Wealth in South Africa: HNW Investors 2017

  • ID: 4239895
  • Report
  • Region: Africa, South Africa
  • 49 pages
  • GlobalData
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FEATURED COMPANIES

  • Anglo American
  • Aviva
  • BMW
  • Charles Schwab
  • Credit Suisse
  • Ford
  • MORE
Wealth in South Africa: HNW Investors 2017

Summary

More than 40% of South African HNW investors generated their wealth through earned income, mainly through manufacturing and the real estate (property sector). Most HNW individuals opt to have their assets managed by a professional, driven by a lack of expertise.

However, clients who self-direct their investments do so mainly to avoid management fees and to retain exclusive control over some of their portfolio. Equities are the preferred asset class, but property, alternatives, and cash are forecast to experience notable increases over the next 12 months. Demand is quite pronounced for pension and inheritance planning, and a strong increase in demand is forecast across all planning services.

Key points to note -
- Expats account for a below-average proportion of the HNW population, with UK HNW migrants accounting for the majority.
- While equities dominate, demand for alternatives is forecast to rise rapidly as investors are looking for new means of diversification.
- Despite a strong preference for discretionary mandates, 21.5% do not place their assets with a professional manager, which is double the global average.
- Demand is strongest for pension and inheritance planning services, and will increase further increase over the next two years, along with demand for financial planning services.

Critical success factors of South Africa HNW business -
- Tailor services to the professional client base: Almost half of South African HNW investors accumulated their wealth through earned income - a considerably larger proportion than the global average. Wealth managers will do well to provide services tailored to the lifestyles and investment goals of their professional client base.
- Target the expat population: Despite being lower than the global average, expats constitute a notable proportion of South African HNW residents. Solutions such as offshore bookings services in the UK will prove to be successful, since British expats constitute nearly two thirds of South African HNW expats.
- Diversify your planning services offering: Demand is very strong for all planning services and is forecast to grow even further. Advisors will do well to develop a broad service offering able to meet diversified planning demands.

The report "Wealth in South Africa: HNW Investors 2017" analyzes the South African investment market, with a focus on the HNW segment and analyzes which asset classes are favored by South African investors and how their preferences impact the growth of the total savings and investments market. Additionally, it examines HNW clients’ attitudes towards non-liquid investments such as property and commodities.

Companies mentioned in this report: Mercantile Private Bank, Credit Suisse, Friends Provident International, Aviva, SIPP, Charles Schwab, Anglo American, BMW, Ford, Toyota, Savills, Nedbank.

Scope

- Expats account for a below-average proportion of the HNW population, with UK HNW migrants accounting for the majority.
- While equities dominate, demand for alternatives is forecast to rise rapidly as investors are looking for new means of diversification.
- Despite a strong preference for discretionary mandates, 21.5% do not place their assets with a professional manager, which is double the global average.
- Demand is strongest for pension and inheritance planning services, and will increase further increase over the next two years, along with demand for financial planning services.

Reasons to Buy

- Benchmark your share of the South African 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 penetration of affluent individuals in South Africa.
- Evaluate your HNW proposition by understanding how the South African tax system will impact HNW clients.
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FEATURED COMPANIES

