Wealth Management in the Nordic Region 2006

Published by: Datamonitor

Published: Aug. 1, 2006 - 95 Pages

Table of Contents

EXECUTIVE SUMMARY

Introduction

Wealthy clients in the Nordic region

Competition for wealthy customers

Products and distribution

INTRODUCTION

What is this report about?

Who is the target reader?

How to use this report

Note to readers

CHAPTER 1 WEALTHY CLIENTS IN THE NORDIC REGION

Introduction

Key findings

The Nordic region represents an attractive market for onshore wealth management

There are more than 2,400,000 wealthy individuals in the Nordic region today

Nordic wealthy individuals hold more than EUR400bn in onshore liquid assets

The Nordic wealth market will grow to EUR615bn by 2010

Entrepreneurs represent biggest opportunity in the Nordic region

The majority of clients put less than 10% of their portfolio offshore

The main motivation for investors to put their assets offshore is tax avoidance

Luxembourg and Switzerland are preferred offshore centers among Nordics

Clients in the Nordic region are demanding a high level of service, influenced by personal relationships

Personal relationship is the number one determinant of choice of wealth manager in the Nordic region

Referrals from existing clients is the number one customer acquisition technique

However, attracting clients does not mean keeping them: clients are more likely to change their wealth manager today than they were two years ago

Clients are demanding to know more about their investments because asset protection is their main concern

Quick problem solving and providing services for clients' families are the best ways to retain clients

Failure to understand client needs and lack of proactive advice are the most likely reasons to leave a wealth manager

The majority of clients in the Nordic region have only one wealth manager

Wealth managers should try to increase clients' share of wallet

Nordic clients tend to have long-term relationships with their wealth managers

Supplementary data

CHAPTER 2 COMPETITION FOR WEALTHY CUSTOMERS

Introduction

Key findings

Wealth management in the Nordic region is concentrated and dominated by domestic providers

Nordea, SEB and Danske Bank are perceived by their peers to be the largest wealth managers in the Nordic region

Nordea

SEB

Danske Bank

DnB NOR

FöreningsSparbanken

Handelsbanken

OKO Bank

Sydbank

Carnegie

Hagstromer & Qviberg

Jyske Bank

Kaupthing Bank

Other Competitors

Minimum investment thresholds vary among wealth managers

Nordic wealth managers are most concerned about competition from domestic players

It is not only wealth managers that are taking business away from each other

The main competitors will remain the same over the next years

Wealth managers in the Nordic region are concentrating on getting more clients and increasing share of clients' wallets

Despite the additional costs, wealth managers think new clients will drive revenue

Increasing share of wallet will come through offering financial planning, more face to face contact and open architecture

Marketing/branding push and improving CRM & support systems are the main strategic initiatives planned

IT and CRM system costs are the main concern in controlling cost bases

Wealth managers in the Nordic region tend to organize their business around a key relationship manager, but few specialize in key client segments

32% of wealth managers in the Nordic region give their clients a single point of contact

Almost half of Nordic wealth managers have dedicated teams organized around customer groups

Most relationship managers are measured by revenue and client satisfaction rate

New relationship managers will come mostly by hiring them from other wealth managers

Supplementary data

CHAPTER 3 PRODUCTS AND DISTRIBUTION

Introduction

Key findings

Alternative investments have most business potential while wealth managers miss out on possible revenue from lending

Alternative investments, financial planning, and tax planning and advice have the most business potential in the Nordic region

And there is only moderate interest in lending, general insurance, and foreign exchange

Wealth managers will focus on alternative investments, traditional investements, and financial planning the next two years

Most wealth managers are missing a significant opportunity to generate revenue from their lending capabilities

Nordic wealth managers are interested in developing new distribution approaches/channels

A majority of wealth managers in the Nordic region will be focusing on developing new distribution approaches/channels

Financial advisors are an important distribution channel in Nordic wealth management, but they tend to be employed by banks

Supplementary data

APPENDIX

Definitions

Aggregate

CAGR

High net worth (HNW)

Liquid assets

Liquid asset bands

Mass affluent

Research methodology

Wealth Management Market Leaders Survey 2006

Euromoney Private Banking Survey

Global Wealth Model Methodology

The UK sub model

European sub model

Forecasting methodology

Continuous refinement to the understanding of liquid wealth distribution

Datamonitor's wealth numbers compared with other wealth numbers

Further reading

Global Wealth Management SPP

Interactive Databases

Market Reports

Strategic Insight Reports

Wealth Management Competitor Tracker

Datamonitor Asia Pacific Wealth Management SPP

SPP writing team

List of Tables

Table 1: Nordic number of MA and HNW individuals by liquid asset band, 000s, 2001-2005

Table 2: Nordic MA and HNW aggregate liquid assets by liquid asset band, EURbn, 2001-2005

Table 3: Forecasted Nordic number of MA and HNW individuals by liquid asset band, 000s, 2006-10

Table 4: Forecasted Nordic MA and HNW aggregate liquid assets by liquid asset band, EURbn, 2006-10

Table 5: What client types offer the greatest potential in your country in the next five years?

Table 6: In your opinion, what proportion of liquid assets do investors in your country put offshore?

Table 7: What is the main motivation for investors in your country to put money offshore?

Table 8: In your opinion, where do investors from your country prefer to put their offshore money?

Table 9: In your experience, what are the key influences that determine a client's choice of wealth management service?

