Wealth in the UK: HNW Investors 2017

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

London is a major wealth capital with competitive financial services, fintech, and property industries. HNW individuals from around the world reside in the UK, particularly London, for its attractive lifestyle and business opportunities. The majority of UK HNW investors are over the age of 50, with males accounting for the majority. Equity and bond investments constitute the greatest proportions of UK HNW portfolios, mirroring the regional average. UK wealth managers experience strong demand for financial products and services, with pension planning in particularly high demand.

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

Scope

– Inherited wealth dominates among UK HNWs, but taken together the largest share has been sourced from family business ownership and first-generation entrepreneurship.

– The vast majority of UK HNW investors prefer their wealth to be managed professionally, with 79.5% placed in discretionary mandates.

– Asset allocation is heavily weighted towards equities and bonds. Wealth managers anticipate reduced demand for bond investments and greater interest in non-traditional asset classes.

– Pension and financial planning services show the strongest demand, and this is not expected to change in the near future. Demand for inheritance planning will remain stable.

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 the product and service demand expressed by UK HNW investors and react proactively to the forecasted changes in demand.

Coutts International
DBS
Delancey
Mount Kendal
Sandaire

Table of Contents

Table of Contents

1. EXECUTIVE SUMMARY 3

1.1. UK HNW clients rely heavily on professional wealth management 3

1.2. Key findings 3

1.3. Critical success factors 3

2. PROFILING THE UK HNW INVESTOR 8

2.1. Inheritance accounts for the largest proportion of UK HNW wealth 8

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

2.1.2. Two fifths of UK wealth is accumulated through family businesses and entrepreneurship 9

2.1.3. UK HNW wealth is driven by financial services 10

2.1.4. UK HNW Investors are likely to hold director and shareholder roles 11

2.2. Expats in the UK represent a minimal proportion of the population 12

2.2.1. The proportion of expats in the UK is lower than in Europe 12

2.2.2. The UK’s Tier 1 (Investor) visa grants residence to HNW expats 13

2.2.3. Europe is the leading feeder region for HNW expats in the UK 14

2.2.4. Uncertainty over repatriation and insufficient control over investments drive HNW expats to invest a proportion of their wealth in the UK 15

3. UK HNW INVESTMENT STYLE PREFERENCES 18

3.1. UK HNWs are comfortable with professionals managing their wealth 18

3.1.1. Discretionary mandates are favored among UK HNW investors 18

3.1.2. UK HNW investors value the expertise and capabilities of wealth managers 19

3.1.3. UK HNW investors are comfortable working with more than one wealth manager 20

3.2. Providing discretionary asset management is key for wealth managers catering to UK HNW investors 21

3.2.1. Notable demand for automated investment services is forecast 22

3.2.2. Establishing trust with HNW investors is key for wealth managers 23

3.2.3. HNW individuals choose to invest directly to avoid management fees 24

4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG UK HNW INVESTORS 26

4.1. UK HNW portfolios are heavily weighted towards equities and bonds 26

4.1.1. Over half of UK HNW portfolios are allocated to equity investments 26

4.1.2. Equity investments make up over half of the average HNW portfolio 27

4.1.3. Bond investments constitute a notable proportion but are forecast to decline 29

4.1.4. Cash and near-cash investments are less important in the UK than the regional average 31

4.1.5. HNW clients allocate a minimal proportion of their portfolio to property 33

4.1.6. The majority of alternative investments are held in hedge funds 36

4.1.7. Commodities constitute a minimal proportion of UK HNW portfolios 38

5. UK HNW PRODUCT AND SERVICE DEMAND 41

5.1. Planning services are essential for UK wealth managers 41

5.1.1. HNW demand is particularly strong for financial and pension planning 41

5.1.2. Access to pension planning services is key for UK HNW investors 42

6. APPENDIX 44

6.1. Abbreviations and acronyms 44

6.2. Definitions 44

6.2.1. HNW 44

6.2.2. Liquid assets 44

6.3. Methodology 44

6.3.1. GlobalData’s 2016 Global Wealth Managers Survey 44

6.3.2. GlobalData’s 2015 Global Wealth Managers Survey 45

6.3.3. GlobalData’s WealthInsight 45

6.4. Bibliography 45

6.5. Further reading 46

Figures

List of Figures

Figure 1: Almost three quarters of UK HNW investors are over the age of 50 9

Figure 2: A greater proportion of UK HNW investors source their wealth through inheritance or earned income than in the wider region 10

Figure 3: Close to half of HNW clients accumulate most of their wealth through financial services 11

Figure 4: UK HNW investors are less likely to hold CEO and chairman roles compared to the European average 12

Figure 5: The proportion of HNW expat clients in Europe is nearly double that of the UK 13

Figure 6: Over half of UK HNW expats are from France or the US 15

Figure 7: Uncertainty over whether they will return to their country of origin drives HNW expats to invest a proportion of their wealth in the UK 16

Figure 8: Coutts International supports soon-to-be UK residents and individuals with financial interests in the UK 17

Figure 9: Almost 80% of HNW assets are managed via discretionary mandates 19

Figure 10: A lack of both time and expertise drive UK HNW investors to seek professional wealth management 20

Figure 11: UK HNW clients place over half of their portfolio with their main wealth manager 21

Figure 12: Wealth managers experience mixed levels of demand across investment products and services 22

Figure 13: Discretionary asset management and automated investment services are expected to drive future demand for wealth management 23

Figure 14: HNW investors are drawn to discretionary asset management once they have established trust through advisory asset management 24

Figure 15: Investor confidence and preferring to manage simple asset classes are not major drivers for investing directly 25

Figure 16: UK HNW portfolios are dominated by equities 27

Figure 17: UK HNW investors allocate more assets to equities than the wider region 28

Figure 18: UK HNW investors value capital appreciation opportunities when investing in equities 29

Figure 19: Direct holdings are preferred to bond funds 30

Figure 20: UK HNW investors are drawn to bonds for diversification and risk aversion 31

Figure 21: Local currency deposits are highly regarded among UK HNW investors 32

Figure 22: Nearly half of clients hold cash in order to maintain liquidity 33

Figure 23: UK HNW investors display a strong propensity for investing in property ETFs 34

Figure 24: Property investments are driven by the desire to diversify assets 35

Figure 25: HNW investors in Asia can access UK real estate investment advice through Mount Kendal’s advisory services 36

Figure 26: 4.5% of assets in HNW portfolios are invested in alternatives 37

Figure 27: Hedge funds are valued for their ability to provide diversification 38

Figure 28: Similar to European portfolios, only 1% of UK HNW investment is allocated to commodities 39

Figure 29: UK wealth managers expect demand for commodity investments to increase over the next year 40

Figure 30: Wealth managers experience less demand for inheritance advice than for other planning services in the UK 42

Figure 31: Pension and financial planning services are expected to experience the greatest increases in demand 43

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