Growth in France’s retail savings and investment market will be dampened by a faltering economic recovery and a weaker stock market performance. Economic and political challenges continue to reverberate in the development of the affluent market, with lower growth forecast in both individuals and assets to 2020.
- Affluent individuals account for 17.5% of the French adult population and hold 80.6% of liquid assets. This wealth distribution is similar to other developed economies. The proportion of affluent individuals among the French adult population is expected to increase by 2 percentage points by 2020.
- Slow but steady growth is forecast in the French retail savings and investments market (2.2% compound annual growth rate to 2020). Lower growth rates are anticipated across all asset classes due to continuing economic and political struggles.
- Deposits dominate the retail savings and investments market, accounting for just under 70% of liquid assets. They are forecast to be the main driver of growth to 2020 as a result of their ongoing status as a safe haven.
- Investment in illiquid assets has increased significantly. In 2016, they constitute over 30% of a typical HNW portfolio. Real estate investment trusts are the most important type of investment in this field.
- Offshore investments account for just over 14% of HNW assets. These are primarily driven by the desire for tax efficiency, but concerns over local political stability are also significant.
The “Wealth in France: Sizing the Market Opportunity 2016” report, analyzes the French wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.
Specifically the report:
- Sizes the affluent market (both by the number of individuals and the value of their liquid assets) using our proprietary datasets.
- Analyzes which asset classes are favored by French investors and how their preferences impact the growth of the total savings and investments market.
- Examines HNW clients’ attitudes towards non-liquid investments such as property and commodities.
- Identifies key drivers and booking centers for offshore investments.
Reasons to Buy
- Benchmark your share of the French wealth market against the current market size.
- Forecast your future growth prospects using our projections for the market to 2020.
- Identify your most promising client segment by analyzing the penetration of affluent individuals in France.
- Evaluate your HNW proposition by understanding how the French tax system will impact HNW clients.
- Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.
- France's economic and political challenges continue to dampen market growth
- Key findings
- Critical success factors
2. Sizing and Forecasting the French Wealth Market
- The French wealth market will remain concentrated at the top end
- Affluent individuals represented 17.5% of the adult population in 2015
- French affluent individuals hold over 80% of total liquid assets
3. Drivers of Growth in the French Wealth Market
- Retail savings and investments growth will remain subdued as France's economy continues to struggle
- Growth in retail savings and investments will remain subdued
- Deposits dominate the retail savings and investments market
- Deposits will grow steadily over the forecast period
- The ECB lowering the main interest rate to 0% has reduced the appeal of deposits
- Deposit growth is set to continue, albeit at a slower pace
- Equities and mutual funds benefited from relatively strong stock market performance in 2015
- The CAC 40 showed signs of recovery in 2015 in spite of continued volatility
- Equity and mutual fund growth is strongly linked to the performance of the CAC 40
- Retail bond holdings will continue to decline
4. HNW Investment Preferences
- French HNW individuals hold just over 30% of their portfolios in alternative and illiquid assets
- Property investment forms the majority of French HNW illiquid portfolios
- Offshore investments are relatively low and are driven by the desire for tax efficiency
- French HNWs invest just over 14% of their portfolios offshore
- Tax efficiency is the number one motivation for offshore investment
- The majority of French HNW offshore wealth is held close to home
- France is taking numerous steps to tackle offshore tax evasion
- France's complex and heavy tax regime will continue to change
- Abbreviations and acronyms
- Supplementary data
- Liquid assets
- Mass affluent
- 2016 Global Wealth Managers Survey
- 2015 Global Wealth Managers Survey
- Global Wealth Model methodology
- Global Retail Investments Analytics methodology
- Exchange rates
- Further reading
- About the Author
List of Tables
Table 1: French income tax rates and thresholds for individuals, 2015
Table 2: Tax surcharges on property gains, 2015
Table 3: French social tax rates, 2015
Table 4: French wealth tax rates, 2015
Table 5: Onshore liquid assets ($m) by asset band, 2011-15
Table 6: Onshore liquid assets ($m) by asset band, 2016-20
Table 7: Adult population (000s) segmented by wealth band, 2011-15
Table 8: Adult population (000s) segmented by wealth band, 2016-20
Table 9: Euro-US dollar exchange rate, December 31, 2014 and December 31, 2015
List of Figures
Figure 1: Affluent individuals account for 17.5% of the total adult population in France
Figure 2: Affluent individuals account for over 80% of total liquid assets in France
Figure 3: Growth in the French retail savings and investments market will steadily rise to 2020
Figure 4: Deposits will continue to dominate French retail savings and investments
Figure 5: Slower growth is forecast across all retail investment classes to 2020, but deposits will be the largest contributor
Figure 6: Retail deposits will outperform wage and GDP growth to 2020
Figure 7: After a strong 2015, the CAC 40 has struggled in 2016
Figure 8: The performance of the CAC 40 closely aligns with mutual fund and equity investment growth rates
Figure 9: Retail bond holdings will marginally decline
Figure 10: REITs account for the majority of illiquid assets
Figure 11: French HNWs allocate 14% of their assets offshore
Figure 12: Tax efficiency is the main driver of offshore investments for French HNWs
Figure 13: French HNW individuals tend to hold their offshore wealth in European centers
Figure 14: France has signed a number of DTCs and TIEAs with international jurisdictions