Wealth Management in France 2009

Published by: Datamonitor

Published: Apr. 23, 2009 - 286 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

The change in French wealth management landscape has been more one of sentiment than structure

Poor equity performance, a falling real estate market and lower bond yields mean that growth in France's wealthy population has suffered badly

The French HNW individuals are knowledgeable, risk averse and less loyal than ever before

Wealth managers in France believe service quality is good, but need to do more to keep clients in poor market conditions

Table of Contents

Table of figures

Table of tables

Special Feature: Impact of the crisis on the French wealth management landscape

The change in wealth management landscape will be less extreme than in other European countries; big players will continue to dominate the market

French banks have been less affected by the economic downturn, but HNW sentiment has worsened

There will be opportunities for large wealth managers, but HNWs are frustrated with some aspects of their service

French wealth managers do not know what to make of nationalized banks

Opinion is divided over which type of wealth manager will fare best over the next few years

Data Tables

France's wealth

Unattractive market conditions in most asset classes mean France's wealthy population must take on more risk if they want a return

Base interest rate cuts, lower bond yields and increasing per capita debt are decreasing France's wealth

French investors, like those across the developed world, suffered badly from poor returns in equity investments

Bond yields have fallen drastically and are no longer attractive

France's property investment sector is suffering

French investors continue the shift into deposits

The Wealth Data in 2009

Data tables

The French HNW investor

French clients remain knowledgeable and risk averse, but market conditions have made them far less loyal

French HNWs have a good knowledge of financial products and shy away from risk

Wealth management service implication: focus on being seen as a firm whose primary investment aim is the low risk preservation of wealth

Innovative Solution: Take heed of the market positioning of shariah law compliant funds

Personal relationships remain all-important, but the wealth management landscape has changed

Wealth Management service implication: understand and cater to the needs of the individual so that the added value is obvious

Innovative Example: Leverage platforms that will increase the knowledge about individual clients

French HNW portfolio allocations will change drastically over the next two years

French HNWs are still heavily invested in property but have left fixed income products

Wealth management service implication: be proactive in advising clients over how to allocate their portfolio, and understand clients' desires

Innovative example: Pyxis mobile is providing a complete mobile communications interface to allow wealth managers to contact their clients while on the move

Over the next two years, the increase in deposits will continue, and there will be a large outflow from property

Wealth management service implication: Look to capitalise on changes to market players' reputations through innovative marketing campaigns and investment opportunities

Innovative example: HSBC is rebranding in order to take market share from its competition

The French HNW is more concerned about asset preservation and positioning for the upturn than on profiting in the downturn

At present a product must be simple, transparent and retain its value well

Wealth management service implication: wealth managers must look to develop simple, transparent products to preserve their clients' wealth

Innovative example: iShares has launched a range of exchange traded funds (ETFs)

In two years' time, close ended property funds will be in demand as investors will look to get back into real estate

Wealth management service implication: look to capitalize at the start of the upturn by developing innovative products, especially in real estate

Innovative example - ASK set up a new Indian real estate fund to tap into pent up demand

Service quality and investment performance are the most important criteria for selecting a wealth manager

Wealth management service implication: offer other features to increase service quality

Innovative solution: Hayden Wealth provide a financial planning service alongside its wealth management offering

Data

The French wealth manager's view

French Wealth managers have suffered a blow to their reputations, but they perceive their quality of service to be high

French wealth managers believe their greatest strengths lie in the quality of their service and the personal relationships they have with their clients

Leveraging the use of CRM and offering financial planning are the best ways to increase the share of a client's wallet

Being proactive and professional is key to retaining clients

French wealth managers contact their clients less frequently than their European peers

Despite it being extremely important to clients, French wealth managers speak to their clients less than the average European wealth manager

Specific asset performance and investment opportunities are what most clients want to discuss

Money market funds are the most important resource focus due to the harsh economic environment

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 2009

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

Definitions

Western Europe

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: To what extent do you agree with the following? (1 = strongly disagree, 2 = somewhat disagree, 3 = somewhat agree, 4 = strongly agree)

