Published : Jan-2019
No. of Pages : 44
1. EXECUTIVE SUMMARY
1.1. In 2019 the wealth management industry will reconsider its priorities
1.2. Key findings
1.3. Critical success factors
2. IN THE WAKE OF CRS, NON-PARTICIPATING COUNTRIES SUCH AS THE US WILL CONTINUE TO GROW AS OFFSHORE CENTERS
2.1. CRS implementation will channel more wealth to the US
2.1.1. The OECD's CRS is the most comprehensive international effort to tackle tax evasion
2.1.2. Shifts in investment structures will be slight due to anti-avoidance provisions
2.1.3. HNW offshoring money dipped ahead of CRS but has since rebounded
2.1.4. The low importance of client anonymity means CRS will not massively disrupt the offshore market
2.1.5. CRS will benefit non-participating countries and low tax jurisdictions
2.1.6. The US and its dependencies remain the clear winners under CRS
3. VOLATILITY WILL REQUIRE A RETHINK OF DIVERSIFICATION
3.1. Bias towards equities is leaving investors exposed to a rise in volatility
3.1.1. Volatility promises to pick up as the year progresses
3.1.2. The average HNW portfolio is heavily biased to equities and thus overly exposed to market shocks
3.1.3. Many wealth managers seem oblivious to a potential crash
3.2. Providers should push for further diversification in the onshore and offshore space to ready investors' portfolios for a potential downturn
3.2.1. Alternatives could add further diversification, but trust and client education are needed to drive uptake
3.2.2. Wealth managers should pay greater attention to geographic and industry diversification
3.2.3. Reaching out to clients will help avoid rushed decision-making
4. AS USE OF TECHNOLOGY INCREASES, WEALTH MANAGERS WILL HAVE TO START THINKING ABOUT CYBERSECURITY
4.1. Adoption of technology in wealth management has been growing
4.1.1. 43% of HNW-focused wealth managers now offer robo-advice
4.1.2. New operational risks emerge as a consequence of tech development
4.2. The industry is underestimating the importance of cybersecurity
4.2.1. Customers might be worried about fraud, but it does not prompt them to switch
4.2.2. Client-advisor relationships mitigate the consequences of failures on a company level
4.2.3. Concern about cybercrime is the highest in digitally advanced regions
4.3. The risk of incurring costs and regulatory scrutiny will compel competitors to act
4.3.1. The cost of brand damage is difficult to measure
4.3.2. Cybercrime prevention should creep up the list of priorities
5. NEW CLIENT DEMOGRAPHICS WILL BECOME MORE PREVALENT
5.1. Wealth managers need to think about the younger generations
5.1.1. Involving heirs in decision-making will be the most effective retention method
5.1.2. Advisor choice differs between the next generation and their parents
5.2. Hybrid services remain in demand among the next generation
5.2.1. Catering to the next generation via digital services is key
5.2.2. The human touch is also in demand by millennials
5.2.3. Investing in socially responsible companies is important to the next generation
5.3. Gender equality will become more prevalent in the industry
5.3.1. More women will enter previously male-dominated industries
5.3.2. The demographic characteristics of HNW women differ from HNW men
5.4. Faith-based investing will open investing to new demographics
5.4.1. Faith-based digital platforms are expanding in the wealth management industry
5.4.2. Religion-compliant investments often align with socially responsible investing
5.5. Targeting the masses will aid AUM growth
5.5.1. Digital services are the gateway to the mass affluent
5.5.2. The mass affluent should be viewed as potential HNW clients
6. APPENDIX
6.1. Abbreviations and acronyms
6.2. Definitions
6.2.1. Affluent
6.2.2. HNW
6.2.3. Liquid assets
6.2.4. Mass affluent
6.2.5. Residency
6.3. Methodology
6.3.1. GlobalData's 2018 Global Wealth Managers Survey
6.3.2. GlobalData's 2017 Global Wealth Managers Survey
6.3.3. GlobalData's 2018 Mass Affluent Investors Survey
6.3.4. GlobalData's 2018 Consumer Payments Insight Survey
6.3.5. Weighted level of agreement
6.3.6. Exchange rates
6.4. Secondary sources
6.5. Further reading
List of Tables
Table 1: US dollar exchange rates
List of Figures
Figure 1: The decline in offshore wealth has been arrested
Figure 2: Total non-resident assets slowly increased over the CRS implementation period
Figure 3: While tax is a major driver of offshoring, CRS does not interfere with tax-minimization strategies
Figure 4: The UAE may benefit as an offshore booking center provided it retains permissive tax residency requirements
Figure 5: Already the world's leading offshore center, the US will benefit significantly from being outside CRS
Figure 6: Volatility increased in 2018
Figure 7: The average HNW portfolio is increasingly exposed to equity risk
Figure 8: Concerns regarding a financial market downturn are relatively low among wealth managers
Figure 9: The proportion HNW investors allocate to alternatives varies significantly across the world
Figure 10: Driving trust is paramount to encourage uptake of alternatives
Figure 11: An increasing number of wealth management firms offer technology-based solutions
Figure 12: Involving the next generation in the estate planning process is key to retaining clients
Figure 13: Digital channels are more important to the next generation than current clients
Figure 14: Females source more of their wealth through inheritance than men
Figure 15: Access to a human advisor is very important according to 30% of mass affluent investors
