New Zealand Wealth Management: HNW Investors 2019

New Zealand Wealth Management: HNW Investors 2019

Summary

This report, based on our proprietary Global Wealth Managers Survey, analyzes the investing preferences and portfolio allocation of New Zealand’s high net worth (HNW) individuals. It profiles the average HNW investor in the country and looks at which management mandates are favored. It examines the allocation of HNW investors’ portfolios in different asset classes and how this is expected to develop in the future. Additionally, it analyzes HNW investors’ propensity to invest offshore and their preferred booking centers and asset classes. Finally, it explores product and service demand among New Zealand HNW investors.

New Zealand HNW investors - who skew heavily towards professional and entrepreneurial males - show strong demand for most forms of wealth advice and planning. A multi-service proposition underpinned by a proven ability to demonstrate returns will be key to tapping into demand. A burgeoning appetite for novel options such as robo-advice, the upcoming transfer of wealth between generations, and the growing female segment provide arguably the most significant growth opportunities for global wealth managers in the foreseeable future.

Scope

New Zealand HNW individuals use an average of 3.9 wealth managers and invest less than half of their managed wealth with their main wealth manager.
A fifth of HNW wealth is placed in execution-only mandates, with a desire to maintain control and save on fees being key drivers.
HNW individuals in New Zealand invest an average of 29.9% of their total managed wealth offshore.

Reasons to Buy

Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors’ preferences for the various types of asset management.
Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.
Develop your service proposition to match the product and service demand expressed by New Zealand’s HNW investors, and react proactively to forecasted changes in demand.

1. EXECUTIVE SUMMARY

1.1. Already a mature wealth market, New Zealand still offers room for growth
1.2. Key findings
1.3. Critical success factors

2. DEMOGRAPHICS

2.1. HNW entrepreneurs are a lucrative target market
2.1.1. The majority of HNW individuals have reached or are approaching retirement age
2.1.2. Earned income and entrepreneurship account for an almost equal share of HNW wealth
2.2. The tech and telecommunications industry is the main (and growing) HNW wealth generator

3. HNW EXPATS

3.1. Expats are a below average but growing segment of the HNW market
3.1.1. Expats constitute 5% of the local HNW market, which is modest compared to other high immigration nations
3.1.2. HNW expats from the UK and China represent an attractive target segment
3.1.3. Intergenerational opportunities and lifestyle factors are the biggest drivers for expats

4. HNW INVESTMENT STYLE PREFERENCES

4.1. The expectation of better returns and a desire for peace of mind drive uptake of advice
4.1.1. New Zealand HNW investors spread their wealth across 3.9 wealth managers
4.1.2. The largest proportion of HNW wealth is kept in advisory mandates
4.1.3. A sophisticated proposition is increasingly important to attract HNW investors
4.2. Automated investment and execution-only services offer opportunities for traditional wealth managers
4.2.1. The strongest growth in demand will be for execution-only asset management
4.2.2. HNW investors self-direct to cut costs and retain control over their assets

5. HNW ASSET ALLOCATION PREFERENCES

5.1. A desire for further diversification will drive uptake of alternatives among HNW investors
5.1.1. Equities dominate the typical HNW portfolio, exposing it to greater volatility
5.1.2. Equities constitute almost a quarter of HNW investors’ managed wealth
5.1.3. Commodity investments will show the most constrained increase in demand over the next year
5.1.4. Investment is driven by expected higher income or risk aversion

6. OFFSHORE INVESTMENT DRIVERS AND MOTIVATORS

6.1. HNW offshore holdings are close to par with the wider region
6.2. The aim for better returns offshore is linked to local knowledge

7. HNW PRODUCT AND SERVICE DEMAND

7.1. HNW investors show strong demand for all advice and planning services, but financial planning is particularly sought after
7.1.1. Inheritance planning needs to be a core element of New Zealand wealth managers’ propositions - especially when reaching out to the country’s sizable entrepreneur community
7.1.2. Life insurance represents a growing opportunity
7.2. Strong market growth will drive demand for all auxiliary services
7.2.1. Demand for secured investment portfolio lending is forecast to increase the most, as investors are betting on strong stock market performance
7.2.2. Offering philanthropy services will become more important as the next generation takes over

8. APPENDIX

8.1. Abbreviations and acronyms
8.2. Definitions
8.2.1. Affluent
8.2.2. HNW
8.2.3. Liquid assets
8.3. Methodology
8.3.1. 2019 Global Wealth Managers Survey
8.3.2. Level of agreement calculation
8.3.3. Service level of demand score
8.3.4. Forecast level of demand calculation
8.4. Secondary Sources
8.5. Further Reading

List of Figures

Figure 1: HNW individuals are predominately older males
Figure 2: HNW individuals mainly derive their wealth from earned income and entrepreneurship
Figure 3: Tech and telecoms have helped power the current generation of HNW investors
Figure 4: Expats represent a below-average proportion of the New Zealand HNW population
Figure 5: HNW expats are drawn to New Zealand for its superior quality of life
Figure 6: Expectations of better returns through advisors drives demand for professional advice
Figure 7: New Zealand HNW individuals use a similar number of wealth managers as the regional average
Figure 8: Advisory mandates are key in New Zealand’s HNW space
Figure 9: Automated services are in high demand relative to more established options
Figure 10: Demand for execution-only asset management is expected to surge over the next 12 months
Figure 11: HNW individuals self-direct in order to maintain exclusive control and avoid management fees
Figure 12: New Zealand HNW individuals have a balanced asset allocation spread
Figure 13: Equity funds are the single most popular product among HNW individuals
Figure 14: Equities will experience the highest net increase in demand
Figure 15: Risk aversion, a desire for regular income, and diversification benefits strongly affect asset allocation preferences
Figure 16: New Zealand HNW offshore holdings are below the Asia Pacific average
Figure 17: HNW individuals are aiming for better returns offshore
Figure 18: Demand is most pronounced for financial and pension planning
Figure 19: Strong opportunities exist for more diversified product offerings