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Wealth in the UK: HNW Investors 2017

Wealth in the UK: HNW Investors 2017

Summary

London is a major wealth capital with competitive financial services, fintech, and property industries. HNW individuals from around the world reside in the UK, particularly London, for its attractive lifestyle and business opportunities. The majority of UK HNW investors are over the age of 50, with males accounting for the majority. Equity and bond investments constitute the greatest proportions of UK HNW portfolios, mirroring the regional average. UK wealth managers experience strong demand for financial products and services, with pension planning in particularly high demand.

Key points include -

  • Inherited wealth dominates among UK HNWs, but taken together the largest share has been sourced from family business ownership and first-generation entrepreneurship.
  • The vast majority of UK HNW investors prefer their wealth to be managed professionally, with 79.5% placed in discretionary mandates.
  • Asset allocation is heavily weighted towards equities and bonds. Wealth managers anticipate reduced demand for bond investments and greater interest in non-traditional asset classes.
  • Pension and financial planning services show the strongest demand, and this is not expected to change in the near future. Demand for inheritance planning will remain stable.
Critical success factors -
  • Lead with discretionary offerings: UK HNW investors are comfortable placing their wealth in the hands of a professional. This is reinforced by the fact that 23.3% of wealth managers believe HNW investors choose discretionary asset mandates because they established trust with their wealth manager when they were an advisory client. Wealth managers will do well to offer advisory services in anticipation of moving their assets to discretionary mandates.
  • Providing pension and financial planning services: Given the proportion of HNW investors who have sourced their wealth through inheritance and the notable presence of these services in the UK, stable demand for these services is expected. To differentiate, wealth managers should provide an array of services, such as those focused on financial and pension planning.
  • Target family business owners and entrepreneurs: 40.5% of UK HNW investors have accumulated their wealth through one of these two channels. Wealth managers should offer services that resonate with these segments and provide them with the greatest potential to grow their wealth.
The report Wealth in the UK: HNW Investors 2017 analyzes the investing preferences and portfolio allocation of UK HNW investors. The report is based on our proprietary Global Wealth Managers Survey.

Specifically the report -
  • Profiles the average UK HNW investor in terms of their demographics and analyzes the expat opportunity in the UK.
  • Analyzes which wealth management mandates are preferred among UK HNW investors and how the demand will develop going forward.
  • Examines the allocation of UK HNW investors’ portfolios into different asset classes and how the allocation is expected to develop in the future.
  • Analyzes the product and service demand among UK HNW investors.
Companies mentioned in this report: Coutts International, DBS, Delancey, Mount Kendal, Sandaire.

Scope
  • Inherited wealth dominates among UK HNWs, but taken together the largest share has been sourced from family business ownership and first-generation entrepreneurship.
  • The vast majority of UK HNW investors prefer their wealth to be managed professionally, with 79.5% placed in discretionary mandates.
  • Asset allocation is heavily weighted towards equities and bonds. Wealth managers anticipate reduced demand for bond investments and greater interest in non-traditional asset classes.
  • Pension and financial planning services show the strongest demand, and this is not expected to change in the near future. Demand for inheritance planning will remain stable.
Reasons to buy
  • Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
  • Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors’ drivers for seeking investment advice vs self-directing.
  • Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.
  • Develop your service proposition to match the product and service demand expressed by UK HNW investors and react proactively to the forecasted changes in demand.


