Wealth in Canada: HNW Investors 2017 Summary "Wealth in Canada: HNW Investors 2017", report analyzes the investing preferences and portfolio allocation of HNW Canadians. The report is based on our proprietary Global Wealth Managers Survey. The HNW market in Canada is dominated by family business owners and expat clients drawn from Asia Pacific and the US. These busy owners prefer discretionary asset management and have little desire to try other options. As cautious investors they favor classic investments such as equities and bonds, investing little into less liquid assets such as property and commodities. Tax is a major issue for the domestic wealth market and a key driver for booking offshore. There is currently strong and growing demand for financial and pension planning. Specifically the report - - Profiles the average HNW investor in Canada in terms of their demographics and analyzes the expat opportunity. - Analyzes which wealth management mandates are preferred among HNW investors in Canada and how demand will develop going forward. - Examines the allocation of HNW investors' portfolios into different asset classes and how this will develop in the future. - Analyzes product and service demand among HNW investors in Canada. Scope - The majority of HNW individuals in Canada have accumulated their wealth through first-generation entrepreneurship and family businesses. - Expats, particularly those from China and the US, represent a large part of the HNW market. - Canadian HNW investors heavily favor equities, followed by the fixed income security of bonds. - HNW individuals show a strong and enduring preference for discretionary asset management. - Led by financial planning, HNW investors show strong demand for all planning services. 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 proposition to match the product and service demand expressed by HNW investors in Canada and react proactively to any forecasted changes.
Table of Contents
1. EXECUTIVE SUMMARY 3 1.1. Canadian HNW individuals are concentrated among business owners 3 1.2. Key findings 3 1.3. Critical success factors 3 2. PROFILING HNW CONSUMERS IN CANADA 8 2.1. Family business is the dominant source of Canadian HNW wealth 8 2.1.1. Dedicated programs targeting female HNW investors are a must 8 2.1.2. Entrepreneurs are also a lucrative target market 9 2.1.3. Many HNW investors have built their fortunes through property 12 2.2. Expats are a large and important target group in Canada 13 2.2.1. Expats constitute almost 18% of the resident HNW population, making it important for wealth managers to comply with CRS rules 13 2.2.2. Friendly visa conditions encouraged migration of the rich, although this route was closed in 2014 14 2.2.3. Chinese and US individuals represent the bulk of the HNW expat population 15 3. HNW INVESTMENT STYLE PREFERENCES 17 3.1. Wealth managers must lead with a discretionary offering 17 3.1.1. There is a significant benefit to being the lead wealth manager in Canada 17 3.1.2. The convenience factor has to feature in every wealth manager's marketing campaign 18 3.1.3. The majority of HNW wealth is kept in discretionary mandates 19 3.1.4. A strong advisory capability is also beneficial in Canada, with 35% of HNW investors exhibiting strong demand 21 3.2. Lack of time and expertise is driving demand for advisory and discretionary mandates 22 3.2.1. Demand will remain largely flat across the various different mandate types 22 3.2.2. Lack of time and knowledge mean discretionary mandates will maintain their leading position 23 3.2.3. HNW investors' desire for non-financial assets drives self-investment 24 4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG HNW INDIVIDUALS IN CANADA 27 4.1. Canadians' love affair with equities is set to continue 27 4.1.1. Equities dominate the HNW portfolio and are forecast to grow their share further 27 4.1.2. Equities dominate HNW investors' managed wealth 28 4.1.3. Bonds constitute the second-largest asset class, in line with global averages 30 4.1.4. Cash and near-cash investments constitute a significantly smaller proportion in Canada 32 4.1.5. Property constitutes only a minor proportion of the typical HNW portfolio 35 4.1.6. Alternatives represent a significant and growing proportion of the typical HNW portfolio 37 4.1.7. Commodity investments are of little interest to HNW clients in Canada 40 5. HNW PRODUCT AND SERVICE DEMAND 43 5.1.1. Led by financial planning, HNW investors show strong demand for all planning services 43 5.1.2. Demand will increase for all planning services, making it a growing element of wealth managers' value proposition 45 6. APPENDIX 47 6.1. Abbreviations and acronyms 47 6.2. Definitions 47 6.2.1. Affluent 47 6.2.2. HNW 47 6.2.3. Liquid assets 47 6.2.4. Mass affluent 48 6.3. Methodology 48 6.3.1. GlobalData's 2016 Global Wealth Managers Survey 48 6.3.2. GlobalData's 2015 Global Wealth Managers Survey 48 6.3.3. GlobalData's WealthInsight 48 6.3.4. Exchange rates 49 6.4. Bibliography 49 6.5. Further reading 50
List of Figures
Figure 1: The Canadian wealth market is more balanced by gender than most of the world 9 Figure 2: Business owners are the key demographic in Canada's HNW market 11 Figure 3: Business owners are given a holistic package of services at RBC Wealth Management 12 Figure 4: A strong run in the property market has boosted the sector as a generator of HNW wealth 13 Figure 5: Expats represent an above-average proportion of the Canadian HNW population 14 Figure 6: Chinese migrants dominate Hong Kong's HNW expat space 16 Figure 7: HNW investors in Canada typically work with only one or two wealth management firms 18 Figure 8: A lack of time and expertise drives uptake of financial advice in Canada 19 Figure 9: The majority of Canadian HNW wealth is held in discretionary mandates 20 Figure 10: HNW demand is strongest for advisory and discretionary mandates 22 Figure 11: On the whole, wealth managers expect demand to remain relatively unchanged across mandates 23 Figure 12: Canadian HNW investors are pressed for time and lack knowledge of investments 24 Figure 13: Investment in non-financial assets is the leading driver for execution-only asset management 25 Figure 14: BMO gives investors low fees and access to expert advisors, opening the robo space up to less confident investors 26 Figure 15: HNW investors are heavily exposed to equities, and this will not change in the near future 28 Figure 16: The typical HNW equity portfolio is dominated by funds 29 Figure 17: Capital appreciation opportunities is the leading driver of equity investments 30 Figure 18: HNW investors allocate around a fifth of their portfolio to fixed income products, in line with the global average 31 Figure 19: Bond investment is driven by Canadian HNW investors' risk-averse nature 32 Figure 20: Only 7.2% of managed HNW wealth is held in cash products 33 Figure 21: Already low HNW demand for cash products will decline as investors deploy cash reserves 35 Figure 22: Offering REITS is a must in Canada, although ETFs are growing as a source of property exposure 36 Figure 23: The expectation of property price appreciation currently drives investment in this space 37 Figure 24: Hedge funds dominate Canadian HNW investors' alternative investment portfolios 38 Figure 25: Demand for alternatives will increase significantly over the next 12 months 40 Figure 26: Appetite for commodity investments is extremely low among Canadian HNW clients 41 Figure 27: Demand for commodity investments is set to decline over the next 12 months 42 Figure 28: HNW investors are most drawn to holistic financial planning, although all planning services record strong demand 44 Figure 29: BMO targets family business owners concerned about succession, a key demographic in Canada 45 Figure 30: Already strong HNW demand for financial and pension planning services is forecast to increase modestly 46
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