Wealth Management in Italy 2009
Datamonitor
June 11, 2009 13 Pages - SKU: DFMN2290623
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Countries covered: Italy
Introduction
The country's serious economic issues are having a major effect on Italy's onshore wealthy population, potentially causing them to lose faith in their wealth managers. To keep clients, wealth managers need to know what this lucrative customer wants from them, in terms of products, services and interaction.
Scope- HNW demographic and attitudinal attributes based on our Wealth Management Market Leaders Survey 2009
- Extensive primary research from 20 wealth management companies highlights their strategies for revenue growth, acquiring and keeping clients
- Indepth assessment of how Intesa Sanpaolo's Italian wealth management operations are currently perceived
Highlights
With 28% of their assets held in cash and near cash products, Italian HNWs remain conservatively positioned in the face of economic instability. However, as returns in the lower risk asset classes have all but dried up, there are signs of a shift in the traditionally risk-averse Italian investment sentiment.
Italian wealth managers are successfully appealing to their clients core needs such as personal relationships, financial stability, and investment performance. However, there are a number of areas where weaknesses need to be addressed. One such area is how proactively wealth managers are bringing ideas to clients.
The megamerger looks set to provide Intesa Sanpaolo's wealth management with advantages in the long run, and currently its brand, image and reputation continues to fare well despite the tough climate. Its wealth management offering is seen as particularly impressive at identifying investment opportunities in the downturn.
Reasons to Purchase- Understand the HNW population's investments by sector and geography, 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
- Gain an understanding of the strengths and weaknesses of Intesa Sanpaolo's Italian wealth management operations
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- Overview
- Catalyst
- Summary
- Methodology
- Executive Summary
- Intesa Sanpaolo's wealth management service is undergoing consolidation but is performing well
- Italy continues to be the 'sick man' of Europe
- HNWs are defensively positioned, but their risk appetite is beginning to increase
- Wealth managers in Italy are strong at providing HNWs with core needs
- Table of Contents
- Table of figures
- Table of tables
- Special Feature: Intesa Sanpaolo's wealth management
- The megamerger looks set to provide Intesa Sanpaolo's wealth management with advantages in the long run
- So far Intesa Sanpaolo has weathered the financial storm better than many large financial institutions
- Intesa Sanpaolo is undergoing a dramatic transformation and is both trying to reorganize and cope with the tough economic times
- Intesa Sanpaolo's wealth management operations are also undergoing fundamental changes
- Intesa Sanpaolo's brand, image and reputation continues to fare well despite the tough climate
- Intesa Sanpaolo's wealth management offering is above average on almost all fronts
- Intesa Sanpaolo has been successful at preventing defections, and has good relationship managers
- Intesa Sanpaolo has the opportunity to build on its strengths and address its weaknesses
- Key implications for Intesa Sanpaolo: concentrate on individuality and enhancing service provision
- Key implication for Intesa Sanpaolo's competitors: niche organizations should target areas of current weakness
- Italy's wealth
- Italy has few attractive asset classes at present
- Inflows into deposits continue, but there may be some signs of life returning to the equities markets
- Bonds are becoming less attractive
- Short term interest rate plummets
- Unemployment is on the rise as average real wages fall
- The Italian HNW investor
- Italian HNWs are becoming more tolerant of risk in a quest for returns, but currently remain defensively positioned
- Italian investors are changing their risk appetite, but their understanding of the current conditions is weak
- Wealth management service implication: HNWs need education to attend to structural ignorance
- Innovative example from Switzerland: UBS is investing in educating its clients
- Innovative example from the UK: Baker and McKenzie believe education is equally important for wealth managers due to the changes taking place in the industry at present
- Relationships are important, but loyalty is low
- Wealth management service implication: ensure the organizational structure is geared towards providing the best possible service
- Innovative example from Switzerland: Julius Baer separates into two businesses
- Italian HNW investors are defensively positioned
- Despite an appetite for risk, Italian HNWs are cash heavy and light on equities
- Wealth management service implication: remain aware of clients' specific desires
- Innovative example from the USA: Advisor Software has developed an application which tailors investment solutions to clients' needs
- There will be a shift away from deposits over the next two years
- Wealth management service implication: look abroad for greater opportunities
- Innovative example from Ireland: BNY Mellon launches new emerging markets equities fund
- The Italian HNW has mixed sentiments, looking both for wealth preservation and for profit
- Although they want to find opportunities to profit in the downturn, HNWs retain a tentative streak
- HNWs are demanding a high level of input and advice from their wealth managers
- Auxiliary services, especially tax advice, are also in high demand
- Wealth management implication: offer auxiliary services as a way in which to develop relationships and increase share of wallet
- Innovative example from the UK: Skandia launches tax planning tool
- In two years' time, discretionary asset management and tax advice will be in demand as investors continue to seek guidance from their managers
- Capital protected funds and bonds will be the most popular product category, as HNWs seek greater returns with some security
