Wealth Management in Italy 2009

Published by: Datamonitor

Published: Jun. 11, 2009 - 13 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

Intesa Sanpaolo's wealth management service is undergoing consolidation but is performing well

Italy continues to be the 'sick man' of Europe

HNWs are defensively positioned, but their risk appetite is beginning to increase

Wealth managers in Italy are strong at providing HNWs with core needs

Table of Contents

Table of figures

Table of tables

Special Feature: Intesa Sanpaolo's wealth management

The megamerger looks set to provide Intesa Sanpaolo's wealth management with advantages in the long run

So far Intesa Sanpaolo has weathered the financial storm better than many large financial institutions

Intesa Sanpaolo is undergoing a dramatic transformation and is both trying to reorganize and cope with the tough economic times

Intesa Sanpaolo's wealth management operations are also undergoing fundamental changes

Intesa Sanpaolo's brand, image and reputation continues to fare well despite the tough climate

Intesa Sanpaolo's wealth management offering is above average on almost all fronts

Intesa Sanpaolo has been successful at preventing defections, and has good relationship managers

Intesa Sanpaolo has the opportunity to build on its strengths and address its weaknesses

Key implications for Intesa Sanpaolo: concentrate on individuality and enhancing service provision

Key implication for Intesa Sanpaolo's competitors: niche organizations should target areas of current weakness

Italy's wealth

Italy has few attractive asset classes at present

Inflows into deposits continue, but there may be some signs of life returning to the equities markets

Bonds are becoming less attractive

Short term interest rate plummets

Unemployment is on the rise as average real wages fall

The Italian HNW investor

Italian HNWs are becoming more tolerant of risk in a quest for returns, but currently remain defensively positioned

Italian investors are changing their risk appetite, but their understanding of the current conditions is weak

Wealth management service implication: HNWs need education to attend to structural ignorance

Innovative example from Switzerland: UBS is investing in educating its clients

Innovative example from the UK: Baker and McKenzie believe education is equally important for wealth managers due to the changes taking place in the industry at present

Relationships are important, but loyalty is low

Wealth management service implication: ensure the organizational structure is geared towards providing the best possible service

Innovative example from Switzerland: Julius Baer separates into two businesses

Italian HNW investors are defensively positioned

Despite an appetite for risk, Italian HNWs are cash heavy and light on equities

Wealth management service implication: remain aware of clients' specific desires

Innovative example from the USA: Advisor Software has developed an application which tailors investment solutions to clients' needs

There will be a shift away from deposits over the next two years

Wealth management service implication: look abroad for greater opportunities

Innovative example from Ireland: BNY Mellon launches new emerging markets equities fund

The Italian HNW has mixed sentiments, looking both for wealth preservation and for profit

Although they want to find opportunities to profit in the downturn, HNWs retain a tentative streak

HNWs are demanding a high level of input and advice from their wealth managers

Auxiliary services, especially tax advice, are also in high demand

Wealth management implication: offer auxiliary services as a way in which to develop relationships and increase share of wallet

Innovative example from the UK: Skandia launches tax planning tool

In two years' time, discretionary asset management and tax advice will be in demand as investors continue to seek guidance from their managers

Capital protected funds and bonds will be the most popular product category, as HNWs seek greater returns with some security

Wealth management service implication: be prepared to develop corporate bond products

Innovative example from Ireland: Smith & Williamson launch a short-dated bond fund

Proactivity and individuality are key to attracting HNW clients

Wealth management service implication: be proactive in the wealth management offering

Data tables

The Italian wealth manager's view

Core wealth management provision is good, but this strength could be leveraged to greater effect

Wealth managers are addressing core requirements successfully

Despite clients' selection influencers, wealth managers are emphasizing the strengths of their core business to increase share of wallet

Providing clients with a range of contacts and ensuring professionalism are the best ways to retain HNW investors

Italian wealth managers keep in regular contact with their clients

Italian HNWs are more interested in performance than their asset allocations

Direct equity investment will be the major resource focus in two years' time

APPENDIX

Additional survey questions on HNW motivations

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

Onshore wealth

Liquid assets

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Wealth managers' views about the strengths and weaknesses of Intesa Sanpaolo's wealth management services on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)

Table 2: Wealth managers' views about the strengths and weaknesses of Intesa Sanpaolo's wealth management services on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)

Table 3: Wealth managers' views about the strengths and weaknesses of Intesa Sanpaolo's wealth management services on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)

Table 4: Intesa Sanpaolo is well regarded by other wealth managers

Table 5: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)

Table 6: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat low, 3 = somewhat high, 4 = very high)

Table 7: What proportion of your HNWs' portfolios is allocated to the following five asset classes?

