Wealth in Germany: HNW Investors 2017

Powered by

All the vital news, analysis, and commentary curated by our industry experts.

$3450

"Wealth in Germany: HNW Investors 2017" analyzes the investing preferences and portfolio allocation of German HNW investors. The report is based on our proprietary Global Wealth Managers Survey.

Germany is a strong industrial nation with a commercial landscape dominated by SMEs. This is reflected in the background of German HNW individuals – most are either family business owners or first-generation entrepreneurs, and are more likely to have generated their wealth in manufacturing, construction, or IT. German HNW investors show strong interest in discretionary mandates, while demand for planning services is moderate. A below-average proportion of HNW wealth is allocated to equities, but this is expected to change as investors are looking for capital appreciation opportunities.

Specifically the report –
– Profiles the average German HNW investor in terms of their demographics and analyzes the expat opportunity in Germany.
– Analyzes which wealth management mandates are preferred among German HNW investors and how demand will develop going forward.
– Examines the allocation of German HNW investors’ portfolios into different asset classes and how the allocation is expected to develop in the future.
– Analyzes product and service demand among German HNW investors.

Scope

– While discretionary mandates remain the most popular form of wealth management, accounting for almost 52% of investments, German HNWs have a greater preference for advisory services than the European average. This reveals a desire for greater control and lower costs.

– HNW demand for robo-advice from wealth managers is currently low, but over a third feel it will increase in the next two years. Lower fees, a growing comfort and familiarity with automated advice, and expanding offerings will lead to increased uptake among HNWs.

– German HNW asset allocation has traditionally been underweight on equities, reflecting a stronger risk aversion compared to the European average. However, poor returns in traditionally favored asset classes will lead to equities, property, and alternatives growing in popularity.

– Financial and inheritance planning demand is expected to pick up as the wealthy population will increasingly look for advice about transferring wealth to the next generation and navigating the turbulent financial course ahead.

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 product and service demand expressed by German HNW investors and react proactively to the forecasted change in demand.

Hauck & Aufhäuser
Deutsche Bank

Table of Contents

Table of Contents

1. EXECUTIVE SUMMARY 2

1.1. Business interests are the leading generator of German HNW wealth 2

1.2. Key findings 2

1.3. Critical success factors 2

2. PROFILING THE GERMAN HNW INVESTOR 8

2.1. The characteristics of the German economy have defined its HNW population 8

2.1.1. German HNW investors are typically older than their European peers 8

2.1.2. The majority of German HNWs are family business owners and entrepreneurs 9

2.1.3. A higher proportion of German HNW individuals are CEOs or chairpersons 10

2.1.4. Many HNW investors have built their fortunes in manufacturing 11

2.2. Expats form a small proportion of the overall HNW population 12

2.2.1. The number of HNW expats in Germany is in line with the European average 12

2.2.1. Most HNW expats are from EU or Schengen Area countries 13

3. GERMAN HNW INVESTMENT STYLE PREFERENCES 15

3.1. German HNW investors use several wealth management firms to save them time and to benefit from their expertise 15

3.1.1. German HNW investors use an average of three wealth management firms 15

3.1.2. Wealth managers are chosen for the time they save their HNW clients and their expertise 16

3.2. With a greater preference for advisory and execution-only services, German HNWs reveal their desire for control and lower costs 17

3.2.1. While discretionary mandates remain most popular, German HNW investors have a greater preference for advisory services than the European average 17

3.2.2. HNW investors choose discretionary asset management as a means of saving time, although many have transitioned from advisory services once trust has been built 18

3.2.3. HNW investors choose advisory asset management as a means of retaining control and lowering fees 18

3.2.4. German execution-only HNW clients have confidence and seek control while avoiding management fees 19

3.3. Demand for most forms of wealth management will increase, with wealth managers needing to keep a close eye on the rise of robo-advice 20

3.3.1. German wealth managers are currently experiencing the highest demand for advisory and discretionary mandates 20

3.3.2. Wealth managers are seeing weak demand from HNW clients for robo-advice 21

3.3.3. Wealth managers expect demand for advisory and discretionary mandates to increase further in the next two years 22

3.3.4. HNW demand for robo-advice will increase, requiring a strategic response from wealth managers 23

4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG GERMAN HNW INVESTORS 24

4.1. Poor yields will push bond investments down, with HNW investors chasing greater returns in equities 24

4.1.1. German HNW asset allocation has traditionally been underweight on equities 24

4.1.2. Equities, property, and alternatives will appeal to HNWs seeking greater returns over the next 12 months 24

4.2. HNW demand for equities will increase as investors seek higher returns 25

4.2.1. Equities constitute 36% of HNW investors’ managed wealth and remain a turbulent asset class 25

4.2.2. While German HNWs have a higher propensity for direct equity holdings, the ETF market is growing rapidly 26

4.2.3. Dividend income and capital appreciation opportunities fuel HNW appetite for equities 27

4.3. Bond investments are forecast to decrease in popularity 28

4.3.1. German HNW bond holdings are in line with regional allocations, although government bonds are more popular 28

4.3.2. Bond investments will continue to decline in popularity 29

4.4. Cash and near-cash allocations will fall as real returns deteriorate 29

4.4.1. The German HNW cash portfolio is largely in local currency deposits 29

4.4.2. Demand for cash investments will decrease, pushed down by low interest rates and rising inflation 30

4.5. Property will be an increasingly attractive option for risk-averse investors 31

4.5.1. German HNW investors are more likely to hold direct property investments 31

4.5.1. Demand for property investments will increase over the next 12 months 32

4.5.2. The perception of safety, inflation protection, and rental income drive HNW appetite for property 33

4.6. Although only a small component of HNW portfolios, demand for alternatives is forecast to increase 34

4.6.1. Private equity forms the majority of alternative investments 34

4.6.1. Demand for alternatives is forecast to increase 35

4.7. Demand for commodities will increase as German HNWs seek inflation protection and safer havens 36

4.7.1. While exposure remains low, German HNWs are more likely to hold direct commodities 36

4.7.2. Commodities are chosen for safety and inflation protection 37

4.7.3. Demand for commodities is expected to increase over the next year 37

5. HNW PRODUCT AND SERVICE DEMAND 38

5.1. Demand for planning services is moderate 38

5.1.1. Overall German demand for planning services is more muted than in Europe 38

5.1.2. Demand for tax and pension advice lags significantly behind the regional average 38

5.2. Demand for planning services will increase 39

5.2.1. Demand for financial and inheritance planning is expected to rise 39

6. APPENDIX 41

6.1. Abbreviations and acronyms 41

6.2. Definitions 41

6.2.1. Affluent 41

6.2.2. Mass affluent 41

6.2.3. HNW 41

6.2.4. Liquid assets 41

6.3. Methodology 41

6.3.1. GlobalData’s 2016 Global Wealth Managers Survey 41

6.3.2. GlobalData’s 2015 Global Wealth Managers Survey 42

6.3.3. GlobalData’s WealthInsight 42

6.4. Bibliography 42

6.5. Further reading 43

Figures

List of Figures

Figure 1: German HNW investors are typically older than their European peers 2

Figure 2: Business interests are the leading generator of German HNW wealth 3

Figure 3: A higher proportion of German HNW individuals are CEOs or chairpersons compared to Europe 4

Figure 4: Manufacturing is by far the leading industry from which German HNW investors have created their wealth 5

Figure 5: The proportion of German HNWs who are expats is largely in line with Europe 6

Figure 6: Almost a quarter of HNW expats in Germany are from the US 7

Figure 7: The majority of German HNW clients use three wealth managers and place over half of their investments with their main manager 9

Figure 8: HNW investors’ lack of time and expertise drive demand for professional management 10

Figure 9: Allocations in advisory and execution-only mandates are above the regional average 11

Figure 10: HNWs use discretionary asset management to save time, and have often transitioned from advisory mandates 12

Figure 11: Execution-only clients seek control and have confidence managing their investments 13

Figure 12: German wealth managers are experiencing weak demand for automated advice from their HNW clients 15

Figure 13: Demand for robo-advice is expected to grow more than for execution-only services 16

Figure 14: Current German HNW asset allocation is broadly in line with European trends 18

Figure 15: Over half of Germany’s HNW equity portfolio is held directly 19

Figure 16: HNW demand for equities is overwhelmingly expected to increase 20

Figure 17: German HNW bond allocations are broadly in line with the wider region 21

Figure 18: As elsewhere in Europe, bonds will continue to lose their appeal 22

Figure 19: HNW investors hold around 13% of their investments in cash and near-cash products 23

Figure 20: German HNW investors will shift their allocation away from deposits 24

Figure 21: German HNW investors hold almost 8% of their wealth in property investments 25

Figure 22: The perception of safety, rental income, and inflation protection are the main drivers for property investments 26

Figure 23: Private equity accounts for the largest proportion of German HNW investment in alternatives 27

Figure 24: Demand for alternatives is set to rise in the future 28

Figure 25: A tiny proportion of German HNW investments are held in commodities, aligned with the regional average 29

Figure 26: Demand for commodity investments will increase as investors seek safer havens 30

Figure 27: Demand for pension and tax planning services is particularly low in Germany 32

Figure 28: Over half of wealth managers expect demand for financial and inheritance planning to increase 33

Frequently asked questions

Wealth in Germany: HNW Investors 2017 thematic reports
Currency USD
$3,450

Can be used by individual purchaser only

$10,350

Can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company


Undecided about purchasing this report?