  • Anglo American
  • Aviva
  • BMW
  • Charles Schwab
  • Credit Suisse
  • Ford
  • MORE
1. EXECUTIVE SUMMARY
1.1. South African clients accumulate wealth through earned income
1.2. Key findings
1.3. Critical success factors
2. PROFILING THE SOUTH AFRICAN HNW INVESTOR
2.1. Earned income accounts for the largest source of wealth
2.1.1. The bulk of South African HNW individuals are males above 51 years of age
2.1.2. The largest proportion of HNW clients amass their wealth through earned income
2.1.3. Many HNW investors have built their fortunes through the manufacturing industry
2.1.4. Nearly half of HNW individuals in South Africa are directors
2.2. Expats account for 8.4% of the local HNW population
2.2.1. The majority of HNW expats are from the UK
3. SOUTH AFRICAN HNW INVESTMENT STYLE PREFERENCES
3.1. Wealth managers should highlight their professional expertise
3.1.1. Over half of South Africa’s HNW wealth is held in discretionary mandates
3.1.2. A lack of expertise drives demand for professional advice
3.1.3. South Africa’s HNW investors place a higher-than-average proportion of their wealth with their main wealth manager
3.2. A desire to avoid management fees is increasing demand for execution-only mandates
3.2.1. However, demand is strongest for discretionary mandates
3.2.2. Advisory mandates will experience the strongest growth in demand
3.2.3. A lack of expertise is driving demand for advisory mandates
3.2.4. South African HNW investors who self-direct want to avoid management fees
3.2.5. Charles Schwab offers automated investment services with a human element
4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG SOUTH AFRICAN HNW INDIVIDUALS
4.1. Property will register the fastest increase in demand over the next year
4.1.1. Equities continue to account for the largest segment of HNW portfolios
4.1.2. Equity investments constitute the largest proportion of the average South African HNW portfolio
4.1.3. Capital appreciation opportunities are the main driver for equity investments
4.1.4. Bond investments are lower in South Africa than the rest of the world
4.1.5. Wealth managers expect bond holdings to decrease significantly
4.1.6. Cash and near-cash allocations are in line with the global average
4.1.7. A desire to maintain liquidity is driving demand for cash and near-cash products
4.1.8. Property constitutes a relatively small part of the typical HNW portfolio
4.1.9. Rental income is the main driver for property investments
4.1.10. Investments in alternatives are more popular in South Africa than globally
4.1.11. Asset diversification is the leading driver for investments in alternatives
4.1.12. Commodities allocations are as low as the global average
4.1.13. Asset diversification is the leading driver for commodity investments
5. HNW PRODUCT AND SERVICE DEMAND
5.1. Wealth managers should lead with pension planning services
5.1.1. Pension planning demand is much higher in South Africa than the rest of the world
5.1.2. Demand for all planning services is forecast to increase
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
6.3. Methodology
6.3.1. 2016 Global Wealth Managers Survey
6.3.2. 2015 Global Wealth Managers Survey
6.3.3. Wealth Insight
6.3.4. Exchange rates
6.4. Bibliography
6.5. Further reading

List of Figures
Figure 1: Women represent just 9% of the South African HNW population
Figure 2: Earned income is the main source of wealth for South Africa’s HNW investors
Figure 3: Manufacturing is the leading generator of South African wealth
Figure 4: A significant proportion of HNW investors in South Africa are directors
Figure 5: 8.4% of South Africa’s HNW client base is made up of expats
Figure 6: Almost two thirds of South African HNW expats are from the UK
Figure 7: Nedbank Private Wealth targets British expats
Figure 8: More than half of HNW assets are managed using discretionary mandates
Figure 9: A lack of expertise is the major driver of wealth management demand
Figure 10: Over three quarters of South Africa’s HNW investors use two or more advisors
Figure 11: Discretionary and advisory mandates experience the highest demand
Figure 12: Advisory asset management will experience the highest increase in demand
Figure 13: HNW investors’ lack of expertise drives the need for advisory mandates
Figure 14: Advisors should offer innovative services to offset self-directing trends
Figure 15: Charles Schwab offers automated advice with a human touch
Figure 16: South African HNW investors are heavily exposed to equities
Figure 17: Equity investments are split almost equally between direct holdings and funds
Figure 18: Demand for equity holdings is forecast to decrease over the next year
Figure 19: Bond allocations in South Africa are half those seen globally
Figure 20: Bond investments are set to decline significantly
Figure 21: The majority of cash and near-cash is invested in money market funds
Figure 22: Cash and near-cash investments are set to record strong growth
Figure 23: South Africa’s HNW investors favor direct property investments
Figure 24: Property investments are forecast to increase further
Figure 25: Hedge funds are the most popular alternatives investment
Figure 26: The majority of industry experts expect alternative investments to increase
Figure 27: Commodity funds are most attractive to South African HNW investors
Figure 28: Asset diversification drives South African commodities investments
Figure 29: Pension planning is the priority for South Africa’s HNW investors
Figure 30: Pension planning will remain the preferred planning service
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  • Mercantile Private Bank
  • Credit Suisse
  • Friends Provident International
  • Aviva
  • SIPP
  • Charles Schwab
  • Anglo American
  • BMW
  • Ford
  • Toyota
  • Savills
Note: Product cover images may vary from those shown
5 of 4
Note: Product cover images may vary from those shown
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