Wealth in Australia: HNW Investors

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Australia is known for its multicultural landscape, which is also reflected in the country’s HNW market. HNW investors in Australia stem from a range of different backgrounds and portray distinctive demand patterns. However, a strong affinity for equity investments and high expectations when it comes to financial advice and other support services (such as pension and tax advice) are common characteristics.

Scope

• The majority of HNW individuals in Australia have accumulated their wealth through earned income, but first-generation entrepreneurs and family businesses represent the largest sources of wealth.

• While representing a slightly lower proportion than in the wider region, HNW expats constitute an attractive target segment in Australia, accounting for 8.3% of Australian HNW individuals (or approximately 11,800 individuals).

• Australian HNW investors allocate almost three times as much wealth into equities compared to their peers in Asia Pacific.

• HNW individuals show a strong and rising interest in advisory asset management, while demand for execution-only services is limited.

• Australian HNW investors show strong and rising demand for tax, pension, and financial planning as well as property advice, making a multi-service strategy critical in Australia.

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 Australian HNW investors and react proactively to the forecasted change in demand.

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Westpac

Table of Contents

EXECUTIVE SUMMARY

Australian HNW individuals come from a range of different backgrounds

Key findings

Critical success factors

PROFILING THE AUSTRALIAN HNW INVESTOR

HNW investors who have accumulated their fortunes through earned income remain the largest segment

However, entrepreneurs are also a lucrative target market

Many HNW investors have built their fortunes through financial services

Expats are an important target group in Australia

Expats constitute

8.3% of the local HNW population

Friendly visa conditions encourage migration of the rich

HNW expats from the UK and Asia Pacific represent an attractive target segment

Fear of having insufficient control and steep forex fees are motivating HNW expats to invest in Australia

HNW INVESTMENT STYLE PREFERENCES

Australian HNW investors value professional advice, but are reluctant to relinquish control

The majority of HNW wealth is kept in advisory mandates

Australian HNW individuals feel well equipped to manage part of their wealth themselves

Demand for execution-only services is on the rise

HNW investors feel confident enough to invest a small proportion of their wealth independently

UNDERSTANDING ASSET ALLOCATION TRENDS AMONG AUSTRALIAN HNW INDIVIDUALS

Australia's love affair with equities is set to continue

Equities dominate the typical HNW portfolio, but alternatives are forecast to experience the greatest increase in popularity

Equities constitute more than half of HNW investors' managed wealth

Bond investments have decreased in popularity over the past year

Cash and near-cash investments constitute a significantly smaller part of the Australian HNW portfolio than in the wider region

Property constitutes less than 10% of the typical HNW portfolio despite the recent property boom in Australia

Commodity investments are of little interest to Australian HNW clients

Alternatives constitute 7% of the typical HNW portfolio

HNW PRODUCT AND SERVICE DEMAND

Planning services are in high demand in Australia

Australian HNW individuals show strong demand for tax advice

A multi-service proposition is key to competing in Australia's HNW market

Property advice is in high demand in Australia

Wealth managers lacking the in-house resources to provide property advice should consider partnerships in light of rising demand

APPENDIX

Abbreviations and acronyms

Definitions

Affluent

HNW

Liquid assets

Mass affluent

SMSF

Superannuation

Methodology

Verdict Financial's 2015 Global Wealth Managers Survey

Verdict Financial's 2014 Global Wealth Managers Survey

Bibliography

Further reading

ABOUT VERDICT FINANCIAL

Disclaimer

Table

Table 1: Average annual income of full-time employees

Table 2: Interest rates, selected countries in Asia Pacific, May 2016

Figures

Figure 1: Earned income is the most common source of wealth among Australian HNW individuals

Figure 2: The majority of HNW investors have sourced their wealth from the financial services and real estate sector

Figure 3: The vast majority of HNW expats have lived in the country for more than three years

Figure 4: The majority of expats in Australia come from the UK and Asia

Figure 5: Credit Suisse targets wealthy immigrants prior to their arrival in Australia

Figure 6: HNW expats residing in Australia want to stay in control of their investments

Figure 7: Lack of time is driving uptake of financial advice

Figure 8: The majority of HNW wealth is kept in advisory mandates

Figure 9: Australian HNW individuals show strong demand for advisory mandates

Figure 10: Demand for execution-only asset management is forecast to increase significantly

Figure 11: Australia's HNW investors are financially savvy

Figure 12: HNW investors are heavily exposed to equities

Figure 13: HNW investors prefer direct equity holdings

Figure 14: Dividend income is the number one driver of equity investments

Figure 15: HNW investors allocate 15% of managed wealth to fixed income products

Figure 16: Demand for fixed income products is set to decrease

Figure 17: Only 15% of managed HNW wealth is held in cash products

Figure 18: HNW demand for cash products will continue to fall

Figure 19: 9% of HNW wealth is allocated to property

Figure 20: Capital appreciation opportunities are fueling HNW demand for property

Figure 21: Commodities are of little interest to Australian HNW investors

Figure 22: Commodity investments are forecast to decrease

Figure 23: HNW investors prefer funds when it comes to commodity investments

Figure 24: Asset diversification benefits are driving HNW demand for alternatives

Figure 25: Australian HNW individuals show strong demand for tax advice

Figure 26: BDO targets family business owners

Figure 27: Already strong HNW demand for planning services is forecast to increase

Figure 28: Australian HNW investors show strong demand for property advice

Figure 29: Already high demand for investment property advice is forecast to increase

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