In the US, men dominate the HNW space, accounting of a significant share of HNWs in the country. The situation is slowly evolving, however, with female HNW investors, especially the salaried, becoming an increasingly attractive target segment.
The US wealth management market report sizes the opportunity within the US wealth market and analyzes the investment preferences, service requirements, and portfolio allocations of the country’s HNW investors.
What are the market dynamics in the US wealth management market?
US HNW individuals make their fortunes predominantly through earned income. US-based companies are known to offer relatively high and lucrative compensation to executives. What is perhaps a little surprising is the small percentage of HNW individuals pulling their fortunes from entrepreneurship, which is becoming a growing source of wealth generation across the world. The small percentage is also surprising given that the US leads the global startup market. While failure is notably more likely among nascent businesses, new entrepreneurs represent a lucrative market for wealth managers willing to target individuals who do not yet qualify as HNW. Supporting entrepreneurs during the early stages of their business venture allows providers to beat the competition and create loyalty early on. With lack of capital the number one challenge faced by early-stage business owners, supporting entrepreneurs during the capital raising process is key.
The inheritor market, although currently very small, is set to grow over the next decade given the age structure of the current HNW cohort, which is dominated by older affluents. This will lead to an increase in inheriting spouses and second- and third-generation inheritors gaining a significant share of HNW wealth in the next 10 years. Given that HNW inheritors often tend to be less financially savvy than other investors, they will be interested in services such as financial education and discretionary asset management.
What are the key investment preferences for HNW investors in the US wealth management market?
The key investment preferences for HNW investors in the US wealth management market are advisory asset management, automated investment services, discretionary asset management, and execution-only asset management. The demand for automated investment services is expected to increase at a healthy pace.
US wealth management market, by investment preferences
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What are the key reasons for expatriation for HNW investors in the US wealth management market?
The key reasons of expatriation for HNW investors in the US wealth management market are job transfer, retirement, business start-up, tax efficiencies, better opportunities for children, better lifestyle conditions, and political/economic instability. Better opportunities for children is one of the major drivers of expatriation.
The US wealth management market, by reasons of expatriation
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What are the major asset classes of wealth allocation for HNW investors in the US wealth management market?
Equities, cash and near cash, bonds, property, alternatives, and commodities are the major asset classes of wealth allocation for HNW investors in the US wealth management market. HNW investors assign the largest proportion of their wealth to equities. This asset class is also forecast to experience the largest increase in HNW demand over the next 12 months, presenting wealth managers with notable challenges given the current investment environment.
US wealth management market, by major asset classes of wealth allocation
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What are the major asset classes of offshore investment for HNW investors in the US wealth management market?
The major asset classes of offshore investment for HNW investors in the US wealth management market include equity, cash and near-cash products, bonds, property, alternatives, and commodities. Investing in offshore bonds is an important diversification tool for most HNW investors in the US. Offshore bonds can enhance the risk-adjusted return of the HNW portfolio by diversifying across different economies with varying growth rates, interest-rate regimes, yield curves, inflation policies, and currencies.
The US wealth management market, by offshore investment
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Market report scope
|Key investment preferences||Advisory Asset Management, Automated Investment Services, Discretionary Asset Management, and Execution-Only Asset Management.|
|Key reasons for expatriation||Job Transfer, Retirement, Business Start-Up, Tax Efficiencies, Better Opportunities for Children, Better Lifestyle Conditions, and Political/Economic Instability|
|Major asset classes of wealth allocation||Equities, Cash and Near Cash, Bonds, Property, Alternatives, and Commodities|
|Major asset classes of offshore investment||Equity, Cash and Near Cash, Bonds, Property, Alternatives, and Commodities|
- Expats represent an attractive target market thanks to their more complex service requirements.
- The market for robo-advisory services is growing rapidly in the country’s HNW space.
- Equities, cash and near-cash investments, and property dominate the US HNW asset portfolio.
Reasons to Buy
- Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
- Enhance your marketing strategies and capture new clients using insights from our data on HNW investors’ asset management style preferences.
- Tailor your investment product portfolio to match the current and future demand for different asset classes among HNW individuals.
- Develop your service proposition to match the demand expressed by US HNW investors and react proactively to forecasted changes in demand.
Securities and Exchange Commission
Table of Contents
Table of Contents
Investment Style Preferences
Asset Allocation Preferences
Offshore Investment Preferences
Products and Services
List of Figures
List of Figures
Figure 1: 2.2% of US individuals qualify as HNW
Figure 2: The rich are still getting richer
Figure 3: Women constitute a smaller proportion of the US HNW segment but are typically younger
Figure 4: Almost all HNW wealth is sourced from earnings or first-generation entrepreneurship
Figure 5: IT and financial services are the leading industries for sources of wealth
Figure 6: The proportion of Chinese expats has dropped while those from Canada and the UK have increased
Figure 7: Most expats stay between three and five years
Figure 8: US HNW clients still place most of their wealth with their main wealth manager
Figure 9: HNW clients rely on their advisors for peace of mind and superior expertise
Figure 10: Advisory and discretionary mandates account for two thirds of US HNW wealth
Figure 11: Demand for all types of asset management mandates is evenly spread
Figure 12: Slight drop in demand for discretionary asset management is predicted
Figure 13: Self-directed investors typically lack trust in wealth managers or prefer exclusive control
Figure 14: Equities is still by far the preferred asset
Figure 15: Equities, and specifically equity funds, outrank all other asset allocations
Figure 16: Wealth managers expect an increase in demand for all asset classes except bonds
Figure 17: Drivers for asset allocation vary greatly across the six classes
Figure 18: Increased government regulations and shifts in demographics are to blame for the stagnation of growth in offshore holdings
Figure 19: Expats retain ties with business interests in their countries of origin
Figure 20: The UK, Switzerland, and China remain the most popular booking centers
Figure 21: Except for investments in currencies, offshore asset class ratios mimic those of onshore portfolios
Figure 22: Financial and inheritance planning services are most in demand for HNW clients
Figure 23: The already strong HNW demand for all planning services is expected to increase, while demand for life insurance is forecast to stagnate
Frequently Asked Questions
The key investment preferences for HNW investors in the US wealth management market are advisory asset management, automated investment services, discretionary asset management, and execution-only asset management.
The key reasons of expatriation for HNW investors in the US wealth management market are job transfer, retirement, business start-up, tax efficiencies, better opportunities for children, better lifestyle conditions, and political/economic instability.
Equities, cash and near cash, bonds, property, alternatives and commodities are the major asset classes of wealth allocation for HNW investors in the US wealth management market.
The major asset classes of offshore investment for HNW investors in the US wealth management market include equity, cash and near-cash products, bonds, property, alternatives, and commodities.
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