Wealth Management in Switzerland 2008

Published by: Datamonitor

Published: Nov. 13, 2008 - 8 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

Special feature: the role of the financial intermediary in Swiss wealth management

Prudency in spending, a regulatory environment favorable to wealth and company business and modest investment returns are driving the growth in Switzerland's wealthy population

Wealthy Swiss investors are younger and more inclined to invest more outside Europe than their European counterparts

Swiss wealth managers have a loyal clientele and are keen to increase their client base

Table of Contents

Table of figures

Table of tables

SPECIAL FEATURE: THE ROLE OF THE FINANCIAL INTERMEDIARY IN SWISS WEALTH MANAGEMENT

Independent financial advisors are set to become a more important distribution channel in Switzerland

Deutsche Bank Private Wealth Management has relationship managers that are owners of their own franchise operating independently from the team that works directly with retail customers

The key to leveraging intermediaries is to make the execution of their clients' demands easier

Fidelity supports investment advisors with technology and business-building platforms

Integrating financial advisors into a wealth manager's marketing strategy is a challenge

Organizing events mixing existing and potential intermediary clients leverages advocates

Innovative examples from around the globe where wealth managers create special events for intermediaries

The Private Banking and Wealth Management Australia conference

The Glenmede Trust uses common interests to bring current and potential intermediaries together

SWITZERLAND'S WEALTH

Prudency in spending, a regulatory environment favorable to wealth and company business and modest investment returns are driving the growth in Switzerland's wealthy population

A higher propensity to save is boosting Switzerland's wealth despite relatively low growth in disposable income

Switzerland has a tax friendly regime for the wealthy and attracts corporate activity

Switzerland and the European Union are co-operating on tax affairs, which impacted on savings accounts in Switzerland

Wealth accumulation in Switzerland is dependent on performance of the US and other global markets

Swiss bond yields and deposit rates are below those in the EU and the US

Switzerland's onshore investment market has repositioned towards collective investments and deposits

Swiss investors put €9 billion into mutual funds in 2006

Wealth in Switzerland is growing, with those having liquid assets in excess of €300,000 accounting for 12% of the wealthy population but 50% of affluents' asset base

2008-09 will be characterized by struggling economies worldwide

There has been a higher rate of growth in the number of wealthy Swiss than the European average

However, growth in the Swiss affluent market slowed in 2007

The number of wealthy Swiss will decrease through to 2009 and then pick up again as economies begin to recover

The majority of affluent Swiss have between €50,000 and €300,000 in liquid assets

The proportion of millionaires as a percentage of the affluent population is the same in Switzerland as for the rest of Europe

The Swiss HNW investor

Switzerland's HNWs are marginally younger and just as liquid as their European counterparts

Switzerland has a large HNW population nearing retirement

Source of income and the age of HNW clients are key to the service offerings of wealth managers

Wealth management service implication: move towards meeting the individual needs of clients by focusing on products appropriate to the client's lifestage, which in Switzerland is 'nearing retirement'

Innovative example: Coutts has a three stage process for its retirement planning service

Innovative example: the Clydesdale Bank offers a 'Prepare for tomorrow' retirement planning service

In contrast to the European average, Swiss wealth comes more from earned income and less from entrepreneurial activity

Wealth management service implication: dedicated client management teams for high income earners is critical

Innovative example from Australia: Westpac promotes financial service solutions to suit the client's lifestage

Innovative example from New Zealand: the Bank of New Zealand seeks to secure clients from a young age

Swiss HNWs are more heavily invested in bonds and less so in real estate

Wealth management service implication: enhancing financial product knowledge is key to further diversification in Swiss portfolios

HNW Swiss investment will shift away from bonds towards greater portfolio diversification

Swiss HNWs' onshore investments are less Europe-centric than their peers across the rest of Europe

Wealth management service implication: look further abroad for investment opportunities for clients as well as for a wider range of investment classes

Swiss HNW customers are not afraid of risk in the pursuit of higher returns, but although seeking diversification, they are less open to new investment ideas than their European peers

Swiss HNW investors are most interested in achieving higher returns and portfolio diversification

Wealth management service response: balance returns and protection

Swiss HNWs have an appetite for risk but are less open to new investment ideas

Swiss HNWs want socially responsible funds, financial planning advice and alternative investments from their wealth managers

Swiss HNWs are less technologically sophisticated but have a better understanding of risk than the European average

Personal relationships are considered a very important aspect of business in Switzerland today

Wealth management service implication: use surveys to strengthen client relationships

Getting it right: investors in the US tell advisors how to gain their trust

Swiss HNW investors like to feel 'connected' to their wealth manager and as a consequence are more loyal

Swiss HNW investors are more likely to change wealth managers when they inherit wealth

THE SWISS WEALTH MANAGER'S VIEW

Wealth managers in Switzerland have stronger long-term relationships with their clients compared to Europe as a whole

Switzerland's wealth managers have more long-term customer bases than their European peers, and are more likely to have to share their clients with at least one other bank

Switzerland's wealth managers plan to drive revenue growth through capturing new clients, improving investment performance and increasing existing clients' share of wallet

Wealth managers in Switzerland are more keen than elsewhere to win new clients, with referrals from existing clients being a key strategy

Wealth management service implication: build a structured client referral mechanism by incentivizing existing clients to bring in new clients

Offering financial planning services will be the most effective means employed to increase share of wallet

Financial planning and socially responsible funds hold the greatest business potential for Swiss wealth managers in coming years

Innovative example from Switzerland: the Ethos Foundation and Pictet have an SRI/asset manager partnership

Innovative example from the UK: Barchester Green Investment brings together financial planning and socially responsible investment

Wealth managers will focus more resources on tax and inheritance planning

A personal relationship is a key determinant of a client's choice of wealth manager

Swiss wealth managers can best attract and retain clients by leveraging personal relationships

Effective client retention requires talking with them frequently to better understand their needs and extending services to HNW families

Swiss HNWs will leave wealth managers if they fail to understand their needs

Appendix

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

Western Europe

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Which services are most important to provide for financial intermediaries in Switzerland?