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

Table 9: What are HNWs demanding today?

Table 10: In two years' time, how much demand do you expect from HNWs for the following product areas?

Table 11: What will determine HNWs' choice of wealth management service over the next two years?

Table 12: HNW motivations when it comes to investment decisions

Table 13: HNW motivations when it comes to investment decisions

Table 14: HNW motivations when it comes to investment decisions

Table 15: HNW motivations when it comes to investment decisions

Table 16: What are your company's greatest strengths and weaknesses?

Table 17: What is the most effective means of increasing share of wallet today?

Table 18: What is the best way to retain clients today?

Table 19: On average, how often do your relationship managers speak by phone to each HNW client?

Table 20: On average, how often do your relationship managers speak in person to each HNW client?

Table 21: When speaking with clients, what do they most want to talk about today?

Table 22: What product areas will your wealth management service focus most resources on in the next two years?

List of Figures

Figure 1: Intesa Sanpaolo's brand image and reputation has survived relatively well in the current crisis

Figure 2: Intesa Sanpaolo is doing well at indentifying investment opportunities in the downturn

Figure 3: Intesa Sanpaolo is performing well across the board when it comes to the people in the organization

Figure 4: The Borsa Italiana has been suffering since 2007

Figure 5: The outflows from mutual funds continued in 2008, but were slowing by Q3

Figure 6: Bond yields plummeted in the latter half of 2008 and in to 2009

Figure 7: The interest rate also took a dive at the end of 2008 and in to 2009

Figure 8: The labor market has been hit as unemployment is on the rise once more and average real wages are lower

Figure 9: HNW investors in Italy have a higher risk appetite than the average European HNW investor

Figure 10: There is a lower risk of HNW clients in Italy leaving to find another wealth manager than the average European HNW investor

Figure 11: The majority of HNW wealth in Italy is invested in the 'cash or near cash' asset category, with this accounting for 28% of all investments

Figure 12: In two years' time, holdings in cash and near cash will reduce, while equities and fixed income will increase

Figure 13: Corporate bonds will increase dramatically over the next two years

Figure 14: In Italy, HNW investors' greatest demand is for tax advice

Figure 15: In two years' time, the greatest demand among HNW investors in Italy will be for capital protected funds or bonds, with 80% of HNW investors demanding this category of product

Figure 16: HNW investors in Italy are most influenced by proactivity in bringing ideas to clients in their choice of wealth manager

Figure 17: The greatest strength of wealth managers in Italy is their companies' financial stability

Figure 18: The best way for wealth managers in Italy to increase share of wallet is to convince clients that your company is financially sound

Figure 19: The best way for wealth managers in Italy to retain HNW investors is to give the client several points of contact within the bank

Figure 20: In Italy, the wealth management relationship managers speak to clients by phone approximately once a week

Figure 21: In Italy, wealth management relationship managers speak to clients in person approximately once a month

Figure 22: The majority of clients in Italy want to speak to their wealth manager about performance of their overall portfolio

Figure 23: In two years' time, wealth managers in Italy will be focusing most of their resources on direct equity investment

Abstract

• HNW demographic and attitudinal attributes based on our Wealth Management Market Leaders Survey 2009
• Extensive primary research from 20 wealth management companies highlights their strategies for revenue growth, acquiring and keeping clients
• Indepth assessment of how Intesa Sanpaolo's Italian wealth management operations are currently perceived

• Understand the HNW population's investments by sector and geography, 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
• Gain an understanding of the strengths and weaknesses of Intesa Sanpaolo's Italian wealth management operations

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