Wealth Management in Italy 2008

Published by: Datamonitor

Published: Sep. 25, 2008 - 7 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

The mega-mergers have created threats and opportunities for smaller wealth managers

Investment returns are driving the growth in Italy's wealth

Italy's HNWs are young, entrepreneurial and playing safe with their wealth

Wealth managers in Italy do not have enduring relationships with their clients

Table of Contents

Table of tables

THE MEGA-MERGERS HAVE CREATED THREATS AND OPPORTUNITIES FOR SMALLER WEALTH MANAGERS

Mega-mergers have fundamentally changed the competitive environment

2007 saw the creation of two dominant players in the Italian banking market

The Italian mega-mergers follow global themes

The stated rationale behind these mega-mergers is fairly traditional

The mergers consolidated the private banking market

Intesa Sanpaolo and UniCredit have staked out powerful positions in private banking

Both Intesa Sanpaolo and UniCredit are moving ahead quickly with their plans for Private Banking

Neither of the banks see significant risks attached to the mergers

Navigating a new private banking market

Threats and opportunities will result from the mega-mergers

The little banks will still be able to compete

Key implication: wealth managers must make sure they offer a personalized service

Key implication: small banks must concentrate on retaining clients

Key implication: small banks must become more efficient and cost-competitive

Dealing with specific threats from the mega-merger

Integration update: so far, there appear not to be major integration problems

ITALY'S WEALTH

Investment returns are driving the growth in Italy's wealth

The Italian stock exchange has been a consistent performer over the past few years

Bond yields and interest rates have contributed steadily to returns

Italy's property investment sector has enjoyed rapid growth

Italy's onshore investment market has repositioned towards safe havens

Italian investors put €40 billion into deposits in 2007

The number of affluent individuals in Italy is declining and is only expected to increase in 2010

2007 saw a decrease in the number of affluent Italians

The number of wealthy individuals is forecast to decrease in the short term

Data tables

THE ITALIAN HIGH NET WORTH INVESTOR

Italy's HNWs are young, entrepreneurial and playing safe with their wealth

Italian HNWs are the youngest in Europe

A disproportionate amount of HNWs' wealth comes from business/entrepreneurship

Wealth management service implication: target the entrepreneurs

Innovative example from the UK: Coutts banks in excess of 18,000 of the UK's entrepreneurs

Italy HNWs have transferred their wealth into safe havens

Wealth management service implication: concentrate on maximizing returns

Innovative example from North America: using the downturn to strengthen client relations

HNW portfolio allocation will shift towards alternative investments

Italy's HNWs' overseas investments follow European patterns

Wealth management service implication: look globally for investment opportunities

Innovative example from UK: Julius Baer launches North African fund

Italian HNWs want to protect their asset base, and are less financially sophisticated than their European peers

Italy's HNW investors are risk averse

Wealth management service implication: find the right balance between risk and return

Innovative example from UK: Barclays Wealth targets cash with enhanced Defined Returns Plan rates

Italy's HNWs aren't particularly knowledgeable about financial products, but have a high understanding of risk

Italy's HNWs are interested in commercial property investment opportunities

Innovative example from Benelux: Fortis Private Bank offers direct real estate investment

HNW clients are demanding more face-to-face contact

Wealth management service implication: wealth managers need to get up close and personal with HNWs

Innovative example from the UK: private banks are moving closer to important regional business hubs

THE ITALIAN WEALTH MANAGER'S VIEW

Wealth managers in Italy do not have enduring relationships with their clients

Italian wealth managers have to share their clients with at least one other bank

Italian wealth managers are focused on capturing new clients, leveraging CRM and providing alternative investment products

Wealth managers in Italy are focused on winning new customers

Better leverage of CRM is seen as the most effective means of increasing share of wallet

Wealth managers see alternative investments as the hot new product area

The key to attracting clients will be personal relationships

Italian wealth managers can best attract new clients by leveraging personal relationships

Referrals are key to catching new clients

Understanding client needs and servicing HNWs' families are key to better retention

A variety of manageable factors are contributing towards client losses

Providing better service to HNW families is important for client retention

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 2008

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

Bibliography

Definitions

Western Europe

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Number of affluent individuals in Italy by liquid asset band, 000s, 2003-07

Table 2: Number of affluent individuals in Italy by liquid asset band, 000s, 2008-12

Table 3: Aggregate onshore liquid assets of affluent individuals in Italy by liquid asset band, €bn, 2003-07

Table 4: Aggregate onshore liquid assets of affluent individuals in Italy by liquid asset band, €bn, 2008-12

Table 5: What proportion of the HNW customer base in Italy is in each age band?

