Wealth in Turkey: HNW Investors; Understanding HNW investors and wealth management strategies.
Summary
Nearly half of Turkish investors attribute their wealth to the manufacturing and property industries, reflective of market demand and the country’s main exports. When opting to have wealth managed by a professional, Turkish HNW clients expect better returns and the convenience of not dealing with administrative details. However, Turkish HNW clients are confident in self-directing their portfolios and prefer to manage simple investments themselves, as well as having exclusive control over at least a proportion of their portfolios.
Key Findings
- Accumulating wealth through earned income or as a first-generation entrepreneur is common among Turkish individuals, together accounting for 64% of the HNW population.
- 40.9% of a typical Turkish HNW portfolio is invested in execution-only mandates. Turkish HNW clients are confident in self-directing their portfolios; they prefer managing simple investments and having exclusive control, and are comfortable with using digital investment tools.
- Bonds constitute the largest proportion of Turkish HNW wealth and make up 43% of a typical portfolio. Nearly 90% of this wealth is kept directly instead of in funds.
- Wealth managers are confident in the outlook of the Turkish property market: 23% of HNW wealth is held in property and 55% of wealth managers believe demand for property will increase over the next year.
- Turkish HNW individuals seek professional advice in preparing for retirement, as the vast majority of wealth managers anticipate greater demand for inheritance planning.
Verdict Financial’s “Wealth in Turkey: HNW Investors” report analyzes the investing preferences and portfolio allocation of Turkish HNW investors. The report is based on our proprietary Global Wealth Managers Survey.
Specifically the report:
- Profiles the average Turkish HNW investor in terms of their demographics and analyzes the expat opportunity in Turkey.
- Analyzes which wealth management mandates are preferred among Turkish HNW investors and how demand will develop looking forward.
- Examines the allocation of Turkish HNW investors’ portfolios into different asset classes and how this allocation is expected to develop in the future.
- Analyzes the product and service demand among Turkish HNW investors.
- 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 the current and future demand for different asset classes among HNW individuals.
- Develop your service proposition to match the service and product demand expressed by Turkish HNW investors and react proactively to the forecasted change in demand.
- EXECUTIVE SUMMARY
- Key findings
- Critical success factors
- The main source of Turkish HNW wealth is earned income
- Earned income and inheritance are the most important wealth sources for HNW investors
- The sectors in which HNW clients amass wealth in Turkey are diverse
- HNW expats constitute a significant proportion of HNW investors in Turkey
- The majority of HNW expat clients in Turkey are classified as short-term residents
- The largest proportions of HNW expats originate from EMEA
- HNW expats invest in Turkey for better tax and investment opportunities
- HNW INVESTMENT STYLE PREFERENCES
- Turkish HNW individuals take an active approach to managing wealth
- Investors forecast a better client experience when opting for professional management
- Turkish HNW clients are most likely to self-direct their wealth
- Demand for asset management is stronger in Turkey than in Central and Eastern Europe
- Significant demand increases are forecast across all asset management types
- 70.9% of wealth managers expect demand for discretionary asset management to increase
- Turkish investors prefer managing a proportion of their investments for control and trust reasons
- UNDERSTANDING ASSET ALLOCATION TRENDS AMONG TURKISH HNW INVESTORS
- Turkish HNW investors hold a sizable proportion of wealth in bonds
- HNW clients prefer diversified investment strategies
- Turkish HNW individuals hold 17% of their wealth in equities
- Bonds make up the largest percentage of the average Turkish HNW portfolio
- Cash constitutes the second largest proportion of Turkish HNW wealth
- Demand for property investments among Turkish HNW investors will grow
- Turkish HNW individuals hold a minimal amount in alternative investments
- Commodity investments are of little interest to Turkish HNW clients
- HNW PRODUCT AND SERVICE DEMAND
- Turkish HNW individuals show varied demand for wealth services
- Wealth managers experience the strongest demand for pension planning services
- Wealth managers anticipate noticeable increases in demand for planning services
- Wealth managers will experience strong demand for investment property advice
- Demand levels for investment property advice are mixed
- Investment property services will become a focal point of wealth management services
- APPENDIX
- Abbreviations and acronyms
- Definitions
- HNW
- Ijarah
- Sukuk
- Methodology
- Verdict Financial's 2015 Global Wealth Managers Survey
- Verdict Financial's 2014 Global Wealth Managers Survey
- Bibliography
- Further reading
- Disclaimer
- List of Tables
- Table 1: Spain, Portugal, Cyprus, Malta, and Greece offer Golden Visas through investment in real estate
- List of Figures
- Figure 1: Turkish HNW clients predominantly accumulated wealth through earned income
- Figure 2: Many HNW clients accumulated wealth in the manufacturing and property sectors
- Figure 3: Turkey's Manufacturing PMI illustrates contraction rather than expansion
- Figure 4: The proportion of HNW expat investors in Turkey is more than twice that of Central and Eastern Europe
- Figure 5: Switzerland and Kuwait are the major feeder countries for HNW expats
- Figure 6: HNW expats invest in Turkey for tax advantages and better investment opportunities
- Figure 7: Turkish HNW clients seek better returns when opting for wealth management services
- Figure 8: Over 40% of Turkish HNW investors opt for execution-only management
- Figure 9: Garanti Asset Management oversees $4bn in assets under management
- Figure 10: Over half of wealth managers experience strong demand for advisory management
- Figure 11: 91.1% of wealth managers expect demand for execution-only management to increase
- Figure 12: Managing simple investments is the most common reason Turkish HNW clients have a preference for self-directing a proportion of their wealth
- Figure 13: Turkish HNW asset allocation is similar to that of Central and Eastern Europe
- Figure 14: 30.6% of equity is allocated to ETPs
- Figure 15: 30% of Turkish wealth managers expect demand for equities to increase
- Figure 16: Turkish HNW clients are heavily invested in bonds
- Figure 17: Wealth managers anticipate greater demand for bonds over the next year
- Figure 18: Many of Turkey's HNW clients allocate cash holdings to local or foreign currency deposits
- Figure 19: HNW clients seek cash funds rather than direct holdings for better returns
- Figure 20: Property constitutes 13% of Turkish HNW portfolios
- Figure 21: Wealth managers will continue to experience strong demand for property investments
- Figure 22: Alternatives is the only asset class that Turkish HNW investors prefer to hold in funds
- Figure 23: The Abraaj Group is a global private equity firm investing in Turkey
- Figure 24: Turkven is one of the country's largest private equity firms
- Figure 25: HNW clients seek alternatives when they are dissatisfied with other investments
- Figure 26: A minimal proportion of Turkish HNW wealth is allocated to commodities
- Figure 27: Demand is not forecast to increase for commodity investments over the next year
- Figure 28: 62.6% of wealth managers experience strong demand for pension planning
- Figure 29: Wealth managers expect demand for financial planning services to grow
- Figure 30: 71% of wealth managers experience strong demand for tax planning services
- Figure 31: Demand for investment property advice is forecast to increase
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