Australia Wealth Management: HNW Investors 2019

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

2.1. The proportion of HNW investors is forecast to stay relatively static
2.2. Almost half of Australia’s liquid assets are concentrated among HNW individuals

3.1. HNW entrepreneurs are lucrative but employees offer volume too
3.1.1. Many HNW individuals have reached or are approaching retirement age
3.1.2. Earned income accounts for a greater share of HNW wealth than entrepreneurship
3.2. Australian wealth remains diversified, with the mining sector down from previous highs

4.1. Expats are a below-average but growing segment of the HNW market
4.1.1. Expats constitute 10.5% of the local HNW market, which is modest compared to other high immigration nations in Asia
4.1.2. HNW expats from the UK and China represent attractive target segments
4.1.3. Intergenerational opportunities and lifestyle factors are big drivers for expats, although business opportunity remains key
4.1.4. The SIV is a lucrative but small market

5.1. The expectation of life events and access to more sophisticated products drive uptake of advice
5.1.1. Wealth managers need to highlight how products help address life goals or milestones
5.1.2. Australian HNW investors spread their wealth across 6.1 wealth managers
5.1.3. Australian HNW wealth is relatively balanced across asset management styles
5.1.4. A sophisticated proposition is important to attract HNW investors, but low-cost options are experiencing growing demand
5.2. Automated investment and execution-only services offer opportunities for traditional wealth managers
5.2.1. The strongest growth in demand will be for advisory asset management
5.2.2. HNW investors self-direct primarily due to confidence in their own abilities

6.1. A desire for further diversification will drive uptake of alternatives among HNW investors
6.1.1. Equities have reduced considerably, in line with global trends
6.1.2. Roughly half of HNW assets are held via funds and ETFs
6.1.3. Equity will bounce back from its recent lows in the asset mix
6.1.4. Investment is driven by expected higher income or risk aversion

7.1. HNW offshore holdings are well below average for the wider region
7.1.1. Increasing use of offshore booking centers is a strategic threat to local wealth managers
7.1.2. Australians use offshore booking centers that are also the world’s largest financial markets
7.2. The aim for better returns offshore is linked to diversification
7.2.1. Foreign stock markets attract the bulk of Australian offshore investment

8.1. HNW investors show strong demand for all advice and planning services, but tax planning is particularly sought after
8.1.1. Inheritance planning needs to be a core element of Australian wealth managers’ propositions - especially when reaching out to the country’s sizable entrepreneur community
8.1.2. Life insurance represents a growing opportunity, but demand is currently low
8.2. Steady market growth will drive demand for most auxiliary services
8.2.1. Demand for life insurance is likely to rise from current lows
8.2.2. Offering SRI will become more important as the next generation takes over
8.2.3. Expanding credit facilities is expected to see the lowest increase in demand

9.1. Abbreviations and acronyms
9.2. Definitions
9.2.1. Affluent
9.2.2. HNW
9.2.3. Liquid assets
9.3. Methodology
9.3.1. 2019 Global Wealth Managers Survey
9.3.2. Level of agreement calculation
9.3.3. Service level of demand score
9.3.4. Forecast level of demand calculation
9.4. Secondary sources
9.5. Further reading

Figure 1: The number of affluent individuals will grow at a steady rate over the forecast period
Figure 2: Australian affluence will rise at a slower rate in the future
Figure 3: Older men represent the bulk of the market, but the younger age profile of female HNW individuals ensures a growing role
Figure 4: HNW individuals mainly derive their wealth from earned income and entrepreneurship
Figure 5: Basic materials and financial services have helped drive the current generation of HNW investors
Figure 6: Expats represent a below-average proportion of the Australian HNW population
Figure 7: HNW expats are drawn to Australia for its stability and business opportunities
Figure 8: Life events and access to more sophisticated investments drive demand for professional advice
Figure 9: Australian HNW individuals use more wealth managers than the regional average
Figure 10: Australian HNW wealth is evenly distributed across various mandates
Figure 11: The merits of discretionary asset management need to be sold to Australian HNW investors
Figure 12: Demand for advisory asset management is expected to surge over the next 12 months
Figure 13: HNW individuals self-direct due to their own confidence and to avoid management fees
Figure 14: Australian HNW individuals have a remarkably balanced asset allocation spread
Figure 15: ETFs make up almost a fifth of the HNW investor portfolio
Figure 16: Equities will experience the highest net increase in demand
Figure 17: Asset diversification, returns, and inflation protection benefits strongly affect asset allocation preferences
Figure 18: Australian HNW offshore holdings are below the regional average but will surge
Figure 19: Australian HNW individuals invest in the usual range of global and regional offshore markets
Figure 20: Offshore booking centers are seen to offer superior returns and diversification to HNW Australians
Figure 21: Equities are the main attraction for HNW investors offshoring their wealth
Figure 22: Demand is most pronounced for tax planning
Figure 23: Strong opportunities exist for more diversified product offerings