Published : Apr-2018
No. of Pages : 40
1. EXECUTIVE SUMMARY 2
1.1. The strength of the German economy presents opportunities for wealth managers to grow existing AUM and gain new clients 2
1.2. Key findings 2
1.3. Critical success factors 2
2. THE ONSHORE GERMAN WEALTH MARKET HAS BEEN BOOSTED BY AN ECONOMIC UPSWING 8
2.1. Introduction 8
2.2. Robust growth is expected in the German wealth market to 2021 8
2.2.1. 2017 saw an upswing in the German economy 8
2.2.2. The strong economy means that HNWs now account for 0.45% of the population 9
2.2.3. German affluent individuals hold a rising proportion of liquid assets 10
2.2.4. Almost a fifth of HNW assets are held in illiquid classes 10
2.3. Offshore investments still form a small proportion of HNW assets 12
2.3.1. The German government has taken numerous steps to tackle offshore tax evasion 13
2.3.2. Germany also plays an active role in global tax transparency efforts, having signed TIEAs and double taxation conventions with many offshore centers globally 13
3. DEPOSITS ARE THE MAINSTAY OF THE GERMAN RETAIL SAVINGS AND INVESTMENTS MARKET 15
3.1. Introduction 15
3.2. The performance of the overall market continues to be determined by the dominant role of deposits 15
3.2.1. Growth will be dampened by the country's over-reliance on deposits 15
3.2.2. Proposed changes to capital gains tax will affect future investment preferences 17
3.3. The German preference for deposits will continue to 2021, although their appeal will be slightly dampened 18
3.3.1. Stock market volatility boosted deposit inflows in 2016, in spite of the 0% interest rate 18
3.3.2. Inflation increased relatively sharply in 2017, affecting real returns on deposits 18
3.3.3. Germany's traditional preference for deposits and risk aversion will continue to drive growth 18
3.4. Negative yields are deterring investors from the bond market 19
3.5. Equities and mutual funds are increasing in popularity, but structural issues continue to impede their share of assets 20
3.5.1. The DAX outperformed its European peers with strong growth in 2017 20
3.5.2. Structural issues mean equities and mutual funds remain under-represented in asset portfolios 21
3.5.3. The Investment Tax Reform Act will impact this sector 22
4. THE GERMAN RETAIL NON-RESIDENT MARKET IS DOMINATED BY EQUITIES AND BONDS 25
4.1. Introduction 25
4.2. Equities and bonds are favored by non-residents 25
4.2.1. Non-residents have been attracted by the strong performance of the DAX 25
4.2.2. Negative yields mean the attractiveness of government bonds is predominantly based on their security 25
4.2.3. Deposit balances held by offshore investors have declined since 2013 26
4.2.4. Non-resident investment in mutual funds remains low 26
5. APPENDIX 27
5.1. Abbreviations and acronyms 27
5.2. Supplementary data 28
5.3. Definitions 32
5.3.1. Affluent 32
5.3.2. Domicile 32
5.3.3. Double taxation convention 32
5.3.4. Emerging affluent 32
5.3.5. FATCA 32
5.3.6. HNW 33
5.3.7. Liquid assets 33
5.3.8. Mass affluent 33
5.3.9. Mass market 33
5.3.10. Onshore 34
5.3.11. Residency 34
5.3.12. Exchange of information 34
5.3.13. TIEAs 35
5.4. Methodology 35
5.4.1. Global Wealth Managers Survey 2017 35
5.4.2. Retail Investments Analytics 35
5.4.3. Global Wealth Model 37
5.4.4. Total HNW Wealth Analytics 38
5.4.5. Exchange rates 38
5.5. Bibliography 38
5.6. Further reading 39
List of Tables
Table 1: German adult population segmented by wealth asset band (000s), 2006-13 28
Table 2: German adult population segmented by wealth asset band (000s), 2014-21f 29
Table 3: Retail liquid assets in Germany segmented by asset band ($bn), 2006-13 30
Table 4: Retail liquid assets in Germany segmented by asset band ($bn), 2014-21f 31
Table 5: US dollar exchange rates with the euro 38
List of Figures
Figure 1: 20% of the German population is affluent 9
Figure 2: Affluent individuals account for 78% of total liquid assets in Germany 10
Figure 3: The value and proportion of HNW illiquid asset holdings is diminishing 11
Figure 4: German HNWs have low levels of offshore investment 12
Figure 5: Germany is an early adopter of the OECD's CRS 14
Figure 6: Deposits will continue to dominate the retail savings and investments market, although they will continue to gradually lose share 16
Figure 7: While under-represented in consumer portfolios, equities will show the fastest growth to 2021 17
Figure 8: Growth in deposits will slow to 2021 19
Figure 9: Bonds will continue to decline in popularity to 2021 20
Figure 10: 2017 was a record year for the DAX Index 21
Figure 11: Equities will show robust growth to 2021, with inflows predicted to increase 23
Figure 12: Mutual funds will show more muted growth to 2021 24
Figure 13: Equities and bonds are the big draw for non-resident retail investors in Germany 26
