary providers among wealthy
investors?
- Figure 28: Top reasons for beginning relationship with primary provider, January 2007
- What financial events have impacted wealthy investors lately?
- Figure 29: Top financial events in the past year, January 2007
- Competitive Landscape--The Customers
- Distinguishing characteristics of the "Ultra" wealthy
- North American Ultra Affluent:
- European Ultra Affluent:
- Latin American Ultra Affluent:
- Middle Eastern Ultra Affluent:
- Asia Pacific Ultra Affluent:
- Competitive Landscape--Institutional Products and Services
- What wealth management firms currently provide and plan to provide
- Figure 30: Non-investment financial services currently provided/will be providing in three years, 2007
- Emergence of new retirement-oriented products
- Developments in Separately Managed Accounts
- Developments in Unified Managed Accounts
- Competitive Landscape--RIAs, Financial Planners and Brokers
- Developments among Registered Investment Advisors (RIAs)
- Figure 31: Client selection considerations, top RIA firms, top small firms vs. all small firms, 2007
- Figure 32: Time spent with clients, top firms vs. all firms, 2007
- Use of advisors and financial planners
- Figure 33: Top five financial decisions, rated very important, 2007
- Figure 34: Top three reasons for using a financial planner
- Figure 35: Top three reasons for not using a financial planner
- Figure 36: Orientation toward advice, 2005 and 2006
- Figure 37: Primary advisor for investments, 2005 and 2006
- Figure 38: Types of advice received in past 12 months, 2005 and 2006
- Use of brokers
- Figure 39: Type of financial institution respondents prefer, September 2007
- Figure 40: Preferred provider for retirement savings, 2007
- Financial Firms Need to Differentiate
- Are banks, brokerage firms, and mutual fund companies all alike?
- Figure 41: Preferred HNW financial institution, by gender, September 2007
- Figure 42: Degree of differentiation between financial institutions, September 2007
- Figure 43: Degree of differentiation between financial institutions, September 2007
- Figure 44: Degree of differentiation between financial institutions, September 2007
- Are banks, brokerage firms, and mutual fund companies all alike?--by
race/ethnicity
- Figure 45: Differentiation between financial institutions, by race/ethnicity, September 2007
- Investor Preferences: Where to Invest
- Earned money
- Figure 46: Financial Institution at which respondents would rather invest their money, September 2007
- Figure 47: Financial Institution at which respondents would rather invest their money, September 2007
- Retirement savings
- Figure 48: Financial Institution at which respondents would rather invest their retirement savings, by gender, September 2007
- Figure 49: Financial Institution at which respondents would rather invest their retirement savings, by income, September 2007
- Savings accounts vs. investment accounts
- Figure 50: Financial Institution at which respondents would rather invest their standard savings, by gender, September 2007
- Banks still get the checking accounts
- Figure 51: Preferences for transactions accounts, by gender, September 2007
- Figure 52: Preferences for transactions accounts, by age, September 2007
- Large sums and inheritance
- Figure 53: Preferred institution for inherited money, by gender, September 2007
- Figure 54: Preferred institution for inherited money, by age, September 2007
- Figure 55: Preferred institution for inherited money, by income, September 2007
- Is there a difference in trust between independent advisors and
banks/brokerage firms?
- Figure 56: Trust in advisors vs. banks and brokerage firms, all respondents with any amount of assets, by gender, September 2007
- Figure 57: Trust in advisors vs banks and brokerage firms, by HNW investors by age, September 2007
- Figure 58: Trust in banks vs brokerage firms, by income, September 2007
- Investor Preferences: Where to Invest--by Race/Ethnicity
- Money
- Figure 59: Preference for investing money, by race/ethnicity group, September 2007
- Retirement savings
- Figure 60: Preference for retirement savings, by race/ethnicity, September 2007
- Savings accounts vs. investment accounts
- Figure 61: Preference for savings and investment accounts, by race/ethnicity, september 2007
- Banks still get the checking accounts
- Figure 62: Preference for having checking accounts at banks, by race/ethnicity, September 2007
- Financial windfalls
- Figure 63: Preferred investement for lottery money, by race ethnicity, September 2007
- Inheritance
- Figure 64: Preferences for investsting inherited money, by race/ethnicity, September 2007
- Trust in banks vs. brokerage firms
- Figure 65: Trust in banks vs. brokerage firms, by race/ethnicity, September 2007
- Independent advisors vs. banks and brokerages
- Figure 66: Trust in advisors vs. banks and brokerage firms, by race/ethnicity, September 2007
- Consumer Scoring of Financial Institutions
- How financial firms are viewed in general
- Which firms are viewed as most prestigious?
