Overview 1
Catalyst 1
Summary 1
Executive Summary 2
HNW investors have become more defensive in response to global turmoil. 2
HNW investors' motivations have changed and a defensive attitude will continue for some time. 2
Wealth managers need to address process, personnel and product/service mix to reassure defensive clients and lead them toward more diversified portfolios. 2
Table of Contents 4
Table of figures 5
Table of tables 6
HNW investors have become more defensive in response to global turmoil 7
The number of wealth individuals and the value of their assets have taken a knock 7
There has been a global movement towards lower risk assets in the wake of the economic and financial crises 9
HNW portfolios in Europe and Asia Pacific are now strongly weighted towards the safer asset categories 9
Cash and real estate investment have witnessed the most profound shifts over 2009 9
Equities, fixed income and alternative investments have had more mixed fortunes globally 10
Portfolios have been increasingly skewed towards very low risk product areas 13
European HNWs have large amounts invested in cash and near cash, and fixed income products 14
Asia Pacific HNWs have large amounts invested in cash and near cash, and equities 16
HNW investors' motivations have changed and a defensive attitude will continue for some time 19
Financial turmoil, recession and losses have all contributed to changes in HNW clients' values 19
Wealth managers need to understand the current thinking of HNW clients 19
Uncertainty is most likely to be accompanied by a risk wariness on the part of HNWs 19
Uncertainty can lead to a reassessment of individuals' values and motivations 20
Greater investment in emotional assets is indicative of changes in HNWs' attitudes towards their investments 21
For those HNWs with a greater risk appetite, there are some good market opportunities 22
Wealth managers need to guide HNW investors toward seeing the opportunities that the downturn affords 22
For some HNWs, risk appetite is returning to pre-crisis levels 22
Wealth managers operating in the current volatile market need to know their clients 22
HNWs vary in their loyalty to wealth managers as a result of their recessionary experiences 23
Some clients have stayed loyal to their wealth managers over the difficult period but others are questioning their wealth management service 23
Wealth managers need to address process, personnel and product/service mix 24
European HNWs' attitudes to risk are set to improve somewhat over the next two years 24
HNWs are expected to slowly increase their appetite for risk but need the guidance of their wealth managers 24
HNWs lack confidence and want evidence of higher returns and encouragement from their wealth managers before moving back into risky products 25
HNW clients remain stuck in the mud after the financial turmoil over the past two years 27
With uncertainty and risk still concerns, wealth managers need to address their risk management operations 28
Wealth management firms need strong, transparent risk management systems 29
Cofunds uses a guided architecture channel to assist with advisor fund selection 29
Employ teams that have specialist knowledge of riskier products so that relationship managers and HNWs can be reliably informed 30
Union Banque Privée (UBP) is in the process of reforming its business model and is hiring specialist staff in the area of risk management 30
Morgan Stanley is making key appointments to rebuild its European equities business 31
Brand and identity are key concerns in the market and wealth managers must continue to work to improve these 31
Offer products that provide an opportunity for clients to move into more risky products - but ones with a safety net 33
Service offerings that improve the profitability of wealth managers 33
The services in demand by HNWs reflect the economic and market turbulence that has been in evidence 34
HNWs across Europe and Asia Pacific are looking for wealth managers to provide services that assist them through these troubled times 34
APPENDIX 36
Methodology 36
Bibliography 36
Further reading 36
Ask the analyst 36
Datamonitor consulting 37
Disclaimer 37
List of Tables
Table 1: Number of wealthy individuals* and the value of their onshore liquid assets, Europe and APAC, 2007-09 9
Table 2: Year-on-year change in the asset categories (percentage points) 10
Table 3: Proportion of HNW portfolios invested in a range of asset classes 12
Table 4: HNWs' portfolio allocations by product area 14
Table 5: European HNWs' portfolio allocations by product area now 16
Table 6: Asia Pacific HNWs' portfolio allocations by product area now 18
Table 7: Proportion of HNW portfolios invested in a range of asset classes 20
Table 8: Please rate your HNW clients' appetite for risk 25
Table 9: What measures are proving to be the most effective in getting HNW clients back into higher risk products? 27
Table 10: What do you think are the two major obstacles preventing HNWs from returning to higher risk products? 28
Table 11: In your experience, what will most determine a client's choice of onshore wealth management company over the next two years? 32
List of Figures
Figure 1: A recovery in the number of wealthy individuals* and the value of their onshore liquid assets is more apparent in APAC than in Europe 8
Figure 2: Both regions have seen a sharp contraction in the relative proportion of real estate investments 10
Figure 3: HNW investors in the APAC region have already stepped back in to equities 12
Figure 4: HNWs have much more defensive portfolios than in 2008 13
Figure 5: Cash and near cash makes up the biggest proportion of European HNWs' portfolios 15
Figure 6: Across Asia Pacific, the proportion of HNWs' portfolios held in equities has not changed much in 2009, compared to 2008 17
Figure 7: Wealth managers in Europe expect HNW clients to have a 'somewhat higher' appetite for risk in two years' time 24
Figure 8: HNWs want evidence of higher returns and encouragement from RMs before moving into higher risk products 26
Figure 9: Fear is the major obstacle preventing HNWs from getting back into riskier products 28
Figure 10: Brand, image and reputation remain important determinants of a HNW client's choice of wealth manager 32
Figure 11: The recent volatility is a key determinant of what services are in demand 35
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