  • Executive Summary
    • UK HNW clients rely heavily on professional wealth management
    • Key findings
    • Critical success factors
    • Profiling the UK HNW Investor
    • Inheritance accounts for the largest proportion of UK HNW wealth
      • The majority of UK HNW individuals are males over the age of 50
        • Table Figure 1: Almost three quarters of UK HNW investors are over the age of 50
      • Two fifths of UK wealth is accumulated through family businesses and entrepreneurship
        • Table Figure 2: A greater proportion of UK HNW investors source their wealth through inheritance or earned income than in the wider region
      • UK HNW wealth is driven by financial services
        • Table Figure 3: Close to half of HNW clients accumulate most of their wealth through financial services
      • UK HNW Investors are likely to hold director and shareholder roles
        • Table Figure 4: UK HNW investors are less likely to hold CEO and chairman roles compared to the European average
    • Expats in the UK represent a minimal proportion of the population
      • The proportion of expats in the UK is lower than in Europe
        • Table Figure 5: The proportion of HNW expat clients in Europe is nearly double that of the UK
      • The UK's Tier 1 (Investor) visa grants residence to HNW expats
      • Europe is the leading feeder region for HNW expats in the UK
        • Table Figure 6: Over half of UK HNW expats are from France or the US
      • Uncertainty over repatriation and insufficient control over investments drive HNW expats to invest a proportion of their wealth in the UK
        • Table Figure 7: Uncertainty over whether they will return to their country of origin drives HNW expats to invest a proportion of their wealth in the UK
        • Table Figure 8: Coutts International supports soon-to-be UK residents and individuals with financial interests in the UK
  • UK HNW Investment Style Preferences
    • UK HNWs are comfortable with professionals managing their wealth
      • Discretionary mandates are favored among UK HNW investors
        • Table Figure 9: Almost 80% of HNW assets are managed via discretionary mandates
      • UK HNW investors value the expertise and capabilities of wealth managers
        • Table Figure 10: A lack of both time and expertise drive UK HNW investors to seek professional wealth management
      • UK HNW investors are comfortable working with more than one wealth manager
        • Table Figure 11: UK HNW clients place over half of their portfolio with their main wealth manager
    • Providing discretionary asset management is key for wealth managers catering to UK HNW investors
      • Table Figure 12: Wealth managers experience mixed levels of demand across investment products and services
      • Notable demand for automated investment services is forecast
        • Table Figure 13: Discretionary asset management and automated investment services are expected to drive future demand for wealth management
      • Establishing trust with HNW investors is key for wealth managers
        • Table Figure 14: HNW investors are drawn to discretionary asset management once they have established trust through advisory asset management
      • HNW individuals choose to invest directly to avoid management fees
        • Table Figure 15: Investor confidence and preferring to manage simple asset classes are not major drivers for investing directly
  • Understanding Asset Allocation Trends among UK HNW Investors
    • UK HNW portfolios are heavily weighted towards equities and bonds
      • Over half of UK HNW portfolios are allocated to equity investments
        • Table Figure 16: UK HNW portfolios are dominated by equities
      • Equity investments make up over half of the average HNW portfolio
        • Table Figure 17: UK HNW investors allocate more assets to equities than the wider region
        • Table Figure 18: UK HNW investors value capital appreciation opportunities when investing in equities
      • Bond investments constitute a notable proportion but are forecast to decline
        • Table Figure 19: Direct holdings are preferred to bond funds
        • Table Figure 20: UK HNW investors are drawn to bonds for diversification and risk aversion
      • Cash and near-cash investments are less important in the UK than the regional average
        • Table Figure 21: Local currency deposits are highly regarded among UK HNW investors
        • Table Figure 22: Nearly half of clients hold cash in order to maintain liquidity
      • HNW clients allocate a minimal proportion of their portfolio to property
        • Table Figure 23: UK HNW investors display a strong propensity for investing in property ETFs
        • Table Figure 24: Property investments are driven by the desire to diversify assets
        • Table Figure 25: HNW investors in Asia can access UK real estate investment advice through Mount Kendal's advisory services
      • The majority of alternative investments are held in hedge funds
        • Table Figure 26: 4.5% of assets in HNW portfolios are invested in alternatives
        • Table Figure 27: Hedge funds are valued for their ability to provide diversification
      • Commodities constitute a minimal proportion of UK HNW portfolios
        • Table Figure 28: Similar to European portfolios, only 1% of UK HNW investmentHNW is allocated to commodities
        • Table Figure 29: UK wealth managers expect demand for commodity investments to increase over the next year
  • UK HNW Product and Service Demand
    • Planning services are essential for UK wealth managers
      • HNW demand is particularly strong for financial and pension planning
        • Table Figure 30: Wealth managers experience less demand for inheritance advice than for other planning services in the UK
      • Access to pension planning services is key for UK HNW investors
        • Table Figure 31: Pension and financial planning services are expected to experience the greatest increases in demand
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • HNW
      • Liquid assets
    • Methodology
      • GlobalData's 2016 Global Wealth Managers Survey
      • GlobalData's 2015 Global Wealth Managers Survey
      • GlobalData's WealthInsight
    • Bibliography
    • Further reading

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