US High Net Worths 2006

Published by: Datamonitor

Published: Aug. 24, 2006 - 70 Pages

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Market context

Competitive Dynamics

The Future Decoded

CHAPTER 2 INTRODUCTION

What is this report about?

Who is the target reader?

How to use this report

CHAPTER 3 MARKET CONTEXT

Introduction

Key findings

Just over 20% of the U.S. population is classed as a mass affluent or high net worth investor

There were 14 million HNW individuals in the US in 2005

HNW individuals in the US controlled USD12,717bn in liquid onshore assets in 2005

The US high net worth market now exceeds the levels attained before the market downturn of 2001

The number of high net worth individuals in the US has grown by 18% between 2001 and 2005

The assets held by US high net worths have grown by 23.2% between 2001 and 2005

Regional income distribution in the US varies significantly

New Hampshire, New Jersey & Maryland are the richest U.S. states

Data tables

CHAPTER 4 COMPETITIVE DYNAMICS

Introduction

Key findings

There are few key competitors in the US HNW market

Smaller competitors have developed a number of strategies to differentiate themselves

Competitor Profile: Citigroup Private Bank

Citigroup Private Bank is the first company to bring banking, insurance & investment services to U.S. clients under one umbrella

Competitor Profile: UBS Wealth Management

UBS positions itself as the world's leading wealth management firm

Competitor Profile: Merrill Lynch

Merrill Lynch has client assets totaling USD1.8tn

Competitor Profile: JP Morgan

JP Morgan is one of the leading financial services firms in the world, with offices in more than 50 countries

Market Issues

Regulation had a high impact on competitors in the US HNW market in 2005

Rule 202 a burden on some banks in the U.S. high net worth market

Sarbanes-Oxley Act has placed considerable strain on regulatory compliance and resources in the U.S. high net worth market

The Patriot Act has added to the regulatory strain placed on U.S. wealth management firms

Mergers, acquisitions and consolidation activity was low in 2005

Structured products were popular among US HNW clients in 2005, although the way a firm approaches these products is vital to their success

Tax reductions have stimulated investment market participation

Acquiring and retaining quality staff continued to be an issue for many competitors

There has been more of a focus on client service rather than product innovation in the U.S. high net worth market

Lack of scalability is preventing banks from reaching the very richest clients

70% of high net worth households in the U.S. are looking at alternative assets such as hedge funds

CHAPTER 5 THE FUTURE DECODED

Introduction

Key findings

The number of HNW individuals in the US is set to increase by roughly 34% by 2010

Assets held by US HNWs will grow to USD19.2bn over the next five years

Giving investors access to global investments will affect the market most over the short term

Investors may begin to shift to the bigger weath management firms

World Wealth Report shows that investors are looking to amplify their global holdings

U.S. high net worths on average, allocate more than three quarters of their portfolios to domestic holdings

Firms will increasingly have to provide a comprehensive wealth management service

US wealth management firms anticipate increasing strength of internet-based and independent firms over the coming year

The U.S. high net worth industry will see increased consolidation over the next few years

U.S. private banking market expected to be hugely profitable over the next decade

Leveraging links with communities, marketing to new sectors and building a network of experts identified as key challenges for the U.S. wealth market

The "Baby Boomer" population is expected to be a rich source of future revenue for U.S. wealth management firms

Data tables

APPENDIX

Definitions

CAGR

Mass Affluent

High net worth (HNW)

Liquid assets

Liquid asset bands

Research methodology

Further Reading

Global Wealth Management SPP

Interactive Databases

Market Reports

Strategic Insight Reports

Wealth Management Competitor Tracker

Datamonitor Asia Pacific Wealth Management SPP

Datamonitor's Global Wealth Model

The UK sub model

Forecasting methodology

SPP writing team

List of Tables

Table 1: US: Number of mass affluent and high net worth individuals, segmented by asset band, USD, 2001 - 2005

Table 2: US: value of aggregate liquid wealth, segmented by asset band, USD, 2001-2005

Table 3: US: value of aggregate liquid wealth, segmented by asset band, USD, 2001-2005

Table 4: Three-year average median household income by state, 2002-2004

Table 5: US: Forecast number of mass affluent and high net worth individuals, segmented by asset band, USD, 2006 - 2010

Table 6: US: forecast value of aggregate liquid wealth, segmented by asset band, USD, 2006-2010

List of Figures

Figure 1: The highest levels of liquid wealth among high net worth individuals are to be found in the highest and lowest asset bands

Figure 2: The number of U.S. high net worth individuals is expected to grow by nearly 50% over the next five years

Figure 3: Over half of American high net worth individuals have between USD300-500k in liquid assets

Figure 4: The highest levels of liquid wealth among high net worth individuals are to be found in the highest and lowest asset bands

Figure 5: The vast majority of U.S. high net worth individuals have held liquid wealth in the lowest two asset bands since 2001

Figure 6: U.S. high net worth individuals have in general held the most liquid wealth in the highest and lowest asset bands since 2001

Figure 7: Households in New Hampshire, New Jersey and Maryland have the highest median income averaged over three years, 2002-2004

Figure 8: The number of U.S. high net worth individuals is expected to grow by nearly 50% over the next five years

Figure 9: Liquid assets held by high net worth individuals in the U.S. is expected to grow by nearly 50% over the next five years

Abstract

As in many markets, the past few years have been a testing time for US wealth managers as both personal wealth and the resulting revenues have been hit by the global downturn and the bursting of the tech bubble. Since 2003 however, the situation has improved and this report examines the recent developments both in terms of market growth and competition to provide an insight into this key market.

• Sizes and forecasts the number and aggregate onshore liquid assets of high net worth individuals in the US from 2001-2010 across five asset bands
• Identifies the key competitors for those services and analyses the current competitive environment in the US
• Utilizes Datamonitor's proprietary Global Wealth Model and in-depth interviews with senior executives from some of the top US wealth managers

High net worth individuals hold 66% of the total mass affluent and high net worth liquid wealth in the US. The highest levels of liquid wealth were in the highest USD10m+ and lowest USD300k USD400k asset bands, which represented 14% and 15% of total high net worth liquid assets respectively.

Granting U.S. investors access to global markets is going to be the most prominent issue for the next few years, according to industry experts. Investors will begin to demand investment products that grant them international exposure, so as to take advantage of growth opportunities in growing markets such as India or China.

Assets held by high net worth individuals in the U.S. will grow by 37% over the next five years, from USD14bn to USD19.2bn. The highest two asset bands, USD4m 10m and USD10m+ will constitute just over a quarter of all liquid wealth held by high net worth individuals in the U.S. over the next five years;

• Identify how large the US wealth management market is and how much you could gain by entering the market
• Identify the key US wealth managers, where you fit in among them and their current considerations with regard to competing in this market
• Use the market sizing forecasts and key future trends to shape your US wealth management strategy going forward

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