Wealth in France: HNW Investors 2019

Table of Contents

1. EXECUTIVE SUMMARY

1.1. A segmented strategy offers opportunities for AUM growth in France’s congested wealth market

1.2. Key findings

1.3. Critical success factors

2. OVERVIEW

2.1. A crowded wealth market in France calls for a multi-segmented targeting strategy

2.2. Demographics: Professionals in the financial services industry represent a sizable target market

2.3. Expats: Offering retirement services will be key for HNW expats in France

2.4. Investment style preferences: Discretionary services are a must, but advisory and execution-only mandates should not be overlooked

2.5. Asset allocations: Demand for alternatives will increase the most

2.6. Offshore preferences: General geographic diversification is driving wealth abroad

2.7. HNW product and service demand: Wealth managers should ensure they include tax services

3. WEALTH MANAGERS WILL FIND FEMALE HNW INVESTORS AN ATTRACTIVE TARGET SEGMENT

3.1. On a regional level, France has one of the highest proportions of females who have sourced their wealth through earned income

3.1.1. Targeting females means adopting a tailored servicing approach

3.2. A significant proportion of female investors who sourced their wealth through earned income are employed in financial services

3.2.1. Female HNW investors employed in the financial services industry are likely to bank with their employer, but a strategy tailored around females’ distinct needs could change this

3.2.2. A female advisor base will aid in growing AUM for wealth managers

4. FRANCE’S SIGNIFICANT HNW EXPAT RETIREE POPULATION CALLS FOR A DEDICATED SERVICE PROPOSITION

4.1. France’s significant HNW expat retiree population calls for a dedicated targeting approach

4.1.1. Retirement is the single most important expatriation driver in France

4.1.2. Wealth managers must cater to the needs of France’s HNW expat retiree population

4.2. The

34.8%% of French HNW expats who migrated as part of a job transfer are less likely to reside in their country of choice permanently

4.2.1. Providers targeting investors who migrated as part of a job transfer need offshore capabilities

4.2.2. On the flip side, wealth managers in an expat’s country of origin may see the relationship terminated when a client expatriates to France

5. A WIDE RANGE OF INVESTMENTS AND INVESTMENT STYLES WILL MITIGATE INVESTORS’ PROPENSITY TO SPREAD WEALTH ACROSS MULTIPLE PROVIDERS

5.1. A multi-service proposition is key to address HNW investors’ promiscuity

5.1.1. Discretionary services attract the largest proportion of French HNW wealth, but demand for other mandates is set to increase the most

5.1.2. To avoid losing cost-conscious clients to competitors, wealth managers should offer low-cost self-directed channels

5.2. Access to a wide range of investment products and relationship management will allow providers to capture a greater share of wallet

5.2.1. Gaining access to a wide range of investments is the key driver for professional financial management

5.2.2. However, wealth managers need to focus on relationships for clients to remain loyal

6. THE PORTFOLIO MIX REMAINS UNCHANGED, BUT GROWING EXPERTISE IS PROMPTING INVESTORS TO TEST RISKIER INVESTMENTS

6.1. Providing a wide range of alternatives is critical in France

6.1.1. Equities dominate the typical HNW portfolio, but HNW demand for alternatives is forecast to experience the most pronounced increase

6.1.2. Alternatives are regarded as a prime diversifier

6.1.3. Providing access to alternatives will allow wealth managers to set themselves apart from the crowd, but a bit of handholding is essential

7. HNW INDIVIDUALS LIMIT DIVERSIFICATION BENEFITS AS THEY OFFSHORE WEALTH TO NEIGHBORING COUNTRIES

7.1. The majority of holdings are in equities due to their diversification benefits

7.1.1. General geographic diversification and tax benefits are the leading drivers to invest overseas

7.2. Providing sound tax advice is a must, given the importance of tax efficiencies as an offshore driver

7.2.1. Being able to provide sound tax advice is becoming more important than ever

8. INHERITANCE PLANNING PRESENTS OPPORTUNITIES TO GROW AUM

8.1. Despite strong demand, only 57% of wealth managers offer inheritance planning directly

8.2. Intergenerational wealth transfer will encourage demand for inheritance planning

9. APPENDIX

9.1. Abbreviations and acronyms

9.2. Supplementary data

9.3. Definitions

9.3.1. Affluent

9.3.2. HNW

9.3.3. Liquid assets

9.4. Methodology

9.4.1. Demographics data from GlobalData’s WealthInsight

9.4.2. GlobalData’s 2018 Global Wealth Managers Survey

9.4.3. Level of agreement calculation

9.4.4. Service level of demand score

9.4.5. Forecast level of demand calculation

9.5. Secondary sources

9.6. Further reading

List of Tables

Table 1: Cash and near-cash products: the importance of asset allocation drivers

Table 2: Equities: the importance of asset allocation drivers

Table 3: Bonds: the importance of asset allocation drivers

Table 4: Property: the importance of asset allocation drivers

Table 5: Commodities: the importance of asset allocation drivers

Table 6: Alternatives: the importance of asset allocation drivers

List of Figures

Figure 1: The wealth of the HNW population is mainly drawn from earned income

Figure 2: The majority of expats stay in the country for more than 10 years

Figure 3: Lack of expertise and time are the main reasons French HNW investors require professional advice

Figure 4: Demand for bonds is expected to decrease the most over the next 12 months

Figure 5: French HNW individuals’ booking center preferences are predominantly neighboring countries

Figure 6: Demand for socially responsible investments is expected to increase the most over the next 12 months

Figure 7: Earned income is a key source of French female HNW wealth

Figure 8: France has the highest proportion of women in Europe that source their wealth from the financial services industry

Figure 9: BNP Paribas pushes for gender equality in the workplace

Figure 10: France has the highest proportion of expats that moved for retirement purposes in Europe

Figure 11: Most expats in France originate from other European countries

Figure 12: London & Capital targets US expats in France

Figure 13: Lloyds Bank supports its clients while they are overseas

Figure 14: Advisory services are set to see the strongest growth

Figure 15: Sensitivity to fees has heightened, and the majority of French wealth managers see robo-advisors as a risk to market share

Figure 16: Access to more investment products is the lead driver for HNW individuals having their wealth professionally managed

Figure 17: Relationships are the key reasons investors choose their wealth manager over a competitor

Figure 18: HNW demand for alternatives is forecast to increase the most

Figure 19: French HNW investors’ main driver for investing in alternatives is their low correlation to financial markets

Figure 20: 40% of wealth managers strongly agree on the importance of trust to encourage alternative investments

Figure 21: French HNW individuals have one of the lowest proportions of portfolios offshore compared to other markets globally

Figure 22: The majority of French wealth managers believe wealth will return home following CRS

Figure 23: Offering inheritance planning services is important