Global Wealth Market Post-COVID-19

Table of Contents

1. EXECUTIVE SUMMARY

1.1. The global wealth market will suffer due to the coronavirus pandemic

1.2. Key findings

1.3. Critical success factors

2. SIZING AND FORECASTING

2.1. The global wealth market will decline by 7% in 2020, losing $8.3tn

2.1.1. Wealth managers headed into 2020 after a strong showing in 2019

2.1.2. HNW investors will see their wealth reduce by 11% in 2020

2.1.3. Retail investors’ preference for safe haven assets will protect them from drastic declines

2.1.4. HNW wealth will increase by $7tn in 2021 following the 2020 crash

2.1.5. Mass affluent investors will hold up better but will see less of a bounce back

2.2. The global retail savings and investments market is expected to contract by 7% in 2020

2.2.1. The run-up in equities’ value means the fall in 2020 is more pronounced

2.3. Global retail savings and investments trends

2.3.1. Global equity balances will suffer significantly, declining by 26% in 2020

2.3.2. Despite their diversification benefits, mutual funds will alsosuffer in this economic crisis

2.3.3. Investors will fly to safety, increasing deposit balances by 8% in 2020

2.3.4. Bonds will see the largest growth of any core asset class, increasing by 9% against 2019

2.3.5. The global reach of the pandemic has reduced investor appetite to offshore wealth

2.4. Key issues in a post-COVID-19 wealth market

2.4.1. Expansion plans will need COVID-19 contingency planning for future waves and disruption

2.4.2. Certain industries will be harder hit than others, requiring differentiated strategies

2.4.3. Expanding advisor count and adapting to the new normal of working from home

2.4.4. Expanding advisor numbers by acquiring smaller or weaker rivals wouldprove beneficial

2.4.5. Greater competition from robo-advisors means different competition dynamics

3. GEOGRAPHICAL ANALYSIS

3.1. The North American wealth market will suffer most during the 2020 crash

3.1.1. HNW North Americans will bear the brunt of the 2020 contraction

3.1.2. The global retail investments market will decline by 7% but North America’s fall will be almost twice as high

3.2. US investors will suffer the most of any country in the 2020 crash

3.2.1. Both mass affluent and HNW investors in the US will see their wealth decline by 15%

3.2.2. The US retail savings and investments market is expected to decrease by 15%

3.3. Despite European investors’ affinity forsafe haven assets, many markets will suffer in this economic crash

3.4. The coronavirus pandemic will wipe out anypositive economic impact of theBrexit decision

3.4.1. The UK wealth market will decline by 2%

3.4.2. The UK retail savings and investments market will shrink by 2% in 2020

3.4.3. All sectors of UK wealth management will suffer, but players with strong digital channels will be best placed to succeed

3.5. German investors’ strong preference for safe haven products will keep wealth growth in positive territory

3.6. Italy’s wealth market will stagnate in 2020

3.6.1. The overall Italian retail savings and investments market will experience

0.2% growth

3.7. Lockdowns and travel bans will severely impactSpain as the country depends on tourism and hospitality to boost the economy

3.7.1. Spain’s overall retail savings and investments market will increase by 1% due to the strong preference for deposits

3.8. The oil price war and the coronavirus pandemic will have a severe impact on the UAE investment market

3.8.1. The UAE has a strong preference for deposits, which will keep growth on the up in 2020

3.9. Asia Pacific will suffer the least despite being the origin of the virus

3.9.1. Asia Pacific’s wealth markets will continue to expand in 2020,although growth will be down

3.9.2. Australia will suffer one of the worst impacts in Asia Pacific with an outright decline in wealth

3.9.3. China is likely to lead the region out of the recession with a relatively strong market

3.9.4. Hong Kong’s successful response to the pandemic has been overshadowed by its complex and evolving relationship with the mainland

3.9.5. India’s retail savings and investments market will experience 0% growth for the first time since the globalfinancial crisis

3.9.6. Singapore’s wealth market has been set back

4. APPENDIX

4.1. Abbreviations and acronyms

4.2. Definitions

4.2.1. Affluent

4.2.2. HNW

4.2.3. Liquid assets

4.2.4. Mass affluent

4.3. Secondary sources

4.4. Further reading

List of Figures

Figure 1: The affluent wealth market will decline by over $10tn in 2020

Figure 2: Retail investors hold the majority of their portfolio in deposits

Figure 3: Both the number of HNW individuals and their liquid wealth will decrease by 11% in 2020

Figure 4: Asia Pacific is the most risk-averse region

Figure 5: The global retail savings and investments market is expected to decline by 7% in 2020

Figure 6: Selected COVID-19 metrics as of May 2020

Figure 7: The oil price dipped below zero in April 2020 but rebounded quickly

Figure 8: A rapid recovery from the recession is not forecast by most industry watchers

Figure 9: Concern over COVID-19 has been notable since the crisis started, which means higher deposit growth

Figure 10: Equities will take the biggest hit in 2020, declining by 26%

Figure 11: Worldwide daily new coronavirus cases surpassed 130,000 on June 2, 2020

Figure 12: North America’s retail savings and investments market will decrease by 15% in 2020

Figure 13: The majority of the global retail savings and investments market is held in less riskyasset classes

Figure 14: Equity balances in the US will decrease by 30%

Figure 15: Safe haven asset classes will increase their share of the UK retail savings and investments market in 2020

Figure 16: German deposit balances are expected to increase by 9%

Figure 17: In Italy, only deposit balances will increase in 2020 compared to2019

Figure 18: Spain’s equity balances will decrease by 22% in 2020

Figure 19: Asia Pacific’s liquid assets will decline by 1.5%

Figure 20: Equity balances are expected to decrease by 17% in 2020