Enquire Before Buying

Get in touch to find out about multi-purchase discounts

reportstore@globaldata.com
Tel +44 20 7947 2745

Every customer’s requirement is unique. With over 220,000 construction projects tracked, we can create a tailored dataset for you based on the types of projects you are looking for. Please get in touch with your specific requirements and we can send you a quote.

See what our customers are saying

“The GlobalData platform is our go-to tool for intelligence services. GlobalData provides an easy way to access comprehensive intelligence data around multiple sectors, which essentially makes it a one-for-all intelligence platform, for tendering and approaching customers.

GlobalData is very customer orientated, with a high degree of personalised services, which benefits everyday use. The highly detailed project intelligence and forecast reports can be utilised across multiple departments and workflow scopes, from operational to strategic level, and often support strategic decisions. GlobalData Analytics and visualisation solutions has contributed positively when preparing management presentations and strategic papers.”

Business Intelligence & Marketing Manager, SAL Heavy Lift

“COVID-19 has caused significant interference to our business and the COVID-19 intelligence from GlobalData has helped us reach better decisions around strategy. These two highlights have helped enormously to understand the projections into the future concerning our business units, we also utilise the project database to source new projects for Liebherr-Werk to use as an additional source to pitch for new business.”

Market Analyst & Management, Liebherr-Werk

Your daily news has saved me a lot of time and keeps me up-to-date with what is happening in the market, I like that you almost always have a link to the source origin. We also use your market data in our Strategic Business Process to support our business decisions. By having everything in one place on the Intelligence Center it has saved me a lot of time versus looking on different sources, the alert function also helps with this.

Head of Key Accounts, Saab AB

Having used several other market research companies, I find that GlobalData manages to provide that ‘difficult-to-get’ market data that others can’t, as well as very diverse and complete consumer surveys.

Marketing Intelligence Manager, Portugal Foods

Our experience with GlobalData has been very good, from the platform itself to the people. I find that the analysts and the account team have a high level of customer focus and responsiveness and therefore I can always rely on. The platform is more holistic than other providers. It is convenient and almost like a one stop shop. The pricing suite is highly competitive and value for our organisation.

I like reports that inform new segments such as the analysis on generation Z, millennials, the impact of COVID 19 to our banking customers and their new channel habits. Secondly the specialist insight on affluent sector significantly increases our understanding about this group of customers. The combination of those give us depth and breadth of the evolving market.

I’m in the business of answering and helping people make decisions so with the intelligence center I can do that, effectively and efficiently. I can share quickly key insights that answer and satisfy our country stakeholders by giving them many quality studies and primary research about competitive landscape beyond the outlook of our bank. It helps me be seen as an advisory partner and that makes a big difference. A big benefit of our subscription is that no one holds the whole data and because it allows so many people, so many different parts of our organisation have access, it enables all teams to have the same level of knowledge and decision support.

Head of Customer Insight and Research, Standard Chartered

“I know that I can always rely on Globaldata’s work when I’m searching for the right consumer and market insights. I use Globaldata insights to understand the changing market & consumer landscape and help create better taste & wellbeing solutions for our customers in food, beverage and healthcare industries.

Globaldata has the right data and the reports are of very high quality compared to your competitors. Globaldata not only has overall market sizes & consumer insights on food & beverages but also provides insights at the ingredient & flavour level. That is key for B2B companies like Givaudan. This way we understand our customers’ business and also gain insight to our unique industry”

Head of Consumer Sensory Insights, Givaudan

GlobalData provides a great range of information and reports on various sectors that is highly relevant, timely, easy to access and utilise.  The reports and data dashboards help engagement with clients; they provide valuable industry and market insights that can enrich client conversations and can help in the shaping of value propositions. Moreover, using GlobalData products has helped increase my knowledge of the finance sector, the players within it, and the general threats and opportunities.

I find the consumer surveys that are carried out to be extremely beneficial and not something I have seen anywhere else. They provided an insightful view of why and which consumers take (or don’t) particular financial products. This can help shape conversations with clients to ensure they make the right strategic decisions for their business.

One of the challenges I have found is that data in the payments space is often piecemeal. With GD all of the data I need is in one place, but it also comes with additional market reports that provide useful extra context and information. Having the ability to set-up alerts on relevant movements in the industry, be it competitors or customers, and have them emailed directly to me, ensures I get early sight of industry activity and don’t have to search for news.

Senior Account Manager, TSYS
Go even deeper with GlobalData Intelligence Center

Every Company Report we produce is powered by the GlobalData Intelligence Center.

Subscribing to our intelligence platform means you can monitor developments at Wealth in Germany: HNW Investors 2017 in real time.

  • Access a live Wealth in Germany: HNW Investors 2017 dashboard for 12 months, with up-to-the-minute insights.
  • Fuel your decision making with real-time deal coverage and media activity.
  • Turn insights on financials, deals, products and pipelines into powerful agents of commercial advantage.