Wealth in the UK: HNW Investors 2018
All the vital news, analysis, and commentary curated by our industry experts.
"Wealth in the UK: HNW Investors 2018", report analyzes the investing preferences and portfolio allocation of British HNW investors. It is based on our proprietary Global Wealth Managers Survey.
Intergenerational wealth transfer will be a big source of new business over the coming years, as will tax planning – with both requiring professional advice and planning. One of the main challenges is an increase in demand for both advisory and automated solutions, indicating a shift away from an industry with a traditionally strong preference for discretionary mandates. Brexit and related volatility are likely to shift HNW asset allocations in the UK, but will have limited impact on the country’s cross-border attractiveness as a destination for HNW wealth mandates.
Specifically the report –
– Profiles the average British HNW investor in terms of their demographics and looks at the expat opportunity in the UK.
– Explores which wealth management mandates are preferred among UK HNW investors and how demand will develop going forward.
– Examines the allocation of British HNW investors’ portfolios into different asset classes and how this is expected to develop in the future.
– Analyzes HNW investors’ propensity to invest offshore, their preferred booking centers and asset classes, as well as the UK’s standing as an offshore center.
– Identifies wealth and investment management product and service demand among HNW investors in the UK.
– At 14.6%, the UK has a higher proportion of female HNW investors than Europe.
– Inheritance planning will continue to be big business, but wealth managers can differentiate themselves by adding tax planning to the mix.
– Demand is increasing for both advisory mandates and automated solutions like robo-advisors..
– Over the next 12 months, UK HNW investors are expected to move away from equities and bonds in favor of property and commodities.
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’ preferences for the various styles of asset management.
– Tailor your investment product portfolio and service proposition to match current and future demand for different asset classes among HNW individuals.
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Table of Contents
Table of Contents
1. EXECUTIVE SUMMARY 2
1.1. Already a mature wealth market, the UK still offers room for growth 2
1.2. Key findings 2
1.3. Critical success factors 2
2. OVERVIEW 10
2.1. Succeeding in the UK’s HNW market requires an understanding of evolving HNW demand patterns 10
2.2. Demographics: Professionals employed in financial services and technology represent a lucrative target market 11
2.3. Expats: Providers will have to work hard to make the expat opportunity work 12
2.4. Lack of expertise drives uptake of advice 13
2.5. Asset allocation: Commodities are on the rise 14
2.6. Offshore preferences: A good investment track record and a wide range of products can entice wealth home 15
2.7. HNW product and service demand: Wealth managers have the opportunity to attract customers with a tax planning offering 16
3. THE UK IS ONE OF THE FEW EUROPEAN MARKETS IN WHICH WOMEN ARE A MAJOR SEGMENT 17
3.1. Wealth managers are missing a trick if they ignore female HNWs 17
3.1.1. Wealthy female investors are growing as an opportunity in the UK market 17
3.1.2. The female HNW market is poorly serviced both around the world and in the UK 18
4. UK HNW INVESTORS WANT THEIR WEALTH MANAGED PROFESSIONALLY 20
4.1. Discretionary mandates have a longstanding foothold with UK HNWs 20
4.1.1. Wealth managers need to be adept at building trust to win discretionary mandates 20
4.1.2. Much of the discretionary preference in the UK is due to the busy nature of the typical HNW Brit 21
4.1.3. UK wealth managers must lead with time-saving and expertise-led messaging to maintain a foothold with discretionary mandates 22
4.1.4. Demand is increasing for both advisory and discretionary services 23
4.1.5. Wealth managers in the UK need to address the robo-advice threat and opportunity 24
4.2. Wealth managers should focus on a hybrid model to attract and retain clients 25
4.3. Investing in corporate branding will help mitigate outflows as client relationships become less important 26
5. VOLATILITY IS A KEY DRIVER OF INVESTOR ASSET PREFERENCES 28
5.1. Investors are looking for a portfolio to shield them from Brexit but still grow 28
5.1.1. Wealth managers need to clearly communicate their Brexit strategy and the investments that cope best 28
5.2. Wealth managers should embrace commodities 29
5.2.1. Commodities provide wary UK HNW investors with hedge and growth opportunities 29
5.2.2. Diversification, returns, and safety are driving UK HNWs to hold and add to their commodities portfolio 30
5.3. Property will return to prominence in UK HNW investment portfolios – but not through direct residential investment 30
5.3.1. The majority of property allocations are in REITS 31
5.3.2. UK HNWs are unlikely to be affected too much by the current downturn 31
5.4. Record dividend payment predictions for 2018 are compelling for equity ownership, but should be mixed with growth stocks 32
6. WEALTH MANAGERS THAT RAMP UP THEIR TAX, RETIREMENT, AND INHERITANCE PLANNING WILL GAIN 34
6.1. Demand is increasing for pensions and retirement planning 34
6.1.1. Broad government policy changes have prompted a rethink of investors’ investment plans in most areas 34
6.1.2. Just over half of wealth managers in the UK offer tax advisory services, making this a point of differentiation 35
6.1.3. Tax services will also help capture and retain HNW expats 38
6.1.4. Providing tax advice can help bring offshored holdings back to the UK 38
6.2. Wealth managers can do more to capitalize on inheritance planning demand 39
6.2.1. Inheritance planning needs to be seen as a means for retaining AUM as it passes to heirs 39
6.2.2. Only focusing on the next generation limits earning opportunities 42
6.3. The UK wealth market is not yet ready to embrace blockchain as part of HNW service offerings 43
6.3.1. Wealth managers need to educate overly enthusiastic clients regarding cryptocurrencies 43
6.3.2. Blockchain is not yet considered secure enough for use as a tool for investing 43
6.3.3. Blockchain will most likely not be used in customer-facing settings 44
7. BREXIT IS NOT A THREAT TO OFFSHORE WEALTH MANAGEMENT – BUT THE UNCERTAINTY IS 46
7.1. The UK is the world’s second-largest offshore booking center 46
7.1.1. Wealth managers need multiple country desks to accommodate the offshore market 46
7.1.2. Concerns about Brexit’s impact on the UK’s appeal as an offshore center are overstated 47
7.1.3. The UK is yet to see the impact of CRS on offshore inflows 48
7.2. UK wealth managers will continue to find Asian and Russian offshore investors a lucrative target market 48
7.2.1. Russian offshore wealth is unlikely to diminish post-Brexit, despite security threat claims 49
7.3. Wealth managers should focus on diversification benefits to attract a wider range of investments 49
8. APPENDIX 51
8.1. Abbreviations and acronyms 51
8.2. Supplementary data 51
8.3. Definitions 54
8.3.1. Affluent 54
8.3.2. HNW 54
8.3.3. Liquid assets 54
8.4. Methodology 54
8.4.1. GlobalData’s 2017 Global Wealth Managers Survey 54
8.4.2. GlobalData’s 2016 Global Wealth Managers Survey 55
8.4.3. Level of agreement calculation 55
8.4.4. Service level of demand score 55
8.4.5. Forecast and projected level of demand calculation 56
8.5. Bibliography 56
8.6. Further reading 56
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