Wealth in Taiwan: HNW Investors 2017

Table of Contents

1. EXECUTIVE SUMMARY 3

1.1. Understanding the needs of first-gen entrepreneurs is paramount 3

1.2. Key findings 3

1.3. Critical success factors 3

2. PROFILING THE TAIWANESE HNW INVESTOR 8

2.1. The largest proportion of Taiwanese HNW wealth can be attributed to business ownership 8

2.1.1. The majority of Taiwanese HNW individuals are males over the age of 50 8

2.1.2. A third of Taiwanese HNW clients are first-generation entrepreneurs 9

2.1.3. Taiwanese HNW wealth is sourced from manufacturing and IT services 10

2.1.4. BNP Paribas specifically caters to business owners 12

2.1.5. Taiwanese HNW investors are most likely to hold chairman and director roles 12

2.2. Expats in Taiwan are not a significant opportunity for wealth managers 13

2.2.1. The proportion of expats in Taiwan is less prominent than across Asia Pacific 13

2.2.2. HNW expats can obtain residency through an entrepreneur visa 14

2.2.3. The US and Asia Pacific are the leading feeder markets for HNW expats in Taiwan 15

3. TAIWANESE HNW INVESTMENT STYLE PREFERENCES 17

3.1. Taiwanese HNW investors prefer their wealth to be professionally managed 17

3.1.1. Advisory mandates are favored among Taiwanese HNW investors 17

3.1.2. Taiwanese HNW investors seek professional management for better returns 18

3.1.3. Taiwanese HNW investors rely on more wealth management firms than the regional average 19

3.2. HNW individuals in Taiwan prefer professional wealth management 20

3.2.1. Greater demand for traditional mandates is widely forecast 21

3.2.2. HNW investors favor advisory mandates for the ability to balance guidance and control 22

3.2.3. HNW individuals prefer to have exclusive control 24

4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG TAIWANESE HNW INVESTORS 25

4.1. Asset allocation is weighted towards equities and cash 25

4.1.1. In the typical Taiwanese HNW portfolio, assets are spread across all classes 25

4.1.2. Equity investments constitute the second-largest proportion of Taiwanese HNW portfolios 26

4.1.3. Bond investments are forecast to increase in demand 28

4.1.4. HNW individuals hold the greatest proportion of wealth in cash investments 30

4.1.5. HNW client portfolios in Taiwan are currently underweight in property investments 32

4.1.6. Alternatives constitute a minimal proportion of the typical Taiwanese HNW portfolio 34

4.1.7. Taiwanese HNW individuals mostly shun commodity investments 36

5. TAIWANESE HNW PRODUCT AND SERVICE DEMAND 39

5.1. Planning services are in high demand in Taiwan 39

5.1.1. Inheritance planning presents an opportunity for wealth managers to resonate with older HNW investors and business owners 39

6. APPENDIX 43

6.1. Abbreviations and acronyms 43

6.2. Definitions 43

6.2.1. HNW 43

6.2.2. Liquid assets 43

6.3. Methodology 43

6.3.1. GlobalData’s 2016 Global Wealth Managers Survey 43

6.3.2. GlobalData’s WealthInsight 44

6.3.3. Exchange rates 44

6.4. Bibliography 44

6.5. Further reading 46

List of Figures

Figure 1: Just 10% of HNW investors in Taiwan are aged 50 or younger 9

Figure 2: 61% of Taiwanese HNW investors accumulate their wealth as a family business owner or first-generation entrepreneur 10

Figure 3: Nearly half of Taiwanese HNW investors have generated their wealth from the manufacturing industry 11

Figure 4: Entrepreneurs are an important target market for BNP Paribas 12

Figure 5: Taiwanese HNW investors are most likely to hold chairman and director roles 13

Figure 6: Expats constitute a minor proportion of the Taiwan HNW population when compared to Asia Pacific 14

Figure 7: The majority of HNW expats in Taiwan are from the US and Hong Kong 16

Figure 8: Taiwanese HNW individuals have a propensity for advisory mandates 18

Figure 9: Better returns and access to more sophisticated investments motivate Taiwanese HNW investors to seek a professional 19

Figure 10: Taiwanese HNW clients place over half of their portfolio with their main wealth manager 20

Figure 11: Demand is strongest for advisory asset management 21

Figure 12: Demand for advisory and automated services will rise notably over the next two years 22

Figure 13: Taiwanese HNW investors value advisory asset management for its collaborative features 23

Figure 14: Wealth managers believe HNW investors who choose execution-only management lack trust in professionals 24

Figure 15: Taiwanese HNW investments are well diversified, with cash leading the way 26

Figure 16: Taiwanese HNW investors hold a below-average proportion of wealth in equity investments 27

Figure 17: HNW individuals value equity investments for their capital appreciation opportunities 28

Figure 18: Over half of Taiwanese bond investments are kept in corporate investment-grade bonds 29

Figure 19: Equity investments are driven by the predictability of returns 30

Figure 20: Taiwanese HNW investors favor local and foreign currency deposits 31

Figure 21: Cash will remain a major component of Taiwan’s HNW investor portfolio 32

Figure 22: Funds are the preferred property investment of Taiwanese HNW individuals 33

Figure 23: Property prices are driven by price appreciation and inflation protection 34

Figure 24: Compared to the wider region, HNW investors in Taiwan hold a smaller proportion of wealth in alternatives 35

Figure 25: Wealth managers in Taiwan are downbeat about the prospects of alternative investments compared to the wider region 36

Figure 26: HNW commodity holdings are even lower in Taiwan than in the wider region 37

Figure 27: Wealth managers in Taiwan are more hopeful about commodity demand than across Asia Pacific 38

Figure 28: Wealth managers experience very strong demand for financial and pension planning services 40

Figure 29: Around half of wealth managers expect demand for all financial services to increase in the next two years 41

Figure 30: UBS launches toolkit to help UHNW individuals set up a family office 42