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Wealth in Australia: HNW Investors

Published: May 18, 2016 | Pages: 43 | Publisher: Verdict Financial | Industry: Financial Services | Report Format: Electronic (PDF)

Summary
Australia is known for its multicultural landscape, which is also reflected in the country's HNW market. HNW investors in Australia stem from a range of different backgrounds and portray distinctive demand patterns. However, a strong affinity for equity investments and high expectations when it comes to financial advice and other support services (such as pension and tax advice) are common characteristics.

Key Findings
- The majority of HNW individuals in Australia have accumulated their wealth through earned income, but first-generation entrepreneurs and family businesses represent the largest sources of wealth.

- While representing a slightly lower proportion than in the wider region, HNW expats constitute an attractive target segment in Australia, accounting for 8.3% of Australian HNW individuals (or approximately 11,800 individuals).

- Australian HNW investors allocate almost three times as much wealth into equities compared to their peers in Asia Pacific.

- HNW individuals show a strong and rising interest in advisory asset management, while demand for execution-only services is limited.

- Australian HNW investors show strong and rising demand for tax, pension, and financial planning as well as property advice, making a multi-service strategy critical in Australia.

Synopsis
Verdict Financial's “Wealth in Australia: HNW Investors” report analyzes the investing preferences and portfolio allocation of Australian HNW investors. The report is based on our proprietary Global Wealth Managers Survey.

Specifically the report:

- Profiles the average Australian HNW investor in terms of their demographics and analyzes the expat opportunity in the country.

- Analyzes which wealth management mandates are preferred among Australian HNW investors and how demand will develop going forward. 

- Examines the allocation of Australian HNW investors' portfolios into different asset classes and how the allocation is expected to develop in the future 

- Analyzes product and service demand among Australian HNW investors 

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

- Develop your service proposition to match the product and service demand expressed by Australian HNW investors and react proactively to the forecasted change in demand.
 Table of Contents

EXECUTIVE SUMMARY
Australian HNW individuals come from a range of different backgrounds
Key findings
Critical success factors

PROFILING THE AUSTRALIAN HNW INVESTOR
HNW investors who have accumulated their fortunes through earned income remain the largest segment
However, entrepreneurs are also a lucrative target market
Many HNW investors have built their fortunes through financial services
Expats are an important target group in Australia
Expats constitute 8.3% of the local HNW population
Friendly visa conditions encourage migration of the rich
HNW expats from the UK and Asia Pacific represent an attractive target segment
Fear of having insufficient control and steep forex fees are motivating HNW expats to invest in Australia

HNW INVESTMENT STYLE PREFERENCES
Australian HNW investors value professional advice, but are reluctant to relinquish control
The majority of HNW wealth is kept in advisory mandates
Australian HNW individuals feel well equipped to manage part of their wealth themselves
Demand for execution-only services is on the rise
HNW investors feel confident enough to invest a small proportion of their wealth independently

UNDERSTANDING ASSET ALLOCATION TRENDS AMONG AUSTRALIAN HNW INDIVIDUALS
Australia's love affair with equities is set to continue
Equities dominate the typical HNW portfolio, but alternatives are forecast to experience the greatest increase in popularity
Equities constitute more than half of HNW investors' managed wealth
Bond investments have decreased in popularity over the past year
Cash and near-cash investments constitute a significantly smaller part of the Australian HNW portfolio than in the wider region
Property constitutes less than 10% of the typical HNW portfolio despite the recent property boom in Australia
Commodity investments are of little interest to Australian HNW clients
Alternatives constitute 7% of the typical HNW portfolio

HNW PRODUCT AND SERVICE DEMAND
Planning services are in high demand in Australia
Australian HNW individuals show strong demand for tax advice
A multi-service proposition is key to competing in Australia's HNW market
Property advice is in high demand in Australia
Wealth managers lacking the in-house resources to provide property advice should consider partnerships in light of rising demand

APPENDIX
Abbreviations and acronyms
Definitions
Affluent

HNW
Liquid assets
Mass affluent
SMSF
Superannuation
Methodology
Verdict Financial's 2015 Global Wealth Managers Survey
Verdict Financial's 2014 Global Wealth Managers Survey
Bibliography
Further reading

ABOUT VERDICT FINANCIAL
Disclaimer
List of Tables
Table 1: Average annual income of full-time employees
Table 2: Interest rates, selected countries in Asia Pacific, May 2016

List of Figures
Figure 1: Earned income is the most common source of wealth among Australian HNW individuals
Figure 2: The majority of HNW investors have sourced their wealth from the financial services and real estate sector
Figure 3: The vast majority of HNW expats have lived in the country for more than three years
Figure 4: The majority of expats in Australia come from the UK and Asia
Figure 5: Credit Suisse targets wealthy immigrants prior to their arrival in Australia
Figure 6: HNW expats residing in Australia want to stay in control of their investments
Figure 7: Lack of time is driving uptake of financial advice
Figure 8: The majority of HNW wealth is kept in advisory mandates
Figure 9: Australian HNW individuals show strong demand for advisory mandates
Figure 10: Demand for execution-only asset management is forecast to increase significantly
Figure 11: Australia's HNW investors are financially savvy
Figure 12: HNW investors are heavily exposed to equities
Figure 13: HNW investors prefer direct equity holdings
Figure 14: Dividend income is the number one driver of equity investments
Figure 15: HNW investors allocate 15% of managed wealth to fixed income products
Figure 16: Demand for fixed income products is set to decrease
Figure 17: Only 15% of managed HNW wealth is held in cash products
Figure 18: HNW demand for cash products will continue to fall
Figure 19: 9% of HNW wealth is allocated to property
Figure 20: Capital appreciation opportunities are fueling HNW demand for property
Figure 21: Commodities are of little interest to Australian HNW investors
Figure 22: Commodity investments are forecast to decrease
Figure 23: HNW investors prefer funds when it comes to commodity investments
Figure 24: Asset diversification benefits are driving HNW demand for alternatives
Figure 25: Australian HNW individuals show strong demand for tax advice
Figure 26: BDO targets family business owners
Figure 27: Already strong HNW demand for planning services is forecast to increase
Figure 28: Australian HNW investors show strong demand for property advice
Figure 29: Already high demand for investment property advice is forecast to increase 



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