- Figure 67: Wealth management providers described as "best overall," by household income of respondent, February 2006
- Customer service not always superior
- Perceived attributes of financial institutions: Familiar
- Figure 68: Perceived attributes of financial institutions by HNW and all respondents, by gender: "Familiar", September 2007
- Perceived attributes of financial institutions: Knowledgeable
- Figure 69: Perceived attributes of financial institutions by HNW and all respondents: "Knowledgeable", September 2007
- Figure 70: Rankings of wealth management providers described as "knowledgeable," February 2006
- Perceived attributes of financial institutions: Safe
- Figure 71: Perceived attributes of financial institutions by HNW and all respondents, by gender: "safe", September 2007
- Perceptions of financial institutions: Reliable
- Figure 72: Perceived attributes of financial institutions by HNW and all respondents, by gender: "reliable", September 2007
- Perceptions of financial institutions: Unique
- Figure 73: Perceived attributes of financial institutions by HNW and all respondents, by gender: "unique", September 2007
- Perceptions of financial institutions: Expensive
- Figure 74: Perceived attributes of financial institutions by HNW and all respondents, by gender: "expensive", September 2007
- Perceptions of financial institutions: Convenient
- Figure 75: Perceived attributes of financial institutions by HNW respondents, by gender: "convenient", September 2007
- Future Trends and Forecast
- Multi-family offices may grow
- Potential emergence of structured products
- More "Concierge Services"
- Separately Managed Accounts will become more creative
- Hedge funds of funds will target wealthy
- Increasing emphasis on retirement management
- Growing markets of wealth
- Market forecast
- Millionaire households
- Figure 76: Forecast of total U.S. millionaire households, 2006-11
- Appendix: Advertising and Promotion
- Wachovia
- Figure 77: Wachovia Wealth Management print ad, focus on investment expertise, 2007
- Figure 78: Wachovia Wealth Management print ad, focus on investors needs, 2007
- U.S. Trust, Bank of America Private Wealth Management
- Figure 79: Bank of America/U.S. Trust print ad, focus on trust, 2007
- Figure 80: Bank of America/U.S. Trust print ad, focus on partnership, 2007
- Northern Trust
- Figure 81: Northern Trust print ad, focus on client contentment, 2007
- UBS
- Figure 82: UBS print ad, focus on personal attention (You & Us), 2007
- Figure 83: UBS print ad, focus on global expertise and goals of the client, 2007
- Bessemer Trust
- Figure 84: Bessemer Trust print ad, focus on its independence and stability, 2007
- Bank of New York/Mellon
- Smith Barney
- Barclays
- Appendix: General Investor Attitudes
- Shopping for the best deal
- Figure 85: Investor feels they always shop for the best deal in financial services, by gender, September 2007
- Figure 86: Investor feels they always shop for the best deal in financial services, by age, September 2007
- Figure 87: Investor feels they always shop for the best deal in financial services, by income, September 2007
- Feeling financially secure
- Figure 88: Investor feels they are financially secure, by gender, September 2007
- Figure 90: Investor feels they are financially secure, by age, September 2007
- Figure 91: Investor feels they are financially secure, by age, September 2007
- Being careful with money
- Figure 92: Investor feels they are careful with money, by gender, September 2007
- Figure 93: Investor feels they are careful with money, by age, September 2007
- Figure 94: Investor feels they are careful with money, by income, September 2007
- Company ethics
- Figure 95: Investor feels that company ethics are important, by gender, September 2007
- Figure 96: Investor feels that company ethics are important, by gender, September 2007
- Figure 97: Investor feels that company ethics are important, by income, September 2007
