Abstract
Introduction
This report focuses on the onshore liquid wealth of affluent individuals and
the liquid assets they hold, sizing, segmenting and forecasting the affluent
population across 10 liquid asset bands. It also presents detailed HNW
demographic and decision trigger analysis, and strategies to drive revenue
growth based on large scale survey of the main players.
Scope of this research
- HNW demographic and attitudinal attributes based on our Wealth Management
Market Leaders Survey 2009
- Extensive primary research from 20 wealth management companies highlights
thier strategies for revenue growth, acquiring and keeping clients
- Aggregated data covers onshore liquid assets including cash and deposits,
mutual funds, direct investment in equities and direct investment in bonds.
- Discusses the changing wealth management competitor landscape
Research and analysis highlights
French banks have so far been less affected by the economic downturn than less
conservative nations, but HNW sentiment has worsened. Opportunities will arise
for those in a position to take advantage of them, but opinion is divided over
which type of wealth manager will fare best over the next few years.
At present there is an increased demand for discretionary wealth management
among French HNWs. This comes despite confidence in and loyalty to wealth
managers being at its lowest. Some HNWs wish to partake in execution only
management, but are unwilling to do so in the current market conditions.
French wealth managers are primarily concerned with the quality of their
service. This is congruent with the high importance placed on personal
relationships by French HNWs and their higher than average demand for face to
face relationship management.
Key reasons to purchase this research
- Understand the HNW population' s investments by sector and geography, and
see how innovative products/services have capitalized on these trends
- Understand the HNW population' s appetite for risk, and reasons for
choosing/leaving their wealth service
- Assess the threats and opportunities for wealth managers by understanding
how peers are planning to grow revenues, acquire and keep clients
Table of Contents
OVERVIEW
- Catalyst
- Summary
- Methodology
EXECUTIVE SUMMARY
- The change in French wealth management landscape has been more one of
sentiment than structure
- Poor equity performance, a falling real estate market and lower bond
yields mean that growth in France' s wealthy population has suffered badly
- The French HNW individuals are knowledgeable, risk averse and less loyal
than ever before
- Wealth managers in France believe service quality is good, but need to do
more to keep clients in poor market conditions
SPECIAL FEATURE: IMPACT OF THE CRISIS ON THE FRENCH WEALTH MANAGEMENT LANDSCAPE
- The change in wealth management landscape will be less extreme than in
other European countries; big players will continue to dominate the market
- French banks have been less affected by the economic downturn, but HNW
sentiment has worsened
- There will be opportunities for large wealth managers, but HNWs are
frustrated with some aspects of their service
- French wealth managers do not know what to make of nationalized banks
- Opinion is divided over which type of wealth manager will fare best over
the next few years
- Data Tables
FRANCE' S WEALTH
- Unattractive market conditions in most asset classes mean France' s wealthy
population must take on more risk if they want a return
- Base interest rate cuts, lower bond yields and increasing per capita
debt are decreasing France' s wealth
- French investors, like those across the developed world, suffered badly
from poor returns in equity investments
- Bond yields have fallen drastically and are no longer attractive
- France' s property investment sector is suffering
- French investors continue the shift into deposits
- The Wealth Data in 2009
THE FRENCH HNW INVESTOR
- French clients remain knowledgeable and risk averse, but market conditions
have made them far less loyal
- French HNWs have a good knowledge of financial products and shy away
from risk
- Wealth management service implication: focus on being seen as a firm
whose primary investment aim is the low risk preservation of wealth
- Innovative Solution: Take heed of the market positioning of shariah law
compliant funds
- Personal relationships remain all-important, but the wealth management
landscape has changed
- Wealth Management service implication: understand and cater to the needs
of the individual so that the added value is obvious
- Innovative Example: Leverage platforms that will increase the knowledge
about individual clients
- French HNW portfolio allocations will change drastically over the next two
years
- French HNWs are still heavily invested in property but have left fixed
income products
- Wealth management service implication: be proactive in advising clients
over how to allocate their portfolio, and understand clients' desires
- Innovative example: Pyxis mobile is providing a complete mobile
communications interface to allow wealth managers to contact their clients
while on the move
- Over the next two years, the increase in deposits will continue, and
there will be a large outflow from property
- Wealth management service implication: Look to capitalise on changes to
market players' reputations through innovative marketing campaigns and
investment opportunities
- Innovative example: HSBC is rebranding in order to take market share
from its competition
- The French HNW is more concerned about asset preservation and positioning
for the upturn than on profiting in the downturn
- At present a product must be simple, transparent and retain its value
well
- Wealth management service implication: wealth managers must look to
develop simple, transparent products to preserve their clients' wealth
- Innovative example: iShares has launched a range of exchange traded
funds (ETFs)
- In two years' time, close ended property funds will be in demand as
investors will look to get back into real estate
- Wealth management service implication: look to capitalize at the start
of the upturn by developing innovative products, especially in real estate
- Innovative example - ASK set up a new Indian real estate fund to tap
into pent up demand
- Service quality and investment performance are the most important
