Wealth Management in Australia

Introduction

Australia weathered the global financial crisis better than most countries but it was not immune to its effects. With billions of dollars having been erased from the portfolios of the affluent, banks will need to work hard to regain the trust and funds of these lucrative customers. This report explores the changes to both the competitive landscape of the wealth marekt and to its affluent clients.

Features and benefits

- Market sizing and forecasts of the onshore wealth population and assets from 2005 - 2014. All data is segmentated into 10 asset bands.
- Regional segmentation of the onshore wealthy population.
- Incorporates data from the Australian Financial Services Survey conducted in 2010.
- In-depth analysis of the competitor landscape, incorporating profiles of ANZ, Commonwealth Bank, NAB, Perpetual and Westpac.

Highlights

- The market for HNW and mass affluent services will have grown considerably in 2010, and is estimated to have mostly recovered from the Global Financial Crisis, which resulted in a decline in 2009. In terms of the total market, the wealthy are likely to have grown in number by approximately 14% in 2010.
- The distribution of wealth in Australia varies considerably, with the majority of wealth and wealthy individuals concentrated in the eastern states of New South Wales and Victoria. While it is unsurprising that the highest number of wealthy live in the most populated areas, these two states also contain the highest proportion of affluent consumers.

Your key questions answered

- How big is the addressable affluent market in Australia?
- Which regional markets within Australia are most ripe for client acquisition?
- What asset classes have become more attractive to the Australian wealthy since the global financial crisis?
- Who are the major competitors in Australian wealth management?
- What strategies are the major competitors using to target the afflunet market. SHOW LESS READ MORE >

Executive Summary
The wealthy onshore population in Australia is expected to have rebounded quickly from the global financial crisis
The number of wealthy individuals in Australia has declined
The wealthy in Australia have adopted more conservative attitudes to investment due to the GFC
Players will need to rebuild trust in financial advice
Wealth is concentrated among the most populous states, but this may change
New South Wales and Victoria have the highest proportions of wealthy individuals
Rapid economic growth in more sparely populated regions will make a national network more valuable
Equities have had strong inflows from the wealthy
Leading local players generally rely upon an extensive retail banking presence
The Australian wealth management scene is led by local players from the retail banking market
The HNW advice market is presently only tapping into 27% of its potential client base
OVERVIEW
Catalyst
Summary
Methodology
MARKET OVERVIEW
Introduction
Economic context
The Australian economy has been one of the few bright spots among developed markets
Equities have bounced back and should lead to a strong rebound in wealth for 2010
The regulatory picture for wealth management has shifted, bringing opportunity and challenge
The Ripoll Inquiry resulted in regulations that will cause a fundamental shift in the business model for many wealth advisors
The wealth management sector will see additional funds under management from the Henry review
The onshore wealthy population in Australia
The number of wealthy individuals in Australia suffered considerably as a result of the GFC
The mass affluent population declined by approximately 400,000 individuals in 2009
The mass affluent at all wealth levels suffered declines in the value of their assets
The challenge for the market will be to rebuild trust in riskier and higher return products
The wealthy in Australia have adopted more conservative attitudes to investment
Players will need to rebuild the trust which has been damaged by negative returns and scandal
With HNWs and the mass affluent regaining their bearings, the market will grow
THE AFFLUENT AUSTRALIAN INVESTOR
Introduction
New South Wales has the largest concentration of wealthy individuals
The two largest states also have the highest proportions of wealthy individuals
New South Wales remains the powerhouse of wealth management in Australia
Victoria's wealth distribution has resulted in a more traditionally structured market
Queensland's wealthy population is more predictable in terms of its population
South Australia is a minor player in the overall wealth market
Western Australia is the fastest developing market in the country, due to the mining boom
Servicing Tasmania means catering primarily to the lower end of the mass affluent market
The Northern Territory has the smallest number of wealthy individuals
The Australian Capital Territory's market is naturally dominated by government employees
Product holdings among the wealthy in Australia are fairly conservative
Product penetration is highest among more liquid assets
Superannuation funds remain an important vehicle for securing the future of wealthy Australian consumers
The run up in local prices means the wealthy in Australia are particularly exposed to the property market
Wealthy individuals have reduced the risk in their asset holdings
Overall trends in asset holdings suggest that HNWs have de-risked, while the least wealthy have drawn upon their savings
Cash products have become more popular, with inflows at all levels
Fixed income securities have been less popular among wealthy Australians
High net worth clients have become more cautious about investment properties
Equities have strong inflows from the wealthy
Mutual funds have fallen from favor, as many wealthy individuals have opted not to increase their holdings
Wealth protection messages are as important as those stressing growth
Breaking into a client's internal decision-making process is the key challenge for wealth managers
Coverage in the financial press still presents a good marketing opportunity
Generally cautious, the wealthy are increasingly split between those keen for extra return and those keen to limit risk
COMPETITIVE DYNAMICS
Leading local players generally rely upon an extensive retail banking presence
The Australian wealth management scene is led by local players from the retail bank market
Consolidation has further tightened the control of the major banks over the market, with implications for HNWs
The retail market for wealth management is more consolidated than the HNW advice market
ANZ
ANZ has developed a wealth management proposition in Australia which is tightly linked to its Asian operations
Key acquisitions have led to growth in Australia and Asia Pacific
ANZ's joint venture with ING Direct provided a fully integrated wealth management arm
Key business performance metrics
Strategy to succeed in today's market: integration into the Asia Pacific regional wealth market
Commonwealth Bank
Key business performance metrics
Commonwealth Bank is aiming to build on its success among HNW clients by focusing on the UHNW market
NAB
Australia's wealth market leader has tried to incorporate both depth and breadth into its offering
Key business performance metrics
Strategy to succeed in today's market: NAB has laid out some key strategies for its wealth arm, focusing on brand and capacity
Perpetual
A long-standing Australian wealth management brand
Key business performance metrics
Specialist services
Strategy to succeed in today's market: becoming a holistic provider through acquisitions
While clearly a national provider, Perpetual has targeted key groups for its wealth proposition
Westpac
Westpac offers a range of private banking brands
Key business performance metrics
Specialist products and services
Westpac's strategy is to invest in more personnel and to better leverage its diverse brand portfolio
APPENDIX
Definitions
The drivers of growth in the wealthy population
Income growth (combined with inflation, changes in GDP by sector, household savings rates, and debt levels)
Investment returns (market capitalization, interest rates, and bond yields)
The following measures are not, in themselves, drivers of wealthy population growth
Market capitalization
GDP
The following measures are not drivers of wealthy population growth except under very restricted circumstances
Primary residence value growth
Inheritance
Methodology
Global Wealth Model
Datamonitor AFS Survey
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer