Global uncertainty will continue to keep investors busy in 2017. Most notably, ongoing Brexit negotiations, the effects of the Italian referendum, and a new presidency in the US will contribute to ongoing market volatility. On top of that 40% of the EU economy is going to the polls in 2017 – as the support for populist and right-wing ideas that reject globalization and free trade continues to grow, this has the potential to further upset financial markets.
The wealth management industry has been undergoing transformation since the financial crisis, and 2017 will be another year marked with changes to business models and the way providers interact with clients. Many trends observed in 2016 will continue over the next 12 months, with regulation and its costs affecting the financial performance of competitors, and market volatility (often fueled by surprising turns in the geopolitical landscape) keeping portfolio managers busy.
Yet 2017 will also be a year of opportunity for competitors that embrace the change and succeed in those areas of the market where growth can be achieved. On a global scale HNW demand for equities and alternatives is on the rise, while demand for bonds is expected to decrease. North America in particular stands out, with an average of 49% and 48% of HNW wealth invested in this asset class in Canada and the US respectively. The only country that is home to even more enthusiastic equity investors is the UK, where HNW investors hold a noteworthy 57% of their wealth in equities.
HNW investors are becoming more inclined to seek professional investment advice
More than four fifths of wealth managers globally agree that HNW investors are becoming more inclined to seek professional investment advice because of market volatility. This trend is magnified by HNW investors’ increasingly complex portfolios and growing allocations into alternatives, given that taken together a desire to manage simple asset classes themselves and investments in non-financial assets constitute the main reason why HNW investors selfdirect.
HNW investors globally are looking for cheap buying opportunities in the equity space as volatility continues
Undoubtedly, there has been significant market upheaval, which is unlikely to subside going into 2017. Despite this we are not seeing a move towards safe havens such as bonds or gold in the HNW space. On the contrary, HNW investors are looking for cheap buying opportunities. In fact, 52.2% of wealth managers agree that demand for equities is forecast to rise, while only 23.9% expect demand to decrease.
GlobalData’s report “2017: Trends to Watch in Global Wealth Management “ informs wealth managers and their strategy teams of the key developments emerging across the industry and how best to respond to these changes. The report examines developments across a number of key areas, from regulation, to product and service trends, to asset allocation drivers. Specifically, the report:
• Analyzes the impact of regulatory developments on the industry, looking in particular at MiFID II in Europe and tax amnesties across the world.
• Discovers how wealth managers can benefit from the emerging regtech sector and how this may affect the adoption of block chain.
• Considers the opportunities in targeting internationally active clients, as well as defining the target audience for robo-advisors.
• Assesses the impact that newly developed investment products, such as exchange-traded mutual funds (ETMFs) can have on clients' demand for alternative and innovative solutions.
• Examines the potential growth and MandA opportunities offered by aging IFAs, as well as the divestment activity of global players.
• Reviews the latest asset allocation trends and what is driving the growth of equities and alternative investments in particular.
• Draws on our 2016 Global Wealth Managers Survey of 324 executives to provide fact-led insight.
Companies Mentioned: Delio, BlackRock, Deutsche Bank, JP Morgan, Trulioo, AQMetrics, The DAO, SweePay, Barclays, Commonwealth Bank Australia, Wells Fargo, Royal Mint, CME Group, Citigroup, Citi Private Bank, Investment Migration Council, Betterment, Charles Schwab, Vanguard Asset Management, Scalable Capital, Eaton Vance, Nasdaq, State Street, Magellen, Centric Wealth, Arthur J Gallagher, Finaccord, Lloyds Bank, Wealth front, XY Planning Network, UBS, Morgan Stanley, Goldman Sachs, BNP Paribas, OCBC, Bank of Singapore, BoA Merrill Lynch, Credit Suisse, Julius Baer, HSBC, Money farm