Wealth Management in the Nordic Region 2008

Published by: Datamonitor

Published: Sep. 25, 2008 - 7 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

Strong investment performance and rising compensation has driven wealth in the Nordic region

Nordic HNW customers are primarily concerned about financing needs and inheritance planning, but are prepared to take risks and entertain new ideas

Nordic wealth managers have medium-term relationships with their clients, and expect to drive revenue growth by improving investment performance and strengthening their product ranges

Table of Contents

Table of tables

The Nordic region's WEALTH

Solid growth in wages and investment returns are driving the growth in the Nordic region's wealthy population, but rising debt is a threat

Wage increases are being undermined by rising debt

Affluent investors in the Nordic region have benefited strongly from equity investment returns

Bond yields and deposit rates have added slowly but steadily to Nordic investors' portfolios

The Nordic region's onshore investment is gradually repositioning towards safe havens

Nordic investors increased their allocation to deposits by 13% in 2007

Wealth in the Nordic region is growing slowly

The Nordic affluent population has grown despite low savings rates and slowing investment returns in 2007

Outlook for Nordic region's wealthy population in 2008-12

2008-09 will be characterized by struggling economies worldwide

Data Tables

The Nordic HIGH NET WORTH INVESTOR

Nordic HNWs are younger than their average European counterparts

There is a relatively high proportion of under-30s in the Nordic region's HNW population compared to Europe

Wealth management service implication: build propositions to capture younger clients

In keeping with the European average, Nordic wealth comes primarily from entrepreneurship, followed by earned income

Norway's entrepreneurial population will grow by 8.3% compounded annually to 2012

Wealth management service implication: dedicated client management teams for entrepreneurs and professionals

Innovative example from the UK: Wesleyan Assurance develops specialist staff to target doctors and dentists

Nordic HNWs hold well-diversified portfolios

Wealth management service implication: promote alternative investments as an option for HNWs who are concerned about market volatility

Innovative example from the UK: Harewood Solutions launches a fund to take advantage of anticipated property gains

Nordic HNW investment will shift towards cash

Nordic HNWs' are more likely to invest abroad than their peers across the rest of Europe

Wealth management service implication: private banks and wealth managers can respond to client demand by expanding their range of investments

Innovative example from the UK: Focus Capital develops an emerging market multi-strategy fund

Nordic HNW customers are primarily concerned about financing needs and inheritance planning, but are prepared to take risks and entertain new ideas

Nordic HNW investors want financing solutions

Wealth management service implication: offer a comprehensive range of financing solutions

Innovative example from the Netherlands: Fortis Private Banking segments clients on the basis of their liabilities

Nordic HNWs demonstrate above-average risk tolerance and are more open to new investment ideas

Nordic HNWs are demonstrating the strongest demand for emerging market equities or funds and residential property

Wealth management service implication: offer innovative investment opportunities in emerging markets and real estate

Innovative example from France: Assetz allows investors to have their cake and eat it too

Nordic HNWs are less financially sophisticated than the average European HNW

While face-to-face relationship management is less important to HNWs in the Nordic region today, personal recommendations are critical

Wealth management service implication: providers can build business through customer advocacy

HNW Nordic investors are more loyal to their wealth manager

The Nordic Wealth Manager's view

Wealth managers in the Nordic region have weaker relationships with their clients compared to Europe as a whole

Nordic wealth managers have medium-term relationships with their clients, and generally have to share them with at least one other bank

Nordic wealth managers expect to drive revenue growth by improving investment performance and strengthening their product ranges

Wealth managers will focus less on winning new clients and more on improving returns and product ranges

Increasing face-to-face contact and financial planning services will be the most effective means employed to increase share of wallet

Socially responsible funds will offer the greatest business potential for Nordic wealth managers in the coming years

The key to attracting clients will be personal relationships and service quality

Nordic wealth managers can best attract new clients by leveraging personal relationships and ensuring high standards of service

Wealth managers' own clients are the best route to new clients

The key to keeping clients will be providing them with proactive advice and keeping their RMs happy

Despite acknowledging the need to improve their advice and guard against defecting RMs, wealth managers in the Nordic region are focusing on minimizing errors as a client retention strategy

APPENDIX

The drivers of growth in the wealthy population

Nominal 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 Denmark by liquid asset band, 000s, 2003-07

Table 2: Number of affluent individuals in Finland by liquid asset band, 000s, 2003-07

Table 3: Number of affluent individuals in Norway by liquid asset band, 000s, 2003-07

Table 4: Number of affluent individuals in Sweden by liquid asset band, 000s, 2003-07

Table 5: Aggregate onshore liquid assets of affluent individuals in Denmark by liquid asset band, €bn, 2003-07

Table 6: Aggregate onshore liquid assets of affluent individuals in Finland by liquid asset band, €bn, 2003-07

Table 7: Aggregate onshore liquid assets of affluent individuals in Norway by liquid asset band, €bn, 2003-07

Table 8: Aggregate onshore liquid assets of affluent individuals in Sweden by liquid asset band, €bn, 2003-07

Table 9: Number of affluent individuals in Denmark by liquid asset band, 000s, 2008-12

Table 10: Number of affluent individuals in Finland by liquid asset band, 000s, 2008-12

Table 11: Number of affluent individuals in Norway by liquid asset band, 000s, 2008-12

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

Table 13: Aggregate onshore liquid assets of affluent individuals in Denmark by liquid asset band, €bn, 2008-12

Table 14: Aggregate onshore liquid assets of affluent individuals in Finland by liquid asset band, €bn, 2008-12

Table 15: Aggregate onshore liquid assets of affluent individuals in Norway by liquid asset band, €bn, 2008-12

Table 16: Aggregate onshore liquid assets of affluent individuals in Sweden by liquid asset band, €bn, 2008-12

Table 17: What percentage of the HNW customer base in the Nordic countries is in each age band?

