Wealth Management in the Belgo-Dutch region, 2008
Introduction
This report focuses on the onshore liquid wealth of affluent individuals and the liquid assets they hold, sizing, segmenting and forecasting the affluent population across 10 liquid asset bands. It also presents detailed HNW demographic and decision trigger analysis, and strategies to drive revenue growth based on large scale survey of the main players.
Scope
*HNW demographic and attitudinal attributes based on our Wealth Management Market Leaders Survey 2008
*Sizes, segments and forecasts the number of affluent invididuals across 10 liquid asset bands from EUR50k
*Extensive primary research from 20 wealth management companies highlights their strategies for revenue growth, acquiring and keeping clients
*Aggregated data covers onshore liquid assets including cash and deposits, mutual funds, direct investment in equities and direct investment in bonds.
Highlights
The Belgo-Dutch HNW is 51.8 years old and is not particularly entrepreneurial. He is interested in higher returns, is relatively knowledgeable about financial products, markedly technologically sophisticated and excited by less traditional investment products.
Belgo-Dutch wealth managers have fairly enduring relationships with their clients. These managers plan to drive revenue growth through capturing new clients and see referrals from their own clients as the best way to do this.
Demand for online services is particularly noticeable among Belgo-Dutch HNWs. Although they may be slightly older than their European counterparts, they are very technologically savvy and demanding. A key factor for success for wealth managers in these countries will be the development of these services to meet HNWs' needs.
Reasons to Purchase
*Understand the HNW population's investments by sector and geography, appetite for risk, and reasons for choosing/leaving their wealth service
*Assess market attractiveness by reviewing size and growth forecasts for the potential wealthy client base through 2012
*Assess the threats and opportunities for wealth managers by understanding how peers are planning to grow revenues, acquire and keep clients
Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 2
Servicing the online needs of HNW clients 2
Belgium and the Netherlands have provided investors with some good domestic investment opportunities 2
HNWs in the Belgo-Dutch region are older and less entrepreneurial than European averages 2
Belgo-Dutch wealth managers enjoy fairly long lasting client relations 2
Table of Contents 3
Table of tables 4
Servicing the online needs of HNW clients 5
Online services are increasingly in demand among HNWs 5
Online services appeal to a wide range of customer segments 5
Demand for online services is particularly noticeable in the Belgo-Dutch region 6
Key implication: Belgo-Dutch wealth managers must look at meeting this high level of demand 7
Developing online services for HNWs 7
A brief history of online banking 7
There are 11 core online services 8
Key stages in developing successful online strategies 9
Innovative example from the US: global private bank takes a structured approach to development 11
Belgium's wealth 12
Investment returns have boosted Belgium's wealth 13
Equity investment returns have boosted Belgian wealth considerably 13
Bond yields and deposit rates have contributed steadily to Belgian investors' portfolios 14
The Belgian property investment sector has grown strongly 15
The Belgian onshore investment market has repositioned towards safe havens 15
Belgian investors have played safe with their wealth 15
THE Netherlands' wealth 16
Local investment returns have been good 17
Equity investment returns have been lower than in other European countries 17
The Dutch property investment sector has soared 18
The Dutch onshore investment market is moving out of risky areas 19
Dutch investors are moving into currency and deposits 19
Wealth in the Belgo-Dutch region has plateaued recently and will fall back slightly in 2008 20
The affluent populations in Belgium and the Netherlands were roughly stable in 2007 20
Outlook for the Belgo-Dutch wealthy population in 2008-12 20
2008-09 will be characterized by struggling economies worldwide 20
Data tables 21
The Belgo-Dutch HNW investor 25
Belgo-Dutch HNWs are mostly aged 31-65, less entrepreneurial and more 'liquid' than their European counterparts 25
Belgo-Dutch HNWs are generally in the peak years leading up to retirement 25
Wealth management service implication: Focus on security in retirement for the large customer base age 51-64 26
