Table Of Contents
OVERVIEW
Catalyst
Summary
Methodology
EXECUTIVE SUMMARY
Sizing and forecasting the affluent population in Taiwan
The Taiwanese economy has recovered well following the global financial crisis
Sizing the offshore fund market in Taiwan
The typical Taiwanese HNW investor is male, between 51 and 65 years old, and accumulated his wealth through entrepreneurship or earned income
Most HNW individuals are between 51 and 65 years old, making retirement, succession, and inheritance planning more of a preoccupation
The majority of HNW individuals have amassed their fortunes through entrepreneurship
Within two years, fixed income products will increase as a proportion of Taiwanese HNW portfolios, while cash will decrease
Competitor developments in wealth management in Taiwan
Despite there being 37 domestic banks and 28 local branches of foreign banks in Taiwan, the private wealth management market is dominated by foreign players
Mergers and acquisitions, organic growth, and partnerships have focused on the China opportunity of late
Taiwan Cooperative Bank intends to set up wealth management teams in all branches
SIZING AND FORECASTING THE AFFLUENT MARKET IN TAIWAN
Introduction
Macroeconomic overview
The Taiwanese economy has recovered well following the global financial crisis
GDP: exports are the primary driver of Taiwan's economic growth
Inflation in Taiwan has been consistently below average for the region
Long-term and short-term interest rates
Stock market capitalization: capitalization increased significantly when Taiwan opened its markets to Chinese investments
Increasing GDP per capita and a low Gini coefficient are leading to a growing number of affluent individuals
The Taiwan dollar has been gradually strengthening against both the US dollar and the euro
Sizing and forecasting the onshore affluent population
The value of onshore liquid assets held in Taiwan quickly overcame the global financial crisis and is forecast to grow steadily
The affluent market reached a value of $858.4bn in 2011 and is set to grow further
The onshore affluent population is growing strongly as a percentage of the total population
There were over 3.9 million mass affluent individuals in 2011 in Taiwan
The HNW population is expected to grow at an AAGR of 6.5% over the period 2011–15
Sizing the offshore fund market in Taiwan
Regulatory and fiscal landscape
Industry regulators
Industry associations
Tax regime
Stamp duties are varied to encourage the development of the local bond market
Recent legal, fiscal, and regulatory developments
International regulations
Taiwanese regulations
Investor immigration program
SERVING HIGH NET WORTH CUSTOMERS IN TAIWAN
Introduction
The typical Taiwanese HNW investor is male, between 51 and 65 years old, and accumulated his wealth through entrepreneurship or earned income
Most HNW individuals are between 51 and 65 years old, making retirement, succession, and inheritance planning more of a preoccupation
Men account for a significant proportion of HNW individuals in Taiwan, but HNW women represent an attractive market as it is poorly targeted
The majority of HNW individuals have amassed their fortunes through entrepreneurship
HSBC Private Banking offers tailored financial solutions to business owners, entrepreneurs, and senior executives
The portfolios of Taiwanese HNW individuals mainly consist of real estate investments and cash or near-cash products, but a shift from cash towards fixed income is expected within two years
Traditionally, the majority of HNW investors in Taiwan allocate their assets in real estate investments
Detailed asset class analysis shows that Taiwanese HNW individuals have mostly invested in open real estate funds and deposits savings
Within two years, fixed income products will increase as a proportion of Taiwanese HNW portfolios, while cash will decrease
Grand Cathay Securities is well positioned to benefit from the growing demand for fixed income products
There is a high demand for discretionary management, mortgages, and personal loans but tax planning and advice is set to become increasingly important
There are crucial gaps in the service offerings of Taiwanese wealth managers when compared to the Asia Pacific region
Looking forward two years, advisory and discretionary asset management will remain in high demand
Mortgages and personal loans are the preferred products among Taiwan's HNW investors but the availability of personal loans at Taiwanese wealth managers is quite low
Within two years demand for tax planning is set to increase, while demand for lending products and insurance is not expected to change drastically
Taiwanese HNW individuals are open to new investments but only have a low understanding of risk and return
Taiwanese HNW individuals have a low understanding of risk and return but a relatively high risk appetite, making personnel who can effectively explain complex investment processes essential
Taiwanese investors appreciate personal relationships in doing business, although to a lesser extent than the Asia Pacific average
Weekly telephone meetings between wealth managers and HNW individuals are the rule in Taiwan
Taiwanese HNW investors display a high degree of loyalty to their bank but not to their wealth manager, making relationship management a crucial activity
Taiwanese HNW individuals tend to work with numerous wealth managers
The majority of Taiwanese HNW individuals will hold up to a fifth of their portfolio with one wealth manager
Referrals or relationships with professional associations are the most effective means of customer acquisition
COMPETITOR DEVELOPMENTS IN WEALTH MANAGEMENT IN TAIWAN
Introduction
Business models of wealth managers in Taiwan
The Taiwanese wealth management market is served by a mixture of different financial institutions, whereas foreign banks capture a significant market share
Despite there being 37 domestic banks and 28 local branches of foreign banks in Taiwan, the private wealth management market is dominated by foreign players
Asset managers and securities firms in Taiwan
Financial advisors
Family offices
Competitor trends
Mergers and acquisitions, organic growth, and partnerships have focused on the China opportunity of late
Since the enactment of the Economic Co-operation Framework Agreement six Taiwanese banks have entered the Chinese market
There is an increased focus on segmentation by customer type