criteria for selecting a wealth manager
- Wealth management service implication: offer other features to increase
service quality
- Innovative solution: Hayden Wealth provide a financial planning service
alongside its wealth management offering
THE FRENCH WEALTH MANAGER' S VIEW
- French Wealth managers have suffered a blow to their reputations, but they
perceive their quality of service to be high
- French wealth managers believe their greatest strengths lie in the
quality of their service and the personal relationships they have with their
clients
- Leveraging the use of CRM and offering financial planning are the best
ways to increase the share of a client' s wallet
- Being proactive and professional is key to retaining clients
- French wealth managers contact their clients less frequently than their
European peers
- Despite it being extremely important to clients, French wealth managers
speak to their clients less than the average European wealth manager
- Specific asset performance and investment opportunities are what most
clients want to discuss
- Money market funds are the most important resource focus due to the
harsh economic environment
APPENDIX
- The drivers of growth in the wealthy population
- Income growth (combined with inflation, changes in GDP by sector,
household savings rates and debt levels)
- Investment returns (market capitalization, interest rates and bond
yields)
- The following measures are not, in themselves, drivers of wealthy
population growth
- Market capitalization
- GDP
- The following measures are not drivers of wealthy population growth except
under very restricted circumstances
- Primary residence value growth
- Inheritance
- Methodology
- Wealth Management Market Leaders Survey 2009
- Global Wealth Model
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
TABLES
- Table: To what extent do you agree with the following? (1 = strongly
disagree, 2 = somewhat disagree, 3 = somewhat agree, 4 = strongly agree)
- Table: To what extent do you agree with the following? (1 = strongly
disagree, 2 = somewhat disagree, 3 = somewhat agree, 4 = strongly agree)
- Table: To what extent do you agree with the following, %
- Table: Household savings rate and retail debt outstanding per adult, % and
USD
- Table: Level of long term interest rate, %
- Table: Year-on-year stock exchange performances, %
- Table: Year-on-year net inflows into asset classes, EURbn
- Table: HNW attributes on a scale of 1 to 4 (risk appetite and knowledge)
(1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat
low, 3 = somewhat high, 4 = very high)
- Table: What proportion of your HNWs' portfolios is allocated to the
following five asset classes?
- Table: HNWs' portfolio allocation now versus in 2 years time
- Table: What are HNWs demanding today?
- Table: In 2 years' time, how much demand do you expect from HNWs for the
following product areas?
- Table: What do you find most influences the provider selection of HNWs?
- Table: HNW motivations when it comes to investment decisions, %
- Table: HNW motivations when it comes to investment decisions, %
- Table: HNW motivations when it comes to investment decisions, %
- Table: HNW motivations when it comes to investment decisions, %
- Table: What are the greatest strengths and weaknesses of your company
today?
- Table: What is the most effective means of increasing share of wallet
today?
- Table: What is the best way to retain clients today?
- Table: On average, how often do your relationship managers speak by phone
to each HNW client?
- Table: On average, how often do your relationship managers speak in person
to each HNW client?
- Table: When speaking with clients, what do they most want to talk about
today?
- Table: What product areas will your wealth management service focus most
resources on in the next 2 years?
FIGURES
- Figure: Wealth managers in France think that large wealth managers will
have the best opportunities in the next few years
- Figure: The view of wealth managers is that nationalized and part
nationalized banks will attract good relationship managers because they are
financially secure
- Figure: Both large and small wealth managers have their competitive
advantages
- Figure: Debt levels in France continue their increase
- Figure: Long-term interest rates are declining slowly after a high in 2007
- Figure: Stock markets around the world collapsed
- Figure: Outflows are seen in all asset classes apart from deposits
- Figure: HNW investors in France have a higher risk appetite than the
average European HNW investor
- Figure: There is a greater risk of HNW clients in France leaving to find
another wealth manager than the average European HNW investor
- Figure: The majority of HNW wealth in France is invested in the ' equities'
asset category, with this accounting for 24% of all investments
- Figure: In 2 years' time the majority of HNW wealth in France will be
invested in the ' cash or near cash' asset category with this accounting for
26% of all investments
- Figure: In France, HNW investors' greatest demand is for simple,
transparent investments
- Figure: In 2 years time, the greatest demand amongst HNW investors in
France will be for closed ended property funds with 22% of HNW investors
demanding this category of product
- Figure: Product demand will alter noticeably over the next two years
- Figure: HNW investors in France are most influenced by service quality in
their choice of Wealth Manager
- Figure: The greatest strength of Wealth Managers in France is their
quality of service
- Figure: The best way for Wealth Managers in France to increase share of
wallet is to offer financial planning
- Figure: The best way for Wealth Mangers in France to retain HNW investors
is to make sure all problems are resolved quickly and completely
- Figure: In France the Wealth Management relationship managers speak to
clients by phone approximately once a week
- Figure: In the Wealth Management relationship managers speak to in person
to clients approximately once a quarter
- Figure: The majority of clients in France want to speak to their wealth
manager about performance of specific asset classes within their portfolio
- Figure: Wealth managers in France will be focusing most of their resources
on money market funds in 2 years time
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