Innovative example from the US: Ziegler Wealth Management offers services in pre-retirement lifestage 27
Belgo-Dutch wealth comes more from earned income and inheritance 28
Wealth management service implication: providers need to develop specific products for customers by source of wealth segments 30
Innovative example from the UK: Investec Private Bank targets city elite segment 30
Belgo-Dutch HNWs are heavily invested in cash and deposits 30
HNW Belgo-Dutch investors have the bulk of their portfolio invested in Europe, and will shift towards alternative investments 32
Belgo-Dutch HNWs have a large proportion of their assets invested in Europe, but have also invested in North America and Asia 32
Wealth management service implication: look East and West for investment opportunities 34
Innovative example from China: HSBC invests in China's property market 34
HNWs will switch more of their wealth into alternative investments 34
Wealth management service implication: provide clients access to alternative investments 36
Innovative example from Europe: AXA Private Equity offers leveraged buyout fund 36
Belgo-Dutch HNW customers are interested in higher returns, are relatively knowledgeable and very interested in less traditional investments 37
Belgo-Dutch HNW investors want higher returns but without high risk 37
Wealth management service implication: help clients balance risk and return 38
Belgo-Dutch HNWs are more financially sophisticated than average 38
Wealth management service implication: look for innovative ways to reach and service clients through technology 39
Innovative example from Switzerland: website helps HNWs find their ideal wealth manager 40
Belgo-Dutch HNWs are demanding less traditional investments 40
Belgo-Dutch HNWs are self-reliant and less dependent on face to face contact 42
The Belgo-Dutch wealth manager's view 44
Wealth managers in the Belgo-Dutch region have fairly strong relationships with their clients compared to Europe as a whole 44
Belgo-Dutch HNWs are more loyal than their European counterparts 44
Belgo-Dutch wealth managers plan to drive revenue growth through capturing new clients and increasing existing clients' share of wallet 46
Wealth managers think new clients will drive revenue in the next two years 46
Financial planning will be the most effective means employed to increase share of wallet 48
The key to attracting clients will be personal relationships 49
Belgo-Dutch wealth managers can best attract new clients by leveraging personal relationships 49
Wealth managers see their own clients as the best route to new clients 51
Lack of proactive advice will prompt clients to leave a wealth manager 53
The key to keeping clients will be proactive investment suggestions and resolving problems quickly 54
Appendix 57
The drivers of growth in the wealthy population 57
Income growth (combined with inflation, changes in GDP by sector, household savings rates and debt levels) 57
Investment returns (market capitalization, interest rates and bond yields) 57
The following measures are not, in themselves, drivers of wealthy population growth 57
Market capitalization 57
GDP 57
The following measures are not drivers of wealthy population growth except under very restricted circumstances 58
Primary residence value growth 58
Inheritance 58
Methodology 58
Wealth Management Market Leaders Survey 2008 58
Global Wealth Model 58
The UK sub model 58
Global sub model (for all other countries) 59
Forecasting methodology 59
Continuous refinement to the understanding of liquid wealth distribution 59
Datamonitor's wealth numbers compared with other wealth numbers 60
Bibliography 60
Definitions 61
Western Europe 61
Further reading 62
Ask the analyst 62
Datamonitor consulting 62
Disclaimer 62
List of Tables
Table 1: Number of affluent individuals in the Belgo-Dutch region by liquid asset band, 000s, 2003-7 22
Table 2: Number of affluent individuals in the Belgo-Dutch region by liquid asset band, 000s, 2008-12 22
Table 3: Aggregate onshore liquid assets of affluent individuals in the Belgo-Dutch region by liquid asset band, EURbn, 2003-7 23
Table 4: Aggregate onshore liquid assets of affluent individuals in the Belgo-Dutch region by liquid asset band, EURbn, 2008-12 23
Table 5: What proportion of the HNW customer base in the Belgo-Dutch region is in each age band? 26
Table 6: What proportion of the HNW customer base in the Belgo-Dutch region accumulated their wealth through (source)? 29
Table 7: What proportion of HNW customers' portfolios in the Belgo-Dutch region is allocated to (product)? 32
