Wealth in Germany: HNW Investors; Understanding HNW investors and wealth management strategies.

Wealth in Germany: HNW Investors; Understanding HNW investors and wealth management strategies.

Code: VF-VF0041CI | Published: Jul-2016 | Pages: 39 | Verdict Financial
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Germany is a strong industrial nation with a commercial landscape dominated by SMEs. This is reflected in the background of German HNW individuals - most are either family business owners or inheritors. The manufacturing industry dominates as the leading generator of wealth, followed by construction. Expats constitute 11.3% of the population and are largely from nearby countries such as the UK, Italy, and Austria. Discretionary mandates are preferred by German investors, closely followed by advisory mandates. Bonds make up the largest asset class among German HNW investors, followed by equities and cash and deposits.

Key Findings
- The leading reasons for German HNW investors to seek professional advice are their highly complex portfolios and a desire to avoid administrative details.

- Those seeking to self-direct at least part of their wealth are largely motivated by a lack of trust towards wealth management services and feel they are sophisticated enough to manage their investments.

- The expressed demand for advisory mandates tops that for discretionary mandates, but demand for the latter is expected to grow quickest.

- Looking forward, low interest rates will push down the share of wealth invested into cash and bonds, while allocation into alternatives and equity is expected to strengthen.

Synopsis
Verdict Financials "Wealth in Germany: HNW Investors" analyzes the investing preferences and portfolio allocation of German HNW investors. The report is based on our proprietary Global Wealth Managers Survey.

Specifically the report:

- Profiles the average German HNW investor in terms of the source of their wealth and age as well as analyzing the expat opportunity in Germany.

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

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

- Analyzes product and service demand among German 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 service and product demand expressed by German HNW investors and react proactively to the forecasted change in demand.

Key Highlights
- 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 service and product demand expressed by German HNW investors and react proactively to the forecasted change in demand.

Table of Contents

EXECUTIVE SUMMARY
Family business owners account for the largest share of German HNW individuals
Key findings
Critical success factors
PROFILING THE GERMAN HNW INVESTOR
Family business ownership is the leading source of German HNW wealth
Family business owners and entrepreneurs should be targeted with specialized services
Many HNW investors have built their fortunes through manufacturing
Expats in Germany account for 11.3% of the local HNW population
The majority of expats have been in the country for the long term
Fear of insufficient control over their finances motivates expats to keep wealth in Germany
The UK is the leading feeder country for HNW expats residing in Germany
GERMAN HNW INVESTMENT STYLE PREFERENCES
13.2% of HNW wealth is held via execution-only mandates
Wealth managers should highlight their expertise to appeal to consumers
HNW investors have an almost equal allocation into advisory and discretionary mandates
Demand is strongest for advisory mandates
German HNW investors will continue to prefer managed mandates
Demand for discretionary mandates is expected to pick up in the future
German self-directed investors distrust wealth management services
UNDERSTANDING ASSET ALLOCATION TRENDS AMONG GERMAN HNW INVESTORS
Low interest rates will push bond investments down
Equities and alternatives will appeal to investors seeking returns
The low allocation into equities reflects the risk aversion of German investors
Bond investments are forecast to decrease in popularity
Cash and near-cash allocation is above the regional average
Property constitutes 19% of the typical HNW portfolio
Alternatives constitute 8% of the typical German HNW portfolio
Commodities constitute 2% of the typical German HNW portfolio
HNW PRODUCT AND SERVICE DEMAND
Demand for planning services is moderate
Inheritance services are the most sought after
Demand for advice will offer opportunities in the future
Demand for investment property and tax advice lags behind the regional average
Demand for tax planning is particularly muted
Wealth managers should ensure their tax planning services match the increasing demand
APPENDIX
Abbreviations and acronyms
Definitions
Affluent
Mass affluent
HNW
Liquid assets
Methodology
Verdict Financials 2015 Global Wealth Managers Survey
Exchange rates
Bibliography
Further reading
About Verdict Financial
Disclaimer

List of Figures


Figure 1: Family businesses are the leading generator of German HNW wealth
Figure 2: Manufacturing is by far the leading industry in which German HNW investors have created their wealth
Figure 3: Over half of expats in Germany have stayed in the country for more than eight years
Figure 4: A preference for maintaining control of their investments motivates expats to keep wealth in Germany
Figure 5: A significant proportion of HNW expats in Germany are from Europe
Figure 6: German investors believe wealth managers have stronger expertise to manage complex portfolios
Figure 7: Allocation in discretionary mandates is below the regional average
Figure 8: Advisory mandates are preferred among German HNW investors
Figure 9: Demand for asset management will grow faster than elsewhere in Western Europe
Figure 10: Self-directing clients do not have trust in wealth management services
Figure 11: German asset allocation is balanced
Figure 12: 55.4% of the German equity portfolio is held through funds
Figure 13: Dividend income drives HNW equity investments
Figure 14: Bonds constitute 28% of German HNW investors portfolio investments
Figure 15: As elsewhere in Western Europe, bonds will continue to lose their appeal
Figure 16: German HNW investors hold 22% of their investments in cash and near-cash products
Figure 17: Looking forward, German HNW investors will shift their allocation away from deposits
Figure 18: German HNW investors hold 19% of their wealth in property investments
Figure 19: Rental income and inflation protection are the main drivers for property investments
Figure 20: Alternatives are mostly other structured products or in private equity
Figure 21: Demand for alternatives is set to rise sharply in the future
Figure 22: A tiny proportion of German HNW investments are held in commodities, aligned with the regional average
Figure 23: Asset diversification is the main driver for commodity investments
Figure 24: Demand for planning services in Germany is below the regional average
Figure 25: Demand for planning services is set to pick up
Figure 26: There is room for growth in demand for property and tax planning advice
Figure 27: Taxation changes will help boost demand for tax planning
Hauck and Aufhaeuser

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