Canada Wealth Management – High Net Worth (HNW) Investors 2022

In Canada, the HNW population is dominated by men. While the proportion of female HNW investors is relatively low, it is slowly evolving, especially as female HNW investors form an increasingly attractive target segment. This can mainly be attributed to the increase in the share of women in the upper echelons of management, aided by initiatives to increase gender diversity on boards and in executive positions.

The Canada wealth management market report sizes the opportunity within Canada’s wealth market and analyzes the investment preferences, service requirements, and portfolio allocations of the country’s HNW investors.

What are the market dynamics in the Canada wealth management market?

The majority of the Canadian HNW population have sourced their wealth through earned income. Entrepreneurship forms a notably smaller yet growing source of wealth. While failure is notably more likely among nascent businesses, new entrepreneurs represent a lucrative market for those willing to target individuals who do not qualify as HNW yet. Supporting entrepreneurs during the early stages of their business venture allows providers to beat the competition and create loyalty early on. With lack of capital the number-one challenge faced by early-stage business owners, supporting entrepreneurs during the capital-raising process is key.

Despite being very small in Canada, the inheritor market is expected to grow over the coming years given the age structure of the current HNW cohort, which is dominated by older affluents. As a result, inherited spouses and second- and third-generation heirs are likely to gain a significant stake in HNW wealth over the coming years. Since HNW inheritors tend to be less financially adept than other investors, they may be interested in services such as financial education or discretionary asset management.

What are the key investment preferences for HNW investors in the Canada wealth management market?

The key investment preferences for HNW investors in the Canada wealth management market are advisory asset management, automated investment services, discretionary asset management, and execution-only asset management. Current demand is distributed relatively equally across different types of mandates, reiterating the importance of a multi-asset management strategy.

However, forecast demand for discretionary mandates will stagnate as investors look for greater involvement. In part, this can be traced back to rising volatility, which means that investors are looking to be more “hands-on”. In addition, investors are becoming increasingly sophisticated, driving uptake in advisory and execution-only mandates.

 Canada wealth management market, by investment preferences

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What are the key reasons for expatriation for HNW investors in the Canada wealth management market?

The key reasons of expatriation for HNW investors in the Canada wealth management market are job transfer, retirement, business start-up, tax efficiencies, better opportunities for children, better lifestyle conditions, and political/economic instability. Better lifestyle conditions is one of the major drivers of expatriation.

Canada wealth management market, by reasons of expatriation

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What are the major asset classes of wealth allocation for HNW investors in the Canada wealth management market?

Equities, cash and near cash, bonds, property, alternatives and commodities are the major asset classes of wealth allocation for HNW investors in the Canada wealth management market. Canadian HNW investors invest a slightly above-average (albeit not notably high) allocation in equities. Also notable is the significant proportion Canadian HNW investors allocate to alternative investments. In fact, demand for the asset class has skyrocketed in recent years thanks to increased availability due to technological advances, and investors looking for new means to achieve greater diversification.

Canada wealth management market, by asset classes of wealth allocation

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What are the major asset classes of offshore investment for HNW investors in the Canada wealth management market?

The major asset classes of offshore investment for HNW investors in the Canada wealth management market include equity, cash and near-cash products, bonds, property, alternatives, and commodities. Alternative investments attract the largest proportion of offshore HNW wealth. As discussed earlier, HNW investors are also showing a strong and rising demand for alternatives in the onshore space.

Canada wealth management market, by offshore investment

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Market report scope

Scope

• Expats represent an attractive target market thanks to their more complex service requirements.
• The market for robo-advisory services is growing rapidly in the HNW space in Canada.
• Equities, alternatives, and property dominate the Canadian HNW asset portfolio.

Reasons to Buy

• Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
• Enhance your marketing strategies and capture new clients using insights from our data on HNW investors’ asset management style preferences.
• 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 demand expressed by Canadian HNW investors and react proactively to forecasted changes in demand.