Table 8: What proportion of the HNW customers' portfolio in the Belgo-Dutch region is allocated to (region)? 33
Table 9: Belgo-Dutch HNW customers' portfolio allocation now versus in two years time 36
Table 10: What are HNW customers in the Belgo-Dutch region most interested in today? 38
Table 11: HNW customer attributes in the Belgo-Dutch region on a scale of one to four (knowledge) 39
Table 12: For which investment opportunities is there a lot of demand from HNW in the Belgo-Dutch region? 42
Table 13: HNW customer attributes in the Belgo-Dutch region on a scale of one to four (relationship drivers) 43
Table 14: How long have HNW customers in the Belgo-Dutch region been with their wealth manager? 45
Table 15: How many wealth managers do HNW customers in the Belgo-Dutch region have on average? 46
Table 16: What will most determine revenue growth in the Belgo-Dutch wealth management market in the next two years? 47
Table 17: What is the most effective means of increasing wealthy clients' share of wallet in the Belgo-Dutch region? 49
Table 18: What are the key influences that determine a client's choice of wealth management service in the Belgo-Dutch region? 51
Table 19: What are the most effective wealth management customer acquisition techniques in the Belgo-Dutch region? 52
Table 20: What are the most likely reasons for clients in the Belgo-Dutch region to leave a wealth management service? 54
Table 21: What is the best way to retain wealthy clients in the Belgo-Dutch region? 56
List of Figures
Figure 1: Online services have broad appeal across most of the customer segments 6
Figure 2: Demand for online services is particularly marked among the Belgo-Dutch HNWs 7
Figure 3: Services plotted against client use and level of value 9
Figure 4: Personal disposable income has risen significantly 13
Figure 5: The Belgian stock market has outperformed many of its peers in Europe 14
Figure 6: Rates on the Belgian 10 year benchmark have climbed upwards the past couple of years 15
Figure 7: Belgians have deserted the riskier assets recently 16
Figure 8: Dutch growth in personal disposable income has been limited by modest wage increases 17
Figure 9: Relatively uninspiring returns from the Netherlands stock market 18
Figure 10: There has been a noticeable inflow into currency and deposits in the Netherlands 19
Figure 11: The growth in the number of affluents has leveled off 20
Figure 12: Things should start to get better from 2009 onwards 21
Figure 13: The 31-50 age band accounts for the greatest share of HNW customers in the Belgo-Dutch region 26
Figure 14: Ziegler Wealth Management Pre-retirement solution 28
Figure 15: Business/entrepreneurship is the main source of wealth in the Belgo-Dutch region accounting for 32% of all HNWs 29
Figure 16: 28% of HNW portfolios in the Belgo-Dutch region are invested in equities 31
Figure 17: HNW investors in the Belgo-Dutch region have 60% of their portfolios invested in Europe 33
Figure 18: Over the next two years, HNW customers in the Belgo-Dutch region will increasingly look to the 'alternative investments' category that will grow its share of HNW investors' portfolios from 13% to 16% 35
Figure 19: Achieving higher returns is a key priority for 65% of Belgo-Dutch HNW investors 37
Figure 20: HNW investors in the Belgo-Dutch region have a greater level of knowledge than the average European HNW investor 39
Figure 21: Emerging market equities/funds is the investment opportunity most in demand from HNW clients in the Belgo-Dutch region 41
Figure 22: HNW investors in the Belgo-Dutch region place less emphasis on provider relationships than the average European HNW investor 43
Figure 23: Almost half (47%) of wealth managers have had relationships with clients for 5-10 years on average 45
Figure 24: Obtaining new clients will be the key driver of revenue growth in the next two years for wealth managers in the Belgo-Dutch region 47
Figure 25: Offer financial planning is the most effective means of increasing share of HNW wallet in the Belgo-Dutch region 48
Figure 26: Personal relationship is the key influencer that determines a client's choice of wealth manager in the Belgo-Dutch region 50
Figure 27: Referrals from existing clients are the most effective customer acquisition technique for wealth managers in the Belgo-Dutch region 52
Figure 28: Lack of proactive advice is the most likely reason for clients to leave a wealth manager in the Belgo-Dutch region 53
Figure 29: Being proactive with investment suggestions is key to retaining HNW customers in the Belgo-Dutch region 55
