Product and service needs of wealth management clients

Published by: Datamonitor

Published: Jul. 28, 2009 - 129 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

The downturn has fundamentally increased the weighting of safer products within HNW portfolios and raised demands for discretionary asset management

HNWs' investment behavior is being shaped by their changing nature and attitudes

Wealth managers expect defensive products and advisory services to be in most demand in the next two years

Datamonitor believes higher risk products will come back strongly by 2011 and that advice will top the list of HNW service demands

CURRENT PRODUCT AND SERVICE NEEDS

There has been a global movement towards lower risk assets in the wake of the economic and financial meltdown

HNW portfolios in Europe and Asia Pacific are now strongly weighted towards the safer asset categories

Current portfolios are skewed towards very low risk product areas

European HNWs have large amounts invested in cash and near cash, and fixed income products

Asia Pacific HNWs have large amounts invested in cash and near cash, and equities

The services in demand by HNWs reflect the economic and market turbulence that has been in evidence

HNWs across Europe and Asia Pacific are looking for wealth managers to provide services that assist them through these troubled times

Discretionary asset management services are very much in demand in Europe at the present time

In Asia Pacific, HNWs are looking for hand holding and advisory asset management services

The changes in investment allocations are the result of changes in the nature and attitudes of HNWs

HNWs' appetite for risk is a key influencer of the asset mix in HNWs' portfolios

Knowledge of products is strongly correlated with the relative importance of different product categories

FUTURE PRODUCT AND SERVICE NEEDS

HNWs are expected to continue to play it safe in the next two years, while demanding advisory services

Capital protected products, and deposits and savings products will be in most demand in the next two years, according to wealth managers

The current turmoil is expected to shape the service needs of HNWs in the next two years

Datamonitor believes that higher risk products will have made a strong return by 2011, and agrees that advice will top the list of service demands

Datamonitor expects stock market recovery to commence in 2010 and HNWs to return en masse to high risk products by 2011

Datamonitor agrees with wealth managers that HNWs will be in search of advice over the next two years

Examples of innovations in promising product and service areas

Examples of product innovation

Innovative example of capital protected products: new capital protected product allows investors to lock in profits

Innovative example of capital protected products: Macquarie offers leverage within its capital protection product

Innovative example of capital protected products: Barclays Wealth offers commodities protected investment

Innovative example of savings products: Investec successfully attracts depositors through innovation

Innovative example of property funds: Grindrod offers a property income fund that looks to offer market-beating yields

Examples of service innovation

Innovative example of tax and financial planning: UK IFA firm launches Advanced Wealth Management

Innovative example of tax and financial planning: Skandia launches new financial planning tool

Innovative example of execution services: UBS launches real-time transaction cost analysis in Europe

Appendix

Definitions

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

Bibliography

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Year-on-year change in the asset categories (percentage points)

Table 2: HNWs' portfolio allocations by product area

Table 3: European HNWs' portfolio allocations by product area now

Table 4: Asia Pacific HNWs' portfolio allocations by product area now

Table 5: Services currently in demand by HNWs

Table 6: Services currently in demand by European HNWs

Table 7: Services currently in demand by HNWs in Asia Pacific

Table 8: Appetite for risk among HNWs in 2008 and 2009

Table 9: Correlations between HNW knowledge of products in 2009 and the percentage of their portfolios in particular products in 2009

Table 10: Expected HNW demand for the following product areas in the next two years

Table 11: Expected HNW demand in Europe for the following product areas in the next two years

Table 12: Expected HNW demand in Asia Pacific for the following product areas in the next two years

Table 13: Expected HNW demand for the following service areas in the next two years

Table 14: Expected HNW demand in Europe for the following service areas in the next two years

Table 15: Expected HNW demand in Asia Pacific for the following service areas in the next two years

List of Figures

Figure 1: Both regions have seen a sharp contraction in the relative proportion of real estate investments

Figure 2: HNWs have much more defensive portfolios than in 2008

Figure 3: Cash and near cash makes up the biggest proportion of European HNWs' portfolios

Figure 4: Across Asia Pacific, the proportion of HNWs' portfolios held in equities has not changed much in 2009, compared to 2008

Figure 5: The recent volatility is a key determinant of what services are in demand

Figure 6: Asset management demands are polarized around discretionary and execution-only services

Figure 7: More hand holding is much in demand in Asia Pacific

Figure 8: HNWs' appetite for risk has fallen sharply from 2008 to 2009, corresponding with the rebalancing of their portfolios away from riskier assets

Figure 9: Stock market performance and HNWs appetite for risk are correlated

Figure 10: Wealth managers have very different views about what the future will hold for products

Figure 11: European wealth managers think capital protected products will be the real winner in the next two years

Figure 12: Wealth managers in Asia Pacific identify deposits and savings as looking particularly promising

Figure 13: Wealth managers in Asia Pacific expect big take up of execution only asset management, while European wealth managers think discretionary asset management will be the big winner

Figure 14: There will be good demand for ancillary wealth management services in Europe

Figure 15: Wealth managers in Asia Pacific expect a lot of country-specific variations in HNW service demands

Abstract

• Extensive primary research from 159 wealth management companies in Europe and 100 wealth management players in Asia Pacific
• European countries/regions covered in this report are Belgo-Dutch region, France, Germany, Italy, Nordics, Spain, Switzerland and the UK
• Asia Pacific countries covered in this report are Australia, China, Hong Kong, India, Singapore and Taiwan

• Gain a high-level snapshot of HNWs' current demands in Europe and Asia Pacific and an understanding of the factors influencing these demands.
• Find out what wealth managers think HNWs in Europe and Asia Pacific will be demanding in future.
• Learn about key product and service innovations in areas expected to be in great demand among HNWs.

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