Wealth in Australia: Sizing the Market Opportunity

2018-11-02
Price :
Published : Nov-2018
No. of Pages : 43
Table of Contents
1. EXECUTIVE SUMMARY 2
1.1. Market summary 2
1.2. Key findings 2
1.3. Critical success factors 2
2. SIZING AND FORECASTING THE AUSTRALIAN WEALTH MARKET 8
2.1. Introduction 8
2.2. By 2020, 23% of Australia's adult population will be classed as affluent 8
2.2.1. A large mass affluent population highlights the viability of retail wealth management offerings 8
2.2.2. Private bankers in Australia still have relatively low penetration into the HNW client base 9
2.3. HNW individuals account for 1.1% of adults but 39.1% of liquid assets 10
2.3.1. Wealth is increasingly concentrated among HNW investors as investment returns rebound 10
2.3.2. With the A$10m+ segment growing fastest, assets will become increasingly concentrated in the portfolios of the rich 10
2.4. The future direction of property and lending will shape Australia's regional wealth markets 13
2.4.1. The Banking Royal Commission has adversely affected the industry's reputation 13
2.4.2. There will be investment management opportunities as the property market loses its allure 13
2.4.3. Australia's onshore wealth and growth is concentrated in the populous states of the eastern seaboard 14
3. THE AUSTRALIAN RETAIL INVESTMENT MARKET IS HIGHLY DEVELOPED 16
3.1. Introduction 16
3.2. Asset proportions have remained steady, with growth on all fronts 16
3.2.1. Equities are expected to grow compared to other securities 16
3.2.2. Outside of superannuation, Australians keep most of their liquid wealth in deposits 17
3.2.3. Investment property is typically a key competitor to securities for Australians' savings, but will be less of a threat over the next two years 18
3.3. Stock value continues to increase, driving investor interest 19
3.3.1. Barring a modest correction, higher equity valuations will drive further investment 19
3.3.2. ETFs are rising as a share of the investment mix 20
3.4. Deposits increased - in part due to low interest rates 21
3.4.1. Investors appear to desire a specific return from deposits, with low rates requiring greater investment to achieve it 21
3.4.2. Future interest rate increases will require a reassessment of deposits 21
3.5. Mutual fund growth is set to be modest 22
3.5.1. Investor interest in mutual funds needs to be rekindled in Australia 22
3.5.2. Fee-free mutual funds are likely to make their way to Australia 23
3.6. Retail bond holdings growth will rise from almost nil 23
3.6.1. Direct bond holdings never took off among retail investors in Australia 23
4. HNW INVESTORS IN AUSTRALIA HOLD 19% OF THEIR WEALTH OFFSHORE 25
4.1. Introduction 25
4.2. Large private investors remain committed to the Australian market 25
4.2.1. Local Australian HNW investors are mainly offshoring wealth to invest in foreign equities 25
4.2.2. The impact of CRS on Australian wealth management will be minimal 26
4.3. Foreign investment into Australia centers on debt and equity 27
4.3.1. Offshore investors are drawn to the Australian securities market 27
4.3.2. Overseas investors into Australia will largely be unaffected by full implementation of CRS 28
4.3.3. Property investment has been a major focus of offshore retail investors 28
5. APPENDIX 30
5.1. Abbreviations and acronyms 30
5.2. Supplemental data 31
5.3. Definitions 35
5.3.1. Affluent 35
5.3.2. Domicile 35
5.3.3. Double taxation convention 35
5.3.4. Emerging affluent 35
5.3.5. FATCA 35
5.3.6. HNW 36
5.3.7. Liquid assets 36
5.3.8. Mass affluent 36
5.3.9. Mass market 37
5.3.10. Onshore 37
5.3.11. Residency 37
5.3.12. Exchange of information 37
5.3.13. Tax information exchange agreements (TIEAs) 38
5.4. Methodology 38
5.4.1. 2018 Global Wealth Managers Survey 38
5.4.2. Retail Investments Analytics 38
5.4.3. Global Wealth Model 40
5.4.4. Total HNW Wealth Analytics 41
5.4.5. Exchange rates 41
5.5. Bibliography 42
5.6. Further reading 42

List of Tables
Table 1: Aggregate HNW investment portfolios by state 14
Table 2: Aggregate mass affluent investment portfolios by state 15
Table 3: Australia: adult population segmented by affluent category and asset band (000s), 2012?17 31
Table 4: Australia: adult population segmented by affluent category and asset band (000s), 2018e?22f 32
Table 5: Australia: retail wealth segmented by affluent category and asset band (000s), 2012?17 33
Table 6: Australia: retail wealth segmented by affluent category and asset band (000s), 2018e?22f 34
Table 7: US dollar exchange rates with the Australian dollar 41

List of Figures
Figure 1: The number of affluent individuals is set to rise over the forecast period 9
Figure 2: Mass affluent assets only narrowly exceed those of the HNW market, highlighting the utility of a private bank offering 11
Figure 3: Interactions with wealth managers are becoming increasingly widespread among affluent Australian investors 12
Figure 4: The Australian economy continues to grow, fueling investment portfolios across the board 17
Figure 5: Low-yielding deposits will outgrow even the relatively high-yielding fund market 18
Figure 6: Australian investors have been slow to reinvest into equities, despite tax incentives to do so 20
Figure 7: Interest rates have plunged, making deposit balance growth dependent upon diminishing inflows 21
Figure 8: Mutual funds will grow, but will face competition from ETFs and exchange-traded products 23
Figure 9: Small gains will not see bonds shift significantly upward in the Australian investment portfolio 24
Figure 10: Australian HNW investors send almost a fifth of their portfolio offshore 26
Figure 11: Foreign retail investors dominate the bond market 28
Filed in: Banking & Finance, Wealth Management
Publisher : GlobalData