Table 6: What proportion of the HNW customer base in Italy accumulated their wealth through (source)?

Table 7: What proportion of HNW customers' portfolios in Italy is allocated to (product)?

Table 8: HNW customers' portfolio allocation now versus in two years' time

Table 9: What proportion of the HNW customers' portfolio in Italy is allocated to (region)?

Table 10: What are HNW customers in Italy most interested in today?

Table 11: HNW customer attributes in Italy on a scale of one to four (knowledge)

Table 12: For which investment opportunities is there a lot of demand from HNW in Italy?

Table 13: HNW customer attributes in Italy (customer contact)

Table 14: How many wealth managers do HNW customers in Italy have on average?

Table 15: What will most determine revenue growth in Italy's wealth management market in the next two years?

Table 16: What is the most effective means of increasing wealthy clients' share of wallet in Italy?

Table 17: From the product areas just mentioned, which three will wealth managers focus most resources on in the next two years?

Table 18: What are the key influences that determine a client's choice of wealth management service in Italy?

Table 19: What are the most effective wealth management customer acquisition techniques in Italy?

Table 20: What are the most likely reasons for clients in Italy to leave a wealth management service?

Table 21: What is the best way to retain wealthy clients in Italy?

List of Figures

Figure 1: Reasons why HNWs choose a wealth management service

Figure 2: Reasons why HNWs leave a wealth management service

Figure 3: Focusing in on the various parts of the wealth manager's value

Figure 4: Italy's index has enjoyed slow but steady growth

Figure 5: Italy's average short-term interest rates have tracked upwards

Figure 6: Deposits and bonds grew as investors shifted out of mutual funds

Figure 7: Italians' shift into the traditional safe havens benefited from rising interest rates

Figure 8: Italy has over seven million affluent individuals

Figure 9: 2010 should see a return to growth

Figure 10: The 31-50 age band accounts for the greatest share of HNW customers in Italy at 44%

Figure 11: Business/entrepreneurship is the main source of wealth in Italy accounting for 43% of all HNWs

Figure 12: 31% of HNW portfolios in Italy are invested in fixed income

Figure 13: In Italy over the next two years HNW customers will increasingly look to the real estate investment category which will grow its share of HNW investors' portfolios from 20% to 23%

Figure 14: HNW investors in Italy have 62% of their portfolios invested in Europe

Figure 15: Protecting their current asset base is a key priority for 59% of HNW investors in Italy

Figure 16: HNW investors in Italy are less knowledgeable than the average European HNW investor

Figure 17: Direct investment in commercial property is the investment opportunity most in demand from HNW clients in Italy

Figure 18: Clients are demanding more face-to-face contact with their wealth manager now than two years ago in Italy

Figure 19: 4% of HNW investors in Italy have just one wealth manager

Figure 20: Obtaining new clients will be the key driver of revenue growth in the next two years for wealth managers in Italy

Figure 21: Better leverage of CRM is the most effective means of increasing share of HNW wallet in Italy

Figure 22: 55% of wealth managers in Italy are planning to focus resources on the alternative investments product area over the next two years

Figure 23: Personal relationship is the key influence that determines a client's choice of wealth manager in Italy

Figure 24: Referrals from the investment bank are the most effective customer acquisition technique for wealth managers in Italy

Figure 25: Failure to understand client needs is the most likely reason for clients to leave a wealth manager in Italy

Figure 26: Providing services for their family is the most effective means of retaining HNW customers in Italy

Abstract

• HNW demographic and attitudinal attributes based on our Wealth Management Market Leaders Survey 2008
• Sizes, segments and forecasts the number of affluent invididuals across 10 liquid asset bands from EUR50k
• 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.

• Understand the HNW population's investments by sector and geography, appetite for risk, and reasons for choosing/leaving their wealth service
• Assess market attractiveness by reviewing size and growth forecasts for the potential wealthy client base through 2012
• Assess the threats and opportunities for wealth managers by understanding how peers are planning to grow revenues, acquire and keep clients

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