Wealth in Singapore: HNW Investors 2017

Table of Contents

1. EXECUTIVE SUMMARY 1

1.1. Key findings 1

1.2. Critical success factors 1

2. PROFILING THE SINGAPOREAN HNW INVESTOR 7

2.1. HNW investors who have accumulated their fortunes through earned income remain the largest specific segment 7

2.1.1. The vast majority of Singaporean HNW investors are approaching or have reached retirement age, making wealth preservation strategies key 7

2.1.2. Professionals lead Singapore’s wealth market, but entrepreneurs are also a lucrative target market 8

2.1.3. Property is the main wealth generator among affluent Singaporeans, but financial services remain important too 10

2.1.4. Singaporean HNW investors are more likely to hold director and shareholder roles than their regional peers 12

2.2. Dedicated expat services are a necessity in the Singaporean market 13

2.2.1. Expats account for half of the resident HNW population 13

2.2.2. Government incentives still make Singapore a hub for wealthy expatriate investors 14

2.2.3. HNW expats from the UK and Switzerland represent the largest target segments 14

2.2.4. Expat offerings from the majors, such as Standard Chartered, are increasingly being challenged by start-ups and boutiques 15

2.2.5. Expats settling in Singapore demand control over their investments 17

3. HNW INVESTMENT STYLE PREFERENCES 18

3.1. Convenience and professionalism should feature strongly in every wealth manager’s targeting campaign 18

3.1.1. Singaporean HNW investors use an average of three wealth management firms 18

3.1.2. Lack of time and expertise motivate HNW investors to seek professional advice 19

3.1.3. The overwhelming majority of HNW wealth is kept in discretionary mandates, and demand will remain strong 20

3.1.4. Current demand is most pronounced for discretionary mandates 21

3.2. Demand for all wealth mandates is not expected to spike significantly 23

3.2.1. Accelerated demand for discretionary mandates will be the pre-eminent trend 23

3.2.2. Investors’ reluctance to relinquish control still underpins demand for advisory mandates, but lack of time is driving a skew towards discretionary 24

3.2.3. HNW investors feel confident managing a small part of their wealth independently 26

4. ASSET ALLOCATION TRENDS AMONG SINGAPOREAN HNW INDIVIDUALS 27

4.1. A desire to diversify portfolios will drive uptake of alternatives among HNW investors 27

4.1.1. Increasing demand for risk assets means investor education is becoming more important 27

4.1.2. Equities constitute almost a third of Singaporean HNW investors’ managed wealth 28

4.1.3. Bond investments have declined in popularity over the past year, and will continue to do so 30

4.1.4. HNW investors’ desire to maintain liquidity is putting a strain on fee income 33

4.1.5. Property remains a small element of Singaporean HNW investment portfolios 34

4.1.6. Conservative Singapore has taken to alternative investment alternatives 36

4.1.7. Commodity investments are of little interest to Singapore’s HNW clients 39

5. HNW PRODUCT AND SERVICE DEMAND 42

5.1.1. Wealth managers should lead with financial planning services 42

5.1.2. Wealth managers should consider including tax advice in their overall service propositions 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. GlobalData’s WealthInsight 46

6.3.4. Exchange rates 47

6.4. Bibliography 47

6.5. Further reading 48

List of Figures

Figure 1: Singaporean HNW investors are typically male and above the age of 50 8

Figure 2: Earned income and business ownership are the most important generators of HNW wealth 10

Figure 3: Property and real estate account for by far the largest share of Singapore’s HNW investors 11

Figure 4: Director is the most common title held by Singaporean HNW individuals 12

Figure 5: Expats’ share of the Singaporean HNW population is more than twice that across the region 13

Figure 6: UK migrants dominate Singapore’s sizable HNW expat market 15

Figure 7: Segmentation of its expat offering, and demonstration of its targeted credentials, keep Standard Chartered strong in this lucrative space 16

Figure 8: Control issues dominate the expatriation of wealth in Singapore 17

Figure 9: Singaporean HNW investors prefer to work with at least two wealth management firms 19

Figure 10: Lack of time and expertise drive financial advice uptake among affluent Singaporeans 20

Figure 11: The majority of Singapore’s HNW wealth is now in discretionary mandates 21

Figure 12: Singaporean HNW individuals are showing strongest demand for discretionary mandates, reflecting a relatively newfound ability to relinquish some control 22

Figure 13: The recent skew towards discretionary asset management is expected to prevail in 2017-18 24

Figure 14: HNW investors are reluctant to relinquish control over their investments 25

Figure 15: Investors’ reluctance to relinquish control completely means a small proportion of HNW wealth will remain unmanaged 26

Figure 16: Singapore HNW investors are increasing their exposure to risk assets 28

Figure 17: HNW investors prefer direct equity holdings, making market access a hygiene factor 29

Figure 18: Capital appreciation opportunities and dividend income are the top drivers of equity investments 30

Figure 19: HNW investors allocate just 7.3% of managed wealth to fixed-income products 31

Figure 20: Demand for fixed-income products is set to decrease 32

Figure 21: Just under a quarter of managed Singaporean HNW wealth is held in cash products 33

Figure 22: HNW demand for cash products is expected to stagnate 34

Figure 23: A lackluster property market in recent years continues to curb HNW investment in Singapore 35

Figure 24: Asset diversification is the key driver of the limited property investments occurring 36

Figure 25: Alternatives constitute a minor proportion of the typical HNW portfolio 37

Figure 26: Diversification benefits are driving demand for alternatives 38

Figure 27: Commodities are of little interest to affluent Singaporean investors 40

Figure 28: Commodity holdings are forecast to remain low 41

Figure 29: Demand for financial planning services is recording the strongest demand levels in a market where demand levels are highly polarized 43

Figure 30: Already strong HNW demand for financial and pension planning services is forecast to increase further 44