Table 10: In your experience, what are the most effective customer acquisition techniques in your market?

Table 11: To what extent do you agree with the following?

Table 12: What are your clients most interested today?

Table 13: What is the best way to retain clients?

Table 14: In your experience, what are the most likely reasons for clients to leave a wealth management service?

Table 15: Which statement do you most agree with?

Table 16: Approximately what share of your clients' wallet do you think you have on average?

Table 17: How long has your client base, on average, been with you?

Table 18: In your opinion, who are the biggest wealth managers in your country?

Table 19: Ranking of Nordic wealth managers based on assets under management by year end 2005

Table 20: What is your minimum asset threshold for new clients?

Table 21: What are the most pressing concerns for your business at present?

Table 22: How much of a threat to your wealth business are the following competitors today?

Table 23: How much of a threat to your wealth business will the following competitors be in three years?

Table 24: What will most determine revenue growth in your market in the next two years?

Table 25: What is the most effective means of increasing share of wallet?

Table 26: What strategic initiatives are you planning or implementing in the next year?

Table 27: What are your main areas of concern in controlling your cost base?

Table 28: Which best applies to your company's relationship management?

Table 29: Do you have dedicated teams set up in your country to attract and manage any of the following customer groups?

Table 30: What quantitative measures are used to assess your relationship managers?

Table 31: Where will you get your staff from in the next three years?

Table 32: Please rate the following product areas in terms of their business potential among wealthy clients in your market during the next two years

Table 33: From the product areas just mentioned, which three will your company focus most resources on in the next two years?

Table 34: How important are the following distribution channels for your wealth business today?

Table 35: To what extent do you agree with the following?

List of Figures

Figure 1: The number of mass affluent and HNW individuals has grown steadily since 2002

Figure 2: Liquid wealth of Nordic mass affluent and HNW individuals amounted to more than EUR400bn in 2005

Figure 3: The Nordic mass affluent and HNW market will reach EUR615bn by 2010

Figure 4: Datamonitor forecasts steady growth in almost all asset bands in the next 5 years

Figure 5: Entrepreneurs offer the greatest potential in the next five years

Figure 6: The majority of clients put less than 10% of assets offshore

Figure 7: Avoiding taxes is the main motivation for investors to put their money offshore

Figure 8: Luxembourg and Switzerland are preferred offshore centers among Nordic investors

Figure 9: Personal relationship and service quality are key influences that determine a client's choice of wealth management service

Figure 10: Word of mouth is the most effective client acquisition technique in the Nordic region

Figure 11: Clients are demanding more contact and more information about the management of their portfolio

Figure 12: Wealth managers' clients are most interested in protecting their current asset base

Figure 13: The best way to retain clients are quick problem solving and providing services for their family too

Figure 14: Failure to understand client needs is the most likely reason for Nordics to leave their wealth manager

Figure 15: More than 50% of respondents state that they are the main wealth manager for most of their client base

Figure 16: Wealth managers should concentrate on gaining a bigger share of clients' wallets

Figure 17: 85% of Nordic wealth managers state that their client base has been with them for more than five years, on average.

Figure 18: Nordea, SEB and Danske Bank are perceived to be the biggest wealth managers in the Nordic region

Figure 19: The wealth management market in the Nordic region is dominated by domestic providers

Figure 20: Nordic wealth managers apply different minimum investment thresholds, varying from EUR 100k to EUR 3.5m

Figure 21: Nordic wealth managers are most concerned about increased competition from domestic players

Figure 22: Large wealth managers are perceived as strongest competitors

Figure 23: The main competitors will remain the same over the next three years

Figure 24: Obtaining new clients and increasing share of wallet will most determine revenue growth in the next two years

Figure 25: Offering financial planning is the most effective way of increasing share of wallet

Figure 26: Wealth managers will focus on marketing/branding push and improving CRM & support systems in the next year

Figure 27: IT and CRM system costs are the main concern in controlling cost bases

Figure 28: A third of all wealth managers give their clients a single point of contact

Figure 29: Only a few wealth managers have dedicated teams set up to target and attract specific customer groups

Figure 30: Most relationship managers in the Nordic region are measured by revenue and client satisfaction rate

Figure 31: New relationship managers will come mostly by hiring them from competitors

Figure 32: The biggest business potential lies in Alternative investments

Figure 33: Lending products are perceived to have less business potential

Figure 34: Wealth managers will focus on Alternative investments, Traditional investments, and Tax planning and advice in the next two years

Figure 35: More than 50% of Nordic wealth managers plan to develop new distribution approaches/channels in the next year

Figure 36: Financial advisors are seen as important distribution channel for wealth business today

Figure 37: Financial advisors will remain an important distribution channel for Nordic wealth managers

Abstract

• Sizing and forecasting of mass affluent and high net worth individuals from 2001-2010, generated from Datamonitor's proprietary Global Wealth Model
• Data presented for 10 liquid asset bands, from EUR50K-75K to EUR3m+ for Denmark, Finland, Norway and Sweden
• 20 Nordic wealth managers were surveyed during Datamonitor's Wealth Management Market Leaders Survey 2006
• Survey questions covered business and product/service development, client trends and attitudes, and general market issues

• Assess market attractiveness by reviewing size and growth forecasts up to 2010
• Improve client service through a greater awareness of their attitudes and concerns
• Assess the threats and opportunities for wealth managers in the market

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