Table 18: What percentage of the HNW customer base in the Nordic countries accumulated its wealth through the following sources?

Table 19: What percentage of HNW customers' portfolios in the Nordic countries is allocated to the following products?

Table 20: HNW customers' portfolio allocation now versus in two years' time

Table 21: What percentage of HNW customers' portfolio in the Nordic countries is allocated to the following regions?

Table 22: What are HNW customers in the Nordic countries most interested in today?

Table 23: Please rate high net worth clients in the Nordic countries on a scale of one to four in terms of the following risk-related variables

Table 24: For which investment opportunities is there a lot of demand from HNWs in the Nordic countries?

Table 25: Please rate high net worth clients in the Nordic countries on a scale of one to four on the following variables related to financial sophistication

Table 26: Please rate high net worth clients in Spain on a scale of one to four on the following relationship-related variables

Table 27: Please rate high net worth clients in the Nordic countries on a scale of one to four on the following loyalty-related variables

Table 28: Please rate high net worth clients in the Nordic region on a scale of one to four on the following loyalty-related variables

Table 29: How long has your client base in the Nordic countries been with you, on average?

Table 30: How many wealth managers do HNW customers in the Nordic countries have on average?

Table 31: What will most determine revenue growth in the Nordics wealth management market in the next two years?

Table 32: What is the most effective means of increasing wealthy clients' share of wallet in the Nordic region?

Table 33: How much business potential do the following product areas have among wealthy clients in the Nordic region for the next two years?

Table 34: From the product areas just mentioned, which three will wealth managers focus most resources on in the next two years?

Table 35: What are the key influences that determine a client's choice of wealth management service in the Nordic countries?

Table 36: What are the most effective wealth management customer acquisition techniques in the Nordic countries?

Table 37: What are the most likely reasons for clients in the Nordic countries to leave a wealth management service?

Table 38: What is the best way to retain wealthy clients in the Nordic countries?

List of Figures

Figure 1: Rising debt and declining savings rates have tempered growth in liquid assets

Figure 2: Growth in the Nordic and Norway exchanges exceeds that of Western Europe

Figure 3: Since 2006, bond yields in the region have increased

Figure 4: Nordic investors shifted strongly towards safe havens in 2007

Figure 5: Nordic affluent population growth slowed in 2007 as market conditions took their toll

Figure 6: After declining in 2008 and 2009, the Nordic affluent population will grow again, to reach 4.3 million by 2012

Figure 7: The 51-65 age band accounts for the greatest share of HNW customers in the Nordic region at 39%

Figure 8: Business/entrepreneurship is the main source of wealth in the Nordic countries, accounting for 38% of all HNWs' liquid assets

Figure 9: 31% of HNW portfolios in the Nordic countries are invested in equities

Figure 10: In the Nordic region, over the next two years HNW customers will increasingly look to the cash or deposits category, which will grow its share of their portfolios from 15% to 24%

Figure 11: HNW investors in the Nordic countries have 55% of their portfolios invested in Europe

Figure 12: Financing needs represent a key priority for Nordic HNWs

Figure 13: HNW investors in the Nordic countries have a higher level of openness to risk and innovation than the average European HNW investor

Figure 14: Direct investment in residential property is the investment opportunity most in demand from HNW clients in the Nordic countries

Figure 15: HNW investors in the Nordic countries are less financially sophisticated than the average European HNW investor

Figure 16: HNW investors in the Nordic countries place less emphasis on provider relationships than the average European HNW investor

Figure 17: HNW investors in the Nordic countries are slightly more loyal than their European peers

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

Figure 19: 51% of Nordic wealth managers have had their client relationships for more than five years on average

Figure 20: 27% of HNW investors in the Nordic countries have just one wealth manager

Figure 21: Improving investment performance will be the key driver of revenue growth in the next two years for wealth managers in the Nordic countries

Figure 22: Offering financial planning is the most effective means of increasing share of HNW wallet in the Nordic region

Figure 23: Socially responsible funds have the greatest business potential for wealth managers in the Nordic region for the next two years

Figure 24: 50% of wealth managers in the Nordic countries are planning to focus resources on traditional investments and alternative investments over the next two years

Figure 25: Personal relationship and quality of service are the primary influences on a client's choice of wealth manager in the Nordic countries

Figure 26: Referrals from existing clients are the most effective customer acquisition technique for wealth managers in the Nordic countries

Figure 27: Lack of proactive advice is the most likely reason for clients to leave a wealth manager in the Nordic countries

Figure 28: Nordic wealth managers believe that resolving all problems quickly and completely is the most effective means of retaining their HNW customers

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 in Denmark, Finland, Norwy and Sweden
• 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

About MarketResearch.com
MarketResearch.com is an online aggregator selling over 300,000 market research reports, company profiles and country profiles from over 700 research firms. Our reports will provide you with the critical business and competitive intelligence you need for strategic planning and marketing research. Coverage includes the US, UK, Europe, Asia and global markets.