Wealth in Turkey: HNW Investors; Understanding HNW investors and wealth management strategies.

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Nearly half of Turkish investors attribute their wealth to the manufacturing and property industries, reflective of market demand and the country’s main exports. When opting to have wealth managed by a professional, Turkish HNW clients expect better returns and the convenience of not dealing with administrative details. However, Turkish HNW clients are confident in self-directing their portfolios and prefer to manage simple investments themselves, as well as having exclusive control over at least a proportion of their portfolios.

Scope

• Accumulating wealth through earned income or as a first-generation entrepreneur is common among Turkish individuals, together accounting for 64% of the HNW population.

• 40.9% of a typical Turkish HNW portfolio is invested in execution-only mandates. Turkish HNW clients are confident in self-directing their portfolios; they prefer managing simple investments and having exclusive control, and are comfortable with using digital investment tools.

• Bonds constitute the largest proportion of Turkish HNW wealth and make up 43% of a typical portfolio. Nearly 90% of this wealth is kept directly instead of in funds.

• Wealth managers are confident in the outlook of the Turkish property market: 23% of HNW wealth is held in property and 55% of wealth managers believe demand for property will increase over the next year.

• Turkish HNW individuals seek professional advice in preparing for retirement, as the vast majority of wealth managers anticipate greater demand for inheritance planning.

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 the current and future demand for different asset classes among HNW individuals.

Develop your service proposition to match the service and product demand expressed by Turkish HNW investors and react proactively to the forecasted change in demand.

Garanti Asset Management
ZyFin
Abraaj Group
Turkven

Table of Contents

EXECUTIVE SUMMARY

Key findings

Critical success factors

The main source of Turkish HNW wealth is earned income

Earned income and inheritance are the most important wealth sources for HNW investors

The sectors in which HNW clients amass wealth in Turkey are diverse

HNW expats constitute a significant proportion of HNW investors in Turkey

The majority of HNW expat clients in Turkey are classified as short-term residents

The largest proportions of HNW expats originate from EMEA

HNW expats invest in Turkey for better tax and investment opportunities

HNW INVESTMENT STYLE PREFERENCES

Turkish HNW individuals take an active approach to managing wealth

Investors forecast a better client experience when opting for professional management

Turkish HNW clients are most likely to self-direct their wealth

Demand for asset management is stronger in Turkey than in Central and Eastern Europe

Significant demand increases are forecast across all asset management types

70.9% of wealth managers expect demand for discretionary asset management to increase

Turkish investors prefer managing a proportion of their investments for control and trust reasons

UNDERSTANDING ASSET ALLOCATION TRENDS AMONG TURKISH HNW INVESTORS

Turkish HNW investors hold a sizable proportion of wealth in bonds

HNW clients prefer diversified investment strategies

Turkish HNW individuals hold 17% of their wealth in equities

Bonds make up the largest percentage of the average Turkish HNW portfolio

Cash constitutes the second largest proportion of Turkish HNW wealth

Demand for property investments among Turkish HNW investors will grow

Turkish HNW individuals hold a minimal amount in alternative investments

Commodity investments are of little interest to Turkish HNW clients

HNW PRODUCT AND SERVICE DEMAND

Turkish HNW individuals show varied demand for wealth services

Wealth managers experience the strongest demand for pension planning services

Wealth managers anticipate noticeable increases in demand for planning services

Wealth managers will experience strong demand for investment property advice

Demand levels for investment property advice are mixed

Investment property services will become a focal point of wealth management services

APPENDIX

Abbreviations and acronyms

Definitions

HNW

Ijarah

Sukuk

Methodology

Verdict Financial's 2015 Global Wealth Managers Survey

Verdict Financial's 2014 Global Wealth Managers Survey

Bibliography

Further reading

Disclaimer

Table

Table 1: Spain, Portugal, Cyprus, Malta, and Greece offer Golden Visas through investment in real estate

Figures

Figure 1: Turkish HNW clients predominantly accumulated wealth through earned income

Figure 2: Many HNW clients accumulated wealth in the manufacturing and property sectors

Figure 3: Turkey's Manufacturing PMI illustrates contraction rather than expansion

Figure 4: The proportion of HNW expat investors in Turkey is more than twice that of Central and Eastern Europe

Figure 5: Switzerland and Kuwait are the major feeder countries for HNW expats

Figure 6: HNW expats invest in Turkey for tax advantages and better investment opportunities

Figure 7: Turkish HNW clients seek better returns when opting for wealth management services

Figure 8: Over 40% of Turkish HNW investors opt for execution-only management

Figure 9: Garanti Asset Management oversees $4bn in assets under management

Figure 10: Over half of wealth managers experience strong demand for advisory management

Figure 11: 91.1% of wealth managers expect demand for execution-only management to increase

Figure 12: Managing simple investments is the most common reason Turkish HNW clients have a preference for self-directing a proportion of their wealth

Figure 13: Turkish HNW asset allocation is similar to that of Central and Eastern Europe

Figure 14: 30.6% of equity is allocated to ETPs

Figure 15: 30% of Turkish wealth managers expect demand for equities to increase

Figure 16: Turkish HNW clients are heavily invested in bonds

Figure 17: Wealth managers anticipate greater demand for bonds over the next year

Figure 18: Many of Turkey's HNW clients allocate cash holdings to local or foreign currency deposits

Figure 19: HNW clients seek cash funds rather than direct holdings for better returns

Figure 20: Property constitutes 13% of Turkish HNW portfolios

Figure 21: Wealth managers will continue to experience strong demand for property investments

Figure 22: Alternatives is the only asset class that Turkish HNW investors prefer to hold in funds

Figure 23: The Abraaj Group is a global private equity firm investing in Turkey

Figure 24: Turkven is one of the country's largest private equity firms

Figure 25: HNW clients seek alternatives when they are dissatisfied with other investments

Figure 26: A minimal proportion of Turkish HNW wealth is allocated to commodities

Figure 27: Demand is not forecast to increase for commodity investments over the next year

Figure 28: 62.6% of wealth managers experience strong demand for pension planning

Figure 29: Wealth managers expect demand for financial planning services to grow

Figure 30: 71% of wealth managers experience strong demand for tax planning services

Figure 31: Demand for investment property advice is forecast to increase

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