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Wealth in Russia: HNW Investors 2017

Wealth in Russia: HNW Investors 2017

Summary

GlobalData’s Wealth in Russia: HNW Investors 2017, report analyzes the Russian investment market, with a focus on the HNW segment. The report is based on GlobalData’s proprietary datasets.

Typically, Russian HNW investors are men over the age of 40 who have sourced their wealth through the mining and oil or construction sectors. Recent political and economic instability has driven more investors to ask for professional advice; however, they are still reluctant to relinquish control completely, preferring advisory mandates. Cash and bonds traditionally dominate the Russian HNW portfolio, and will continue to do so in the future. All planning services are forecast to see an increase in demand, but tax and financial planning services will be the most sought after.

Specifically the report -

  • Sizes the affluent market (both by number of individuals and their demographics) using our proprietary datasets.
  • Analyzes which asset classes are favored by Russian investors and how their preferences impact the growth of the total savings and investments market.
  • Examines HNW clients’ attitudes towards non-liquid investments such as property and commodities.
Scope
  • The mining, oil, and gas industry is the major source of Russian HNW individuals’ wealth. The construction sector, while still important, is declining in significance.
  • Expats account for just a fraction of Russian millionaires, but their population is higher in Russia than in the rest of Europe.
  • Cash and bonds are the preferred asset classes among Russian investors, and they are expected to experience higher-than-average growth.
  • Investors largely prefer advisory mandates as they welcome guidance when managing their finances, but are reluctant to completely hand over control.
Reasons to buy
  • Benchmark your share of the Russian wealth market against the current market size.
  • Forecast your future growth prospects using our projections for the market to 2020.
  • Identify your most promising client segment by analyzing the penetration of affluent individuals in Russia.
  • Evaluate your HNW proposition by understanding how the Russian tax system will impact HNW clients.


  • Executive Summary
    • Russian HNW individuals typically source their wealth through mining, oil, and gas
    • Key findings
    • Critical success factors
  • Profiling the Russian HNW Investor
    • The mining, oil, and gas industry is the primary source of HNW wealth
      • Most Russian HNW individuals are males over the age of 40
        • Table Figure 1: Women are still under-represented in the Russian HNW population
      • First-generation entrepreneurship is the leading source of Russian HNW wealth
        • Table Figure 2: Business ventures account for a high proportion of HNW wealth
      • Many HNW investors have built their fortunes through mining, oil, and gas
        • Table Figure 3: Russian wealth is mainly derived from the mining, oil, and gas industry
      • The majority of HNW investors in Russia hold executive positions
        • Table Figure 4: Most HNW investors' job titles reflect the Russian economic landscape
    • Expats in Russia account for a higher proportion than the regional average
      • Expats in Russia account for 6% of the HNW population
      • New visa regulations are designed to encourage immigration
        • Table Figure 5: Expats form a larger proportion of the Russian market than the European average
      • Most HNW expats residing in Russia originate from Germany
        • Table Figure 6: US nationals account for an increasing proportion of the Russian expat population
        • Table Figure 7: Citi Bank targets Russia's wealthy expats
  • Russian HNW Investment Style Preferences
    • Lack of time drives discretionary mandates
      • HNW investors opt for advisory asset management
        • Table Figure 8: Wealth managers in Russia should lead with advisory mandates
      • Wealthy Russians expect their wealth managers to be highly experienced
        • Table Figure 9: A lack of expertise is the major driver of demand for wealth management services
      • Russia's HNW investors place nearly half of their managed wealth with their main wealth manager
        • Table Figure 10: The vast majority of Russian HNW investors use more than one advisor
    • Investors' reluctance to relinquish control means that advisory asset management will remain the mandate of choice
      • Demand for automated services remains weak
        • Table Figure 11: HNW demand is highest for advisory services
    • An appetite for advice is still on the rise
      • Demand for advisory mandates will strongly increase
        • Table Figure 12: Advisory asset management will experience the highest increase in demand
      • A reluctance to give up control is driving demand for advisory mandates
        • Table Figure 13: HNW investors in Russia are reluctant to relinquish control
      • A share of Russian HNW wealth will remain in execution-only platforms
        • Table Figure 14: Wealth managers should develop execution-only propositions
  • Understanding Asset Allocation Trends among Russian HNW Individuals
    • Already high allocations to bonds will continue to rise
      • Investors are loyal to cash and bonds
        • Table Figure 15: Russian HNW investors' portfolios are dominated by deposits
      • Russian HNW clients enjoy dividend income
        • Table Figure 16: Most equity investments are held directly
        • Table Figure 17: Equities growth will be driven by dividend income opportunities
      • Bond investments are forecast to experience the highest increase
        • Table Figure 18: Bonds constitute a sizable portion of HNW portfolios
        • Table Figure 19: Bond investments are forecast to increase further
      • Cash and near-cash allocations are above the global average
        • Table Figure 20: Cash and near-cash allocations are much higher in Russia than globally
        • Table Figure 21: Deutsche Bank Private Wealth Management offers a wide spectrum of investment options
        • Table Figure 22: A desire to maintain liquidity will drive cash and near-cash investments growth
      • Property is still a minor share of the typical HNW portfolio
        • Table Figure 23: Property funds are significantly more popular than direct holdings
        • Table Figure 24: Opinion about future property demand is mixed among wealth managers
      • Russian investors opt for structured products
        • Table Figure 25: Structured products are the most popular alternative investment
        • Table Figure 26: Moderate growth for Russian alternatives is to be expected
      • Commodities allocations beat the European average
        • Table Figure 27: Russian HNW investors' commodity allocations are mostly held directly
        • Table Figure 28: Commodity investments will stagnate over the next year
  • HNW Product and Service Demand
    • Demand for tax planning services is forecast to increase strongly
      • Demand for financial planning is higher than average
        • Table Figure 29: Financial planning is a priority for Russian HNW investors
      • Internationally active millionaires require advice on tax matters
        • Table Figure 30: Wealth managers should lead with tax planning services
      • Sberbank caters for clients' tax planning needs
        • Table Figure 31: Sberbank offers tax advice to its clients
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • Affluent
      • HNW
      • Liquid assets
      • Mass affluent
    • Methodology
      • GlobalData's 2016 Global Wealth Managers Survey
      • GlobalData's 2015 Global Wealth Managers Survey
    • Global Data's WealthInsight
      • Exchange rates
        • Table Russian ruble to US dollar exchange rate, December 31, 2015 and December 31, 2016
    • Bibliography
    • Further reading

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