Wealth in France: HNW Investors 2017

Table of Contents

1. EXECUTIVE SUMMARY 3

1.1. French clients accumulate wealth through business ventures and inheritance 3

1.2. Key findings 3

1.3. Critical success factors 3

2. PROFILING THE FRENCH HNW INVESTOR 10

2.1. Entrepreneurship and inheritance account for the largest sources of wealth 10

2.1.1. The bulk of French HNW individuals are males over 50 years old 10

2.1.2. Sources of wealth accumulation for French HNW investors are diverse 11

2.1.3. Many HNW investors have built their fortunes through property and real estate 12

2.1.4. Nearly half of HNW individuals in France are CEOs and directors 14

2.2. Expats account for over 7% of the local HNW population 14

2.2.1. Exceptional Economic Contribution residence permit facilitates business ventures 15

2.2.2. Nearly 80% of HNW expats are from Western Europe 16

2.2.3. Alexander Peter Wealth Management leads with expat services 16

3. FRENCH HNW INVESTMENT STYLE PREFERENCES 18

3.1. Wealth managers should highlight the time-saving benefits of their services 18

3.1.1. Over half of France’s HNW wealth is held in discretionary mandates 18

3.1.2. A lack of time and expertise drives demand for professional advice 19

3.1.3. France’s HNW investors place just over half of their managed wealth with their main wealth manager 20

3.2. French HNW investors’ lack of time is increasing demand for execution-only mandates 21

3.2.1. Demand is strongest for advisory mandates 21

3.2.2. Advisory mandates will remain the favored asset management service 22

3.2.3. A strong reluctance to give up control is driving demand for advisory mandates 23

3.2.4. French HNW investors who self-direct want exclusive control over some of their portfolio 24

4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG FRENCH HNW INDIVIDUALS 26

4.1. Alternatives will register the fastest increase over the next year 26

4.1.1. Equities continue to make up the largest segment of HNW portfolios 26

4.1.2. Equity investments constitute the largest proportion of the average French HNW portfolio 27

4.1.3. Asset diversification is the main driver for equities investments 28

4.1.4. Bond investments are lower in France than in the rest of Europe 29

4.1.5. Wealth managers expect bond holdings to decrease strongly 30

4.1.6. Cash and near-cash allocations are above the global average 31

4.1.7. Clients cite risk-aversion and future investment opportunities as drivers for allocations into deposits 32

4.1.8. Property constitutes a quarter of the typical HNW portfolio 33

4.1.9. Risk aversion is the main driver for property investments 34

4.1.10. Alternatives constitute a meagre percentage of the typical HNW portfolio 35

4.1.11. Asset diversification is the leading driver for investments in alternatives 36

4.1.12. Commodities allocations are as low as the European average 37

4.1.13. Asset diversification is the leading driver of commodity investments 38

5. HNW PRODUCT AND SERVICE DEMAND 40

5.1. Wealth managers should lead with tax planning services 40

5.1.1. High taxation rates drive demand for planning services 40

5.1.2. Allen & Overy partners with advisors to increase their competitive advantage 41

5.1.3. Demand for all planning services is forecast to increase 42

5.1.4. Primonial grows its AUM by offering a multi-service proposition 43

6. APPENDIX 45

6.1. Abbreviations and acronyms 45

6.2. Definitions 45

6.2.1. Affluent 45

6.2.2. HNW 45

6.2.3. Liquid assets 45

6.2.4. Mass affluent 45

6.3. Methodology 46

6.3.1. GlobalData’s 2016 Global Wealth Managers Survey 46

6.3.2. GlobalData’s 2015 Global Wealth Managers Survey 46

6.3.3. Global Data’s WealthInsight 46

6.3.4. Exchange rates 46

6.4. Bibliography 47

6.5. Further reading 48

List of Tables

Table 1: Production revenue by sector (€bn), 2000-15 14

Table 2: Net wealth tax rates 42

Table 3: Euro to US dollar exchange rate, December 31, 2015 and December 31, 2016 48

List of Figures

Figure 1: The bulk of HNW investors in France are males over the age of 50 11

Figure 2: First-generation entrepreneurship is the main source of wealth for France’s HNW investors 12

Figure 3: Property and real estate is the leading generator of French wealth 13

Figure 4: A quarter of HNW investors in France are CEOs 14

Figure 5: 7.2% of France’s HNW client base is made up of expats 15

Figure 6: Nearly 40% of Frances’s HNW expats are from the UK 16

Figure 7: Alexander Peter Wealth Management targets British expats 17

Figure 8: Over half of HNW assets are managed using discretionary mandates 19

Figure 9: A lack of time is the major driver of demand for wealth management services in France 20

Figure 10: The vast majority of France’s HNW investors use two or more advisors 21

Figure 11: HNW demand is particularly high for advisory services 22

Figure 12: Advisory asset management will experience the highest increase in demand 23

Figure 13: HNW investors in France are reluctant to relinquish control 24

Figure 14: Advisors should build strong relationships with their clients to offset self-directing trends 25

Figure 15: The average French HNW portfolio is relatively balanced 27

Figure 16: The majority of equity investments are held in funds 28

Figure 17: Equities growth will be driven by asset diversification and dividend income opportunities 29

Figure 18: Bonds are the third most important investment vehicle 30

Figure 19: Bond investments are forecast to decrease across the continent 31

Figure 20: Cash and near-cash allocations are higher in France than the rest of Europe 32

Figure 21: Risk aversion will drive cash and near-cash investment growth 33

Figure 22: Property funds are significantly more popular than direct investments 34

Figure 23: Property investments are forecast to increase further 35

Figure 24: Private equity funds are the most popular alternatives investment 36

Figure 25: The majority of industry experts expect alternative investments to increase 37

Figure 26: French HNW investors prefer to hold commodities directly 38

Figure 27: Asset diversification drives French HNW investment in commodities 39

Figure 28: Tax planning is the priority for France’s HNW investors 41

Figure 29: Allen & Overy advises wealth managers on tax matters 42

Figure 30: Financial planning will experience the highest increase in demand 43

Figure 31: Primonial offers a wide range of wealth management services 44