Wealth in South Africa: Sizing the Market Opportunity 2016

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South Africa is currently navigating a turbulent course of political, economic, and financial uncertainties that are seriously undermining future prospects. Low economic growth, high inflation, currency devaluation, and the threat of a further downgrade of the country’s national credit rating to “junk” are hampering the South African wealth market. Political tensions are increasing investor nerves, making it a vital time for wealth managers to guide their clients through rough waters.

Scope

Verdict Financial’s “Wealth in South Africa: Sizing the Market Opportunity 2016” analyzes the South African wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.

Specifically the report:

– Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.

– Analyzes which asset classes are favored by South African investors and how their preferences impact the growth of the total savings and investments market.

– Examines HNW clients’ attitudes towards non-liquid investments such as property and commodities.

– Identifies key drivers and booking centers for offshore investments.

Reasons to Buy

Benchmark your share of the South African wealth market against the current market size.

Forecast your future growth prospects using our projections for the market to 2020.

Identify your most promising client segment by analyzing penetration of affluent individuals in South Africa.

Evaluate your HNW proposition by understanding how the South African tax system will impact HNW clients.

Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.

Table of Contents

EXECUTIVE SUMMARY

South Africa's volatile economic, political, and financial environment will hamper market growth

Key findings

Critical success factors

SIZING AND FORECASTING THE SOUTH AFRICAN WEALTH MARKET

The onshore wealth market is extremely concentrated at the top end

Affluent individuals account for just

0.8% of South Africa's population

In South Africa affluent individuals hold over 90% of liquid assets

DRIVERS OF GROWTH IN THE SOUTH AFRICAN WEALTH MARKET

Growth in South Africa's retail savings and investments market will slow

Economic and political difficulties will hamper growth

Going forward growth will be driven by deposits

Deposits will benefit from increasing savings and investors seeking safe havens

Savings will gradually increase

High inflation undermines the appeal of deposits

Equities and mutual funds have experienced extreme volatility

The volatility of the FTSE JSE Index has been exacerbated by political tensions

The popularity of mutual funds and equities is unlikely to be dented, although more muted growth is forecast to 2020

Retail bonds will remain a marginal asset class

HNW INVESTMENT PREFERENCES

South African HNW individuals allocate over a quarter of their portfolios to alternative and property investments

Hedge funds are a popular alternative investment for South African HNWs

Property accounts for over 40% of non-traditional liquid investments

South African HNWs hold almost a third of investments offshore

Geographic diversification and political instability are the biggest drivers for offshore investments

Offshore wealth is predominantly held in the UK

The South African government faces an ongoing battle with offshore tax evasion

Personal tax rates are high, but are not a key driver of offshore investment

APPENDIX

Abbreviations and acronyms

Supplementary data

Definitions

Affluent

Domicile

DTC

FATCA

HNW

Liquid assets

Mass affluent

Onshore

Residency

TIEAs

Methodology

Verdict Financial's 2016 Global Wealth Managers Survey

Global Wealth Model methodology

Global Retail Investments Analytics methodology

Bibliography

Further reading

About Verdict Financial

Disclaimer

Frequently asked questions

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