- Wealth management service implication: be prepared to develop corporate bond products
- Innovative example from Ireland: Smith & Williamson launch a short-dated bond fund
- Proactivity and individuality are key to attracting HNW clients
- Wealth management service implication: be proactive in the wealth management offering
- Data tables
- The Italian wealth manager's view
- Core wealth management provision is good, but this strength could be leveraged to greater effect
- Wealth managers are addressing core requirements successfully
- Despite clients' selection influencers, wealth managers are emphasizing the strengths of their core business to increase share of wallet
- Providing clients with a range of contacts and ensuring professionalism are the best ways to retain HNW investors
- Italian wealth managers keep in regular contact with their clients
- Italian HNWs are more interested in performance than their asset allocations
- Direct equity investment will be the major resource focus in two years' time
- APPENDIX
- Additional survey questions on HNW motivations
- 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
- The UK sub model
- Global sub model (for all other countries)
- Forecasting methodology
- Continuous refinement to the understanding of liquid wealth distribution
- Datamonitor's wealth numbers compared with other wealth numbers
- Definitions
- Western Europe
- Onshore wealth
- Liquid assets
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Wealth managers' views about the strengths and weaknesses of Intesa Sanpaolo's wealth management services on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table 2: Wealth managers' views about the strengths and weaknesses of Intesa Sanpaolo's wealth management services on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table 3: Wealth managers' views about the strengths and weaknesses of Intesa Sanpaolo's wealth management services on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table 4: Intesa Sanpaolo is well regarded by other wealth managers
- Table 5: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table 6: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)
- Table 7: What proportion of your HNWs' portfolios is allocated to the following five asset classes?
- Table 8: HNWs' portfolio allocation now versus in two years' time
- Table 9: What are HNWs demanding today?
- Table 10: In two years' time, how much demand do you expect from HNWs for the following product areas?
- Table 11: What will determine HNWs' choice of wealth management service over the next two years?
- Table 12: HNW motivations when it comes to investment decisions
- Table 13: HNW motivations when it comes to investment decisions
- Table 14: HNW motivations when it comes to investment decisions
- Table 15: HNW motivations when it comes to investment decisions
- Table 16: What are your company's greatest strengths and weaknesses?
- Table 17: What is the most effective means of increasing share of wallet today?
- Table 18: What is the best way to retain clients today?
- Table 19: On average, how often do your relationship managers speak by phone to each HNW client?
- Table 20: On average, how often do your relationship managers speak in person to each HNW client?
- Table 21: When speaking with clients, what do they most want to talk about today?
- Table 22: What product areas will your wealth management service focus most resources on in the next two years?
- List of Figures
- Figure 1: Intesa Sanpaolo's brand image and reputation has survived relatively well in the current crisis
- Figure 2: Intesa Sanpaolo is doing well at indentifying investment opportunities in the downturn
- Figure 3: Intesa Sanpaolo is performing well across the board when it comes to the people in the organization
- Figure 4: The Borsa Italiana has been suffering since 2007
- Figure 5: The outflows from mutual funds continued in 2008, but were slowing by Q3
- Figure 6: Bond yields plummeted in the latter half of 2008 and in to 2009
- Figure 7: The interest rate also took a dive at the end of 2008 and in to 2009
- Figure 8: The labor market has been hit as unemployment is on the rise once more and average real wages are lower
- Figure 9: HNW investors in Italy have a higher risk appetite than the average European HNW investor
- Figure 10: There is a lower risk of HNW clients in Italy leaving to find another wealth manager than the average European HNW investor
- Figure 11: The majority of HNW wealth in Italy is invested in the 'cash or near cash' asset category, with this accounting for 28% of all investments
- Figure 12: In two years' time, holdings in cash and near cash will reduce, while equities and fixed income will increase
- Figure 13: Corporate bonds will increase dramatically over the next two years
- Figure 14: In Italy, HNW investors' greatest demand is for tax advice
- Figure 15: In two years' time, the greatest demand among HNW investors in Italy will be for capital protected funds or bonds, with 80% of HNW investors demanding this category of product
- Figure 16: HNW investors in Italy are most influenced by proactivity in bringing ideas to clients in their choice of wealth manager
- Figure 17: The greatest strength of wealth managers in Italy is their companies' financial stability
- Figure 18: The best way for wealth managers in Italy to increase share of wallet is to convince clients that your company is financially sound
- Figure 19: The best way for wealth managers in Italy to retain HNW investors is to give the client several points of contact within the bank
- Figure 20: In Italy, the wealth management relationship managers speak to clients by phone approximately once a week
- Figure 21: In Italy, wealth management relationship managers speak to clients in person approximately once a month
- Figure 22: The majority of clients in Italy want to speak to their wealth manager about performance of their overall portfolio
- Figure 23: In two years' time, wealth managers in Italy will be focusing most of their resources on direct equity investment
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