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Advisory Asset Management: HNW Demand and Drivers
"Advisory Asset Management: HNW Demand and Drivers" draws on our 2016 Global Wealth Managers Survey to analyze HNW investors' preferences and attitudes towards advisory asset management services across the globe. It sizes the market for advisory mandates and examines key drivers behind wealthy individuals choosing such services. The competitive landscape is also analyzed.
Globally over 25% of HNW individuals' portfolio is invested via advisory services, with markets in Asia Pacific displaying the strongest affinity for these mandates. Although discretionary services remain the preferred option-particularly in developed markets-global HNW demand for formal advice is expected to increase in light of capital markets volatility. Wealth managers should use advisory mandates offering to capitalize on this demand to draw assets from execution-only platforms.
Specifically, the report-
Estimates the value of HNW assets invested via advisory mandates.
Compares HNW individuals' willingness to use advisory services in different countries.
Identifies target client groups for advisory asset managers.
Compares drivers for advisory mandates between countries and regions.
Examines the client targeting strategies of advisory portfolio managers.
Explores robo-advisors' potential to disrupt traditional discretionary asset management business.
Emerging markets show a greater propensity for advisory services than developed countries. Taiwan has the highest penetration of advisory mandates, with 71.2% of the HNW portfolio held in these services.
The US HNW advisory asset management market is worth $1.5tn, representing the greatest opportunity in absolute terms. China is the second-largest market, followed by Australia.
On the global level, the balance between access to advice and retaining control over investments is the main factor fueling HNW demand for advisory mandates, although regional preferences vary.
The second most important reason is price sensitivity. When cheaper than discretionary mandates, advisory services are likely to appeal to HNW investors.
As competitive pricing fuels demand for robo-advice, most wealth managers agree they should invest in automated investment services to complement their existing offering.
Reasons to Buy
Discover how much HNW wealth is invested via advisory mandates.
Identify markets offering the greatest growth potential for advisory asset management.
Learn why HNW investors choose to opt for advisory services, and how these motivations differ between countries, particularly in emerging and developed markets.
Gain an insight into best-practice examples from competitors operating within the advisory mandates landscape.
Table of Contents
1. EXECUTIVE SUMMARY 2
1.1. Market volatility will drive demand for advisory mandates 2
1.2. Key findings 2
1.3. Critical success factors 2
2. SIZING THE GLOBAL MARKET FOR ADVISORY ASSET MANAGEMENT 7
2.1. Defining advisory asset management 7
2.2. Wealth managers offer a range of asset management solutions to cater to HNW investors 7
2.3. More than 25% of HNW wealth is managed using advisory mandates 8
2.3.1. HNW investors in Asia Pacific place the largest proportion of their wealth in advisory mandates 9
2.3.2. Advisory asset management is a more prevalent service in emerging markets 10
2.3.3. Developed markets hold a below-average proportion of wealth in advisory mandates 11
2.4. The global HNW advisory asset management market is worth $7.6tn 13
2.4.1. The value of the HNW market will continue to expand with growth in assets 13
2.4.2. The US holds the greatest value of assets placed in advisory mandates 14
2.5. Demand for mandated services will increase 15
2.5.1. Wealth managers expect the greatest demand increase for advisory asset management 16
2.5.2. Demand for advisory services will rise the most in regions with an already high preference 17
3. DRIVERS FOR ADVISORY ASSET MANAGEMENT 19
3.1. Advisory services appeal to offshore investors and businessmen 19
3.1.1. HNW offshore investors are likely to opt for advisory mandates 19
3.1.2. Family business owners and first-generation entrepreneurs support demand for advisory mandates in emerging markets 20
3.2. HNW investors value time and monetary resources 21
3.2.1. The most common driver behind demand for advisory services is a balance between guidance and control 21
3.2.2. Drivers for advisory mandates vary among regional markets 23
4. UNDERSTANDING THE COMPETITIVE LANDSCAPE 27
4.1. The majority of wealth managers currently offer advisory services 27
4.1.1. Advisory services are often offered alongside discretionary mandates 27
4.1.2. HNW investors have a range of options for pursuing advisory mandates 28
4.2. With the increasing use of technology, the way investment advice is delivered has been changing 30
4.2.1. Robo-advisors revealed the benefits of the digital channel 30
5. APPENDIX 34
5.1. Abbreviations and acronyms 34
5.2. Definitions 34
5.2.1. Developed (mature) economies or markets 34
5.2.2. Developing (emerging) economies or markets 34
5.2.3. HNW 34
5.2.4. Liquid assets 34
5.2.5. Mass affluent 34
5.2.6. Mass market 35
5.2.7. Robo-advisor 35
5.3. Methodology 35
5.3.1. Sizing the market for advisory asset management 35
5.3.2. GlobalData's 2016 Global Wealth Managers Survey 35
5.3.3. GlobalData's 2015 Global Wealth Managers Survey 35
5.3.4. Exchange rates 36
5.4. Bibliography 36
5.5. Further reading 37
List of Figures
Figure 1: Advisory mandates are less popular among HNW individuals than discretionary services 8
Figure 2: Over a third of HNW portfolio wealth in Asia Pacific is held in advisory mandates 10
Figure 3: Taiwan has the highest advisory mandate penetration among emerging markets 11
Figure 4: HNW investors in Australia hold the majority of their wealth in advisory mandates 12
Figure 5: Double-digit growth is forecast among HNW individuals with liquid assets exceeding $10m 13
Figure 6: Globally, the US is the largest opportunity for advisory asset management 15
Figure 7: Wealth managers expect demand for advisory mandates to increase 16
Figure 8: The majority of wealth managers globally expect demand for advisory mandates to increase 18
Figure 9: Offshore investors have a strong appetite for advisory mandates 20
Figure 10: HNW individuals in emerging markets are more likely to work as a family business owner or first-generation entrepreneur than those in developed markets 21
Figure 11: Maintaining the right balance of guidance and control is key for HNW individuals who hold wealth in advisory mandates 22
Figure 12: HNW investors in Asia Pacific are the most likely to choose advisory mandates because they want guidance but also the ability to retain control 24
Figure 13: HNW investors in Europe and the Middle East & Africa are the most reluctant to hand over complete control to their wealth manager 26
Figure 14: Most wealth managers offer their clients advisory services 28
Figure 15: Globally, wealth managers agree that investing in automated investment services can complement an existing offering 32
List of Tables
Table 1: Minimum investment thresholds for advisory services of selected providers in the UK 29
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Bank of Singapore BNP Paribas Wealth Management Charles Schwab Citibank Credit Suisse Hargreaves Lansdown Asset Management HSBC Private Bank JP Morgan Chase Julius Baer Merrion Capital OCBC Rathbones RBC Wealth Management Rowan Dartington & Co Seven Investment Management UBS Wealth Management W H Ireland Walker Crips Group
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