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

Table 3: Number of affluent individuals in Switzerland by liquid asset band, 000s, 2008-12

Table 4: Aggregate onshore liquid assets of affluent individuals in Switzerland by liquid asset band, € billions, 2003-07

Table 5: Aggregate onshore liquid assets of affluent individuals in Switzerland by liquid asset band, € billions, 2008-12

Table 6: What proportion of your high net worth client base in Switzerland is in each age band?

Table 7: The Clydesdale Bank has a retirement planning guide to enable investors know the issues that they will need to consider before creating a plan with the bank

Table 8: What proportion of your HNW client base in Switzerland accumulated their money through the following means?

Table 9: The Bank of New Zealand's products are designed around life stages

Table 10: What proportion of your Swiss HNW customers' portfolios are allocated to the following asset classes?

Table 11: In two years' time, what proportion of your Swiss HNW customers' portfolios will be allocated to the following assets classes?

Table 12: What proportion of Swiss HNW customers' portfolios are allocated to the following regions?

Table 13: Which of the following investment issues are your HNW clients in Switzerland most interested in today?

Table 14: Please rate your HNW customer attitudes in Switzerland to investment openness on a scale of 1 to 4

Table 15: How much business potential do the following product areas have among wealthy clients in Switzerland during the next two years?

Table 16: Please rate your HNW customer attitudes in Switzerland to financial knowledge on a scale of 1 to 4

Table 17: Please rate your HNW customer attitudes in Switzerland to relationship drivers on a scale of 1 to 4

Table 18: Please rate your HNW customer attitudes in Switzerland to customer loyalty on a scale of 1 to 4

Table 19: How long have wealth managers in Switzerland been with their HNW customers?

Table 20: How many wealth managers do HNW customers in Switzerland have on average?

Table 21: What will most determine revenue growth in Switzerland's wealth management market in the next two years?

Table 22: What are the most effective wealth management customer acquisition techniques in Switzerland?

Table 23: What is the most effective means of increasing wealthy clients' share of wallet in Switzerland?

Table 24: How much business potential do the following product areas have among wealthy clients in Switzerland during the next two years

Table 25: From the product areas just mentioned, which three will wealth managers focus most resources on in the next two years?

Table 26: What are the key influences that determine a client's choice of wealth management service in Switzerland?

Table 27: What is the best way to retain wealthy clients in Switzerland?

Table 28: What are the most likely reasons for clients in Switzerland to leave a wealth management service?

List of Figures

Figure 1: Acquiring clients through intermediaries is among the most effective customer acquisition techniques for wealth managers in Switzerland

Figure 2: Execution and settlement platforms are the most important service to provide for financial intermediaries in Switzerland

Figure 3: Switzerland's rate of savings is accelerating away from the European average

Figure 4: Switzerland's market cap runs alongside that of Western Europe as a whole

Figure 5: Yields on US bonds are attracting Swiss investment in the US and higher deposit rates in the US make US denominated accounts more attractive

Figure 6: Swiss retail investors moved out of equities into mutual funds in 2006

Figure 7: Swiss wealthy individuals tend to be in the lower asset bands but wealth is more concentrated in the higher asset bands

Figure 8: The 51-65 age band accounts for the greatest share of HNW customers in Switzerland at 51%

Figure 9: Earned income is the main source of wealth in Switzerland accounting for 31% of all HNWs

Figure 10: 29% of HNW portfolios in Switzerland are invested in fixed income

Figure 11: In Switzerland 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 14% to 16%

Figure 12: HNW investors in Switzerland have 54% of their portfolios invested in Europe

Figure 13: Achieving higher returns is a key priority for HNW investors in Switzerland

Figure 14: HNW investors in Switzerland have a lower level of investment openness than the average European HNW investor

Figure 15: Socially responsible funds have the greatest business potential for wealth managers in Switzerland during the next two years

Figure 16: HNW investors in Switzerland have less knowledge than the average European HNW investor

Figure 17: HNW investors in Switzerland place more emphasis on provider relationships than the average European HNW investor

Figure 18: HNW investors in Switzerland have greater loyalty than their European peers but are more likely to change their wealth manager when they inherit wealth

Figure 19: 67% of wealth managers in Switzerland have had a relationship with their HNW customers for more than five years

Figure 20: 4% of wealth managers in Switzerland share their clients with another advisor

Figure 21: Obtaining new clients will be the key driver of revenue growth in the next two years for wealth managers in Switzerland

Figure 22: Referrals from existing clients are the most effective customer acquisition technique for wealth managers in Switzerland

Figure 23: Offer financial planning is the most effective means of increasing share of HNW wallet in Switzerland

Figure 24: Socially responsible funds have the greatest business potential for wealth managers in Switzerland during the next two years

Figure 25: 55% of wealth managers in Switzerland are planning to focus resources on the 'traditional investments' product area over the next two years

Figure 26: Personal relationship is the key influencer that determines a client's choice of wealth manager in Switzerland

Figure 27: In Switzerland, talking to HNW clients regularly is the most effective means for retaining their business

Figure 28: Failure to understand client needs is the most likely reason for clients to leave a wealth manager in Switzerland

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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