United States of America (USA) Wealth Management – High Net Worth (HNW) Investors 2022

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In the US, men dominate the HNW space, accounting for a significant share of HNWs in the country. The situation is slowly evolving with female HNW investors, especially the salaried, becoming an increasingly attractive target segment.

The US wealth management market report sizes the opportunity within the US 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 US Wealth Management Market?

The US HNW individuals make their fortunes predominantly through earned income. US-based companies are known to offer relatively high and lucrative compensation to executives but a little surprising is the small percentage of HNW individuals pulling their fortunes from entrepreneurship. This is becoming a growing source of wealth generation across the world. The small percentage is also surprising given that the US leads the global startup market while failure is notably more likely among nascent businesses, new entrepreneurs represent a lucrative market for wealth managers willing to target individuals who do not yet qualify as HNW. Supporting entrepreneurs during the early stages of their business venture allows providers to beat the competition and create loyalty early on. However, with lack of capital the number one challenge faced by early-stage business owners, supporting entrepreneurs during the capital raising process is key.

Although, the inheritor market is currently very small but set to grow over the next decade given the age structure of the current HNW cohort, which is dominated by older affluents. This will lead to an increase in inheriting spouses and second- and third-generation inheritors gaining a significant share of HNW wealth in the next 10 years. As HNW inheritors often tend to be less financially savvy than other investors, they will be interested in services such as financial education and discretionary asset management.

What are the Key Investment Preferences for HNW Investors in the US Wealth Management Market?

The key investment preferences for HNW investors in the US wealth management market are advisory asset management, automated investment services, discretionary asset management, and execution-only asset management. The demand for automated investment services is expected to increase at a healthy pace.

US Wealth Management Market, by Investment Preferences

US Wealth Management Market, by Investment Preferences

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

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

The US wealth management market, by reasons of expatriation

The US 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 US 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 US wealth management market. HNW investors assign the largest proportion of their wealth to equities. This asset class is also forecast to experience the largest increase in HNW demand over the next 12 months, presenting wealth managers with notable challenges given the current investment environment.

US wealth management market, by major asset classes of wealth allocation

US Wealth Management Market Analysis, by Major Asset Classes of Wealth Allocation

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

The major asset classes of offshore investment for HNW investors in the US wealth management market include equity, cash and near-cash products, bonds, property, alternatives, and commodities. Investing in offshore bonds is an important diversification tool for most HNW investors in the US. Offshore bonds can enhance the risk-adjusted return of the HNW portfolio by diversifying across different economies with varying growth rates, interest-rate regimes, yield curves, inflation policies, and currencies.

The US Wealth Management Market Analysis, by Offshore Investment

The US Wealth Management Market Analysis, by Offshore Investment

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Market report scope

Key investment preferences Advisory Asset Management, Automated Investment Services, Discretionary Asset Management, and Execution-Only Asset Management.
Key reasons for expatriation Job Transfer, Retirement, Business Start-Up, Tax Efficiencies, Better Opportunities for Children, Better Lifestyle Conditions, and Political/Economic Instability
Major asset classes of wealth allocation Equities, Cash and Near Cash, Bonds, Property, Alternatives, and Commodities
Major asset classes of offshore investment Equity, Cash and Near Cash, Bonds, Property, Alternatives, and Commodities

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 country’s HNW space.
  • Equities, cash and near-cash investments, and property dominate the US 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 US HNW investors and react proactively to forecasted changes in demand.

Credit Suisse
Nasdaq
Securities and Exchange Commission
Personal Capital

Table of Contents

Table of Contents

Demographics

Expats

Investment Style Preferences

Asset Allocation Preferences

Offshore Investment Preferences

Products and Services

Appendix

Figures

List of Figures

Figure 1: 2.2% of US individuals qualify as HNW

Figure 2: The rich are still getting richer

Figure 3: Women constitute a smaller proportion of the US HNW segment but are typically younger

Figure 4: Almost all HNW wealth is sourced from earnings or first-generation entrepreneurship

Figure 5: IT and financial services are the leading industries for sources of wealth

Figure 6: The proportion of Chinese expats has dropped while those from Canada and the UK have increased

Figure 7: Most expats stay between three and five years

Figure 8: US HNW clients still place most of their wealth with their main wealth manager

Figure 9: HNW clients rely on their advisors for peace of mind and superior expertise

Figure 10: Advisory and discretionary mandates account for two thirds of US HNW wealth

Figure 11: Demand for all types of asset management mandates is evenly spread

Figure 12: Slight drop in demand for discretionary asset management is predicted

Figure 13: Self-directed investors typically lack trust in wealth managers or prefer exclusive control

Figure 14: Equities is still by far the preferred asset

Figure 15: Equities, and specifically equity funds, outrank all other asset allocations

Figure 16: Wealth managers expect an increase in demand for all asset classes except bonds

Figure 17: Drivers for asset allocation vary greatly across the six classes

Figure 18: Increased government regulations and shifts in demographics are to blame for the stagnation of growth in offshore holdings

Figure 19: Expats retain ties with business interests in their countries of origin

Figure 20: The UK, Switzerland, and China remain the most popular booking centers

Figure 21: Except for investments in currencies, offshore asset class ratios mimic those of onshore portfolios

Figure 22: Financial and inheritance planning services are most in demand for HNW clients

Figure 23: The already strong HNW demand for all planning services is expected to increase, while demand for life insurance is forecast to stagnate

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