Taiwanese private banks are struggling to recruit skilled private bankers
Competitor profiles
Competitor profile: Bank of East Asia
Bank SinoPac
HSBC
Taiwan Cooperative Bank
APPENDIX
Definitions
High net worth (HNW)
Liquid assets
Mass affluent
Measures of growth
Onshore
Methodology
Overall methodology
Global Wealth Model methodology
Global Wealth Managers Survey 2011
Further reading
Selected bibliography
Ask the analyst
Disclaimer
List Of Tables
Table: Key Taiwanese macroeconomic data
Table: The value of mass affluent assets ($bn), by asset band, 2006–10
Table: The value of mass affluent assets ($bn), by asset band, 2011–15f
Table: The value of HNW assets ($bn), by asset band, 2006–10
Table: The value of HNW assets ($bn), by asset band, 2011–15f
Table: The mass affluent population in Taiwan (000s), 2006–10
Table: The mass affluent population in Taiwan (000s), 2011–15f
Table: The HNW population in Taiwan (000s), 2006–10
Table: The HNW population in Taiwan (000s), 2011–15f
Table: Tax rates in Taiwan
Table: Citi Private Bank offers a range of lending services
Table: Domestic and foreign banks in Taiwan
Table: Requirements to set up representative offices or bank branches in Taiwan
Table: Top mutual asset managers
Table: Financial performance – Bank of East Asia
Table: Financial performance – Bank SinoPac
Table: Financial data – HSBC Group
Table: Retail banking and wealth management profit after tax in 2011 ($m) – HSCB
Table: Financial data – Taiwan Cooperative Bank
Table: Business targets ($bn) – Taiwan Cooperative Bank
Table: Financial data by segment and total – UBS
Table: Total operating income by region – UBS
List Of Figures
Figure: Almost half of the HNW population in Taiwan accumulated their wealth through entrepreneurship
Figure: Taiwan is the sixth largest economy in the Asia Pacific region
Figure: Taiwan experienced only one year of economic decline during the global economic crisis
Figure: Inflation in Taiwan was consistently lower than the regional average between 2007 and 2011
Figure: Long-term interest rates have been gradually declining
Figure: Short-term interest rates have been steadily increasing as the economy has recovered well from the global financial crisis
Figure: The Taiwan Stock Exchange has performed well compared to other Asia Pacific markets
Figure: Taiwan has the third lowest Gini coefficient in the Asia Pacific region
Figure: During the financial crisis, the Taiwan dollar weakened against both the US dollar and the euro
Figure: Taiwan will experience growth rates of over 5% in the value of liquid assets held by affluent individuals over the next five years
Figure: Liquid assets held by the affluent population in Taiwan are expected to increase at a CAGR of 6.3% between 2012 and 2015
Figure: The value of liquid assets held by mass affluent individuals is forecast to grow strongly
Figure: The value of HNW individuals' liquid assets in Taiwan is forecast to grow by 7% between 2011 and 2015
Figure: 28% of the population will be classed as affluent by 2015, indicating that there will be greater demand for wealth managers
Figure: The mass affluent population in Taiwan is forecast to increase between 2011 and 2015
Figure: The number of HNW individuals in Taiwan increased every year apart from 2008 during 2006–11, and is forecast to continue growing
Figure: Investment areas of offshore funds
Figure: Domestic vs offshore fund market in Taiwan
Figure: More than three quarters of the Taiwanese HNW population are over 51 years old
Figure: Men constitute the majority of HNW individuals
Figure: UBS tailors its wealth management services to the needs of women
Figure: Almost half of the HNW population in Taiwan accumulated their wealth through entrepreneurship
Figure: The majority of HNW investors allocate their assets in real estate investments
Figure: Open real estate funds and deposits savings are the preferred investments in Taiwan
Figure: Real estate investment remains popular in Taiwan
Figure: More sophisticated wealth management products and services are not widely available in Taiwan
Figure: Taiwanese HNW individuals have a high appetite for discretionary asset management
Figure: Demand for discretionary asset management services will not change within the next two years
Figure: Mortgages and personal loans are high in demand in Taiwan
Figure: Demand for tax planning and advice is set to increase within the next two years
Figure: Taiwanese HNW investors have a lower than average understanding of risk and return
Figure: Taiwanese HNW investors value personal relationships when doing business
Figure: Integrated Wealth Counsel answers client questions on Facebook within 72 hours
Figure: Taiwanese wealth managers communicate with their clients once a week over the phone
Figure: Taiwanese HNW individuals are not likely to leave their wealth manager for another service provider but may leave in order to manage their wealth on their own
Figure: More than 90% of HNW investors allocate only 11–20% of their portfolio to one wealth manager
Figure: Referrals from or relationships with professional associations are the most powerful means of acquiring new customers
Figure: Press advertising, events, and cold calling are not an effective use of time or money
Figure: Bank of Taiwan is the largest deposit holder in the country
Figure: Onshore mutual fund mix, Q4 2010
Figure: UBS Wealth Management Campus
Figure: Business structure – Bank of East Asia
Figure: Branch network – Bank of East Asia
Figure: Bank of East Asia's SupremeGold offer
Figure: Business structure – Bank SinoPac
Figure: The fee income of Bank SinoPac is substantially reliant on its wealth business
Figure: Banking network – Bank SinoPac
Figure: Business structure – HSBC Bank (Taiwan)
Figure: Profit before tax contribution by segment – HSBC Group
Figure: HSBC Private Banking network in Asia Pacific
Figure: Product offerings -HSBC Bank (Taiwan)
Figure: HSBC Private Banking services for HNW clients, as stated on the HSBC homepage
Figure: HSBC Private Bank's rebranding advertising campaign in 2009
Figure: Business structure – Taiwan Cooperative Bank
Figure: Branch network – Taiwan Cooperative Bank
Figure: Business structure – UBS
Figure: UBS’ assets under management split by client wealth band 2011
Figure: Branch network – UBS
Figure: UBS is a sponsor of the Art Gallery of New South Wales, which houses contemporary artworks
Figure: Global Wealth Managers Survey 2011 – geographic coverage