Global Wealth Management Trends An EY Point of View June 2015.
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Transcript of Global Wealth Management Trends An EY Point of View June 2015.
Page 2 Global Wealth Management Trends
Some key observations around Wealth
ASIA, LATAM AND
AFRICA ARE
GROWING FASTER
PRIVATE WEALTH OF
GEN-Y
(MILLENIALS) WILL
DOMINATE BY 2020
CURRENTLY WEALTH IS
CONCENTRATED
AROUND DEVELOPED
COUNTRIES
GLOBALLY THE
RICH ARE
GETTING RICHER
BUT ASIA IS FAST
CATCHING UP
Page 3
Today’s Discussion: Major trends emerging in wealth management
Global Wealth Management Trends
Customer Preferences
3 Trend
s
WM Institutions Responses
3 Trend
s
Market and Regulatory
Impact
4 Trend
s
Page 4
Trend 10: Women will take more active decisions regarding family wealth by 2020
51%49%
Women Men
33%
67%
2012 2020
Shift in control of Wealth► Control USD 8 Tn in assets in the
US, and is expected to rise to USD 22 Tn by 2020
► Live 6-8 years longer and are
responsible for more household financial decisions
► Participate in the workforce and
generate personal income, retirement assets
► Are poised to inherit from their
families and spouses
Global Wealth Management Trends
Women Today …
Source: Sallie Krawcheck: Majority of Women’s Money Going Unmanaged, WealthManagement.com
Page 5
Trend 9: Millennials are conservative
Cash52%
Fixed Income
7%
Stocks28%
Others13%
Care more about Risk than anything else…
Distrustful of Wall Street
Hold a lot of Cash
Cautious
Current Asset MixInvestment philosophy
Global Wealth Management Trends
Source: UBS “Think you know the Next Gen investor? Think again” 1Q 2014
The financial crisis has shaped their behaviour
Page 6
Trend 8: Your advisor is growing old
Age of the financial advisor increasing across
the globe
Next Gen to the job
► Average age of advisors is 50.9 years
► In US 43% of the advisors are over the age of 55
► Only 11% are under the age of 35
Global Wealth Management Trends
Source: Understanding and Addressing a More Sophisticated Population, Cerulli Associates
Succession planning and
training of advisors is slowing which
will lead to a shortfall of advisors
Page 7
Trend 7: The future is digital
2/3 HNWIs are
going digital
ROBO Advisors
Automated PMS
Algorithms to create and manage portfolios
Managing wealth relationships digitally
Low cost investment advice is a rising trend and a threat to the traditional RM model
Differentiation will be essentialROBO Advisors provides portfolio management services with minimal human intervention
Global Wealth Management TrendsSource: 2014 World Wealth Report
Page 8
75% financial compliance
professionals listed
cybersecurity as a top issue
Trend 6: Digital evokes the need for cybersecurity =>Trust
Increased incidence of cybersecurity threats will have a bearing on reputation risk
Top issues in 2014
Global Wealth Management Trends
Source: 2014 Investment Management Compliance Testing Survey
Page 9
Trend 5: Celebrities fail without good financial advisor
Celebrity lives are always magnified
They need good financial advise because their time is money
Today’s high profile and rich make mistakes
Global Wealth Management Trends
Celebrities need a trusted advisor to help them manage wealth while dealing with lifestyle challenges
Celebrities fail to plan and protect their wealth for events that erode their wealth such as:
► Divorce
► Death
► Law Suits and other Legal trouble
Financial planning for life events
M C Hammer
Dionne Warwick
Larry King
Page 10
Trend 4: Domicile preferences
Australia & New
Zealand
Russia & CIS
Over 60% likely to send children
abroad for secondary education
Only 4% HNWIs considering move out
of country
33% HNWIs considering to move
out of country
Tax is the main reason globally UHNWI consider moving to different country
In Russia, education and political issues are the main reasons
Globally 27% send kids abroad for
secondary education
China
42%3%
Global Wealth Management Trends
Source: Knight Frank report, 2015
12% HNWIs considering to move
out of country
Page 11
78
71
67
66
61
60
53
54
51
80
72
67
66
61
61
54
53
52
Technology
Automotive
Food & Beverage
Consumer packaged goods
Pharma
Energy
Banks
Financial services
Media
Trend 3: Trust will be new wealth mantra
Global Wealth Management Trends
Source: Edelman Trust Barometer
2014 2015
Banks and Financial services have lowest trust among industries
Page 12 Global Wealth Management Trends
Trend 2: Mass affluent is the new sweet spot for wealth managers
44% of mass affluent does not consider primary bank as a potential provider of investment
services. Addressing this perception problem will unlock more opportunities for banks
Mass Market
Mass Affluent
Mass market segment, a core driver
of revenue, is
marginally profitable at best
Mass Affluent are 6- 10 times more
profitable than mass
market
Constitute 20-30% of
retail divisions in banks
HNWI segment though profitable, is too
small to drive enough growth and
revenue
Source: Rising to the challenge of the rising mass affluent, BAI
HNWIs
Millionaires
UHNWI
Billionaires
Centa- millionaires
Page 13
Trend 1: The wealthier take more risks
Growing trends of acquiring stakes in
unlisted companies
Offshore investments have
caught on
Attractiveness of Real estate as an
asset class is coming down
Equity has taken over from real estate as the
preferred option, commercial Real estate
and lease rental discounting are helping
push investments in Real Estate
Kids going abroad, diversification,
currency movement are pushing offshore investment
High growth potential opportunities in these firms
are attracting HNWIs attention
Global Wealth Management Trends
Source: EY Analysis
Page 14
Globally the rich are getting richer…How can wealth management firms work to build their wealth?
What have these guys
done right to build their
wealth?
The top 1% own almost 40% of wealth. And the top 10% hold almost 90%
Global Wealth Management Trends
Source: The Economist
A. Invest in their Businesses
B. Diversification of investments
Page 15
Centa-millionaires (+ USD100m)+35% Forecast global growth 2014-2024
UHNWIs (+ USD 30m)+34% Forecast global growth 2014-2024
Billionaires (+USD 1,000m)+41% Forecast global growth 2014-2024
Global growth rates
+25%
+25%
+24%
NORTH AMERICA
EUROPE
MIDDLE EAST
AFRICA
ASIA
AUSTRALASIA
Forecast growth in HNWIs 2014 - 2024
LATIN AMERICA
Changing wealth demographics Asia, Africa and Latin America lead the global charge
+25%
+25%
+25%
+23%
+24%
+24%
+59%
+56%
+60%
+40%
+40%
+35%
+50%
+53%
+51%
+48%
+57%
+70%
Global Wealth Management Trends
Source: Knight Frank report, 2014
Page 16 Global Wealth Management Trends
Where is wealth concentrated today
Source: Knight Frank report, 2015
Europe, 29%
North America,
25%
Australasia, 2%
Asia, 32%
Rest of the World,
12%
HNWIs wealth distribution
J apan, 26%India, 5%
China, 31%
Singapore, 17%
Rest of Asia, 21%
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