Table 2: To what extent do you agree with the following? (1 = strongly disagree, 2 = somewhat disagree, 3 = somewhat agree, 4 = strongly agree)

Table 3: To what extent do you agree with the following, %

Table 4: Household savings rate and retail debt outstanding per adult, % and USD

Table 5: Level of long term interest rate, %

Table 6: Year-on-year stock exchange performances, %

Table 7: Year-on-year net inflows into asset classes, EURbn

Table 8: HNW attributes on a scale of 1 to 4 (risk appetite and knowledge) (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)

Table 9: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)

Table 10: What proportion of your HNWs' portfolios is allocated to the following five asset classes?

Table 11: HNWs' portfolio allocation now versus in 2 years time

Table 12: What are HNWs demanding today?

Table 13: In 2 years' time, how much demand do you expect from HNWs for the following product areas?

Table 14: What do you find most influences the provider selection of HNWs?

Table 15: HNW motivations when it comes to investment decisions, %

Table 16: HNW motivations when it comes to investment decisions, %

Table 17: HNW motivations when it comes to investment decisions, %

Table 18: HNW motivations when it comes to investment decisions, %

Table 19: What are the greatest strengths and weaknesses of your company today?

Table 20: What is the most effective means of increasing share of wallet today?

Table 21: What is the best way to retain clients today?

Table 22: On average, how often do your relationship managers speak by phone to each HNW client?

Table 23: On average, how often do your relationship managers speak in person to each HNW client?

Table 24: When speaking with clients, what do they most want to talk about today?

Table 25: What product areas will your wealth management service focus most resources on in the next 2 years?

List of Figures

Figure 1: Wealth managers in France think that large wealth managers will have the best opportunities in the next few years

Figure 2: The view of wealth managers is that nationalized and part nationalized banks will attract good relationship managers because they are financially secure

Figure 3: Both large and small wealth managers have their competitive advantages

Figure 4: Debt levels in France continue their increase

Figure 5: Long-term interest rates are declining slowly after a high in 2007

Figure 6: Stock markets around the world collapsed

Figure 7: Outflows are seen in all asset classes apart from deposits

Figure 8: HNW investors in France have a higher risk appetite than the average European HNW investor

Figure 9: There is a greater risk of HNW clients in France leaving to find another wealth manager than the average European HNW investor

Figure 10: The majority of HNW wealth in France is invested in the 'equities' asset category, with this accounting for 24% of all investments

Figure 11: In 2 years' time the majority of HNW wealth in France will be invested in the 'cash or near cash' asset category with this accounting for 26% of all investments

Figure 12: In France, HNW investors' greatest demand is for simple, transparent investments

Figure 13: In 2 years time, the greatest demand amongst HNW investors in France will be for closed ended property funds with 22% of HNW investors demanding this category of product

Figure 14: Product demand will alter noticeably over the next two years

Figure 15: HNW investors in France are most influenced by service quality in their choice of Wealth Manager

Figure 16: The greatest strength of Wealth Managers in France is their quality of service

Figure 17: The best way for Wealth Managers in France to increase share of wallet is to offer financial planning

Figure 18: The best way for Wealth Mangers in France to retain HNW investors is to make sure all problems are resolved quickly and completely

Figure 19: In France the Wealth Management relationship managers speak to clients by phone approximately once a week

Figure 20: In the Wealth Management relationship managers speak to in person to clients approximately once a quarter

Figure 21: The majority of clients in France want to speak to their wealth manager about performance of specific asset classes within their portfolio

Figure 22: Wealth managers in France will be focusing most of their resources on money market funds in 2 years time

Abstract

• HNW demographic and attitudinal attributes based on our Wealth Management Market Leaders Survey 2009
• 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.
• Discusses the changing wealth management competitor landscape

• Understand the HNW population's investments by sector and geography, and see how innovative products/services have capitalized on these trends
• Understand the HNW population's appetite for risk, and reasons for choosing/leaving their wealth service
• 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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