1. Global Wealth Management Trends
An EY Point of View
June 2015

2. Some key observations around Wealth
ASIA, LATAM AND AFRICA ARE GROWING FASTER
PRIVATE WEALTH OF GEN-Y (MILLENIALS) WILL DOMINATE BY 2020
CURRENTLY WEALTH IS CONCENTRATED AROUND DEVELOPED COUNTRIES
GLOBALLY THE RICH ARE GETTING RICHER
BUT ASIA IS FAST CATCHING UP
Global Wealth Management Trends

3. Today’s Discussion: Major trends emerging in wealth management
Customer Preferences
3 Trends
WM Institutions Responses
3 Trends
Market and Regulatory Impact
4 Trends
Global Wealth Management Trends

4. Shift in control of Wealth
Trend 10: Women will take more active decisions regarding family wealth by 2020
Women Today …
2012
2020
Shift in control of Wealth
Control USD 8 Tn in assets in the US, and is expected to rise to USD 22 Tn by 2020
Live 6-8 years longer and are responsible for more household financial decisions
Participate in the workforce and generate personal income, retirement assets
Are poised to inherit from their families and spouses
Source: Sallie Krawcheck: Majority of Women’s Money Going Unmanaged, WealthManagement.com
Global Wealth Management Trends

5. Trend 9: Millennials are conservative
The financial crisis has shaped their behaviour
Investment philosophy
Current Asset Mix
Care more about Risk than anything else…
Distrustful of Wall Street
Hold a lot of Cash
Cautious
Source: UBS “Think you know the Next Gen investor? Think again” 1Q 2014
Global Wealth Management Trends

6. Trend 8: Your advisor is growing old
Age of the financial advisor increasing across the globe
Next Gen to the job
Average age of advisors is 50.9 years
In US 43% of the advisors are over the age of 55
Only 11% are under the age of 35
Succession planning and training of advisors is slowing which will lead to a shortfall of advisors
Source: Understanding and Addressing a More Sophisticated Population, Cerulli Associates
Global Wealth Management Trends

7. Trend 7: The future is digital
2/3 HNWIs are going digital
ROBO Advisors
Automated PMS
Algorithms to create and manage portfolios
Managing wealth relationships digitally
Low cost investment advice is a rising trend and a threat to the traditional RM model
Differentiation will be essential
ROBO Advisors provides portfolio management services with minimal human intervention
Global Wealth Management Trends
Source: 2014 World Wealth Report

8. Trend 6: Digital evokes the need for cybersecurity =>Trust
Top issues in 2014
75% financial compliance professionals listed cybersecurity as a top issue
Increased incidence of cybersecurity threats will have a bearing on reputation risk
Source: 2014 Investment Management Compliance Testing Survey
Global Wealth Management Trends

9. Trend 5: Celebrities fail without good financial advisor
Dionne Warwick
Celebrity lives are always magnified
They need good financial advise because their time is money
Today’s high profile and rich make mistakes
M C Hammer
Celebrities fail to plan and protect their wealth for events that erode their wealth such as:
Divorce
Death
Law Suits and other Legal trouble
Financial planning for life events
Larry King
Celebrities need a trusted advisor to help them manage wealth while dealing with lifestyle challenges
Global Wealth Management Trends

10. Trend 4: Domicile preferences
Globally 27% send kids abroad for secondary education
Over 60% likely to send children abroad for secondary education 3%
42%
Australia & New Zealand
China
Russia & CIS
Only 4% HNWIs considering move out of country
12% HNWIs considering to move out of country
33% HNWIs considering to move out of country
Tax is the main reason globally UHNWI consider moving to different country
In Russia, education and political issues are the main reasons
Source: Knight Frank report, 2015
Global Wealth Management Trends

11. Trend 3: Trust will be new wealth mantra
2014
2015
Banks and Financial services have lowest trust among industries
Source: Edelman Trust Barometer
Global Wealth Management Trends

12. Trend 2: Mass affluent is the new sweet spot for wealth managers
Millionaires
Mass Market
Mass Affluent
UHNWI
HNWIs
Billionaires
Centa- millionaires
Mass market segment, a core driver of revenue, is marginally profitable at best
Mass Affluent are times more profitable than mass market
Constitute 20-30% of retail divisions in banks
HNWI segment though profitable, is too small to drive enough growth and revenue
44% of mass affluent does not consider primary bank as a potential provider of investment services. Addressing this perception problem will unlock more opportunities for banks
Source: Rising to the challenge of the rising mass affluent, BAI
Global Wealth Management Trends

13. Trend 1: The wealthier take more risks
Growing trends of acquiring stakes in unlisted companies
Attractiveness of Real estate as an asset class is coming down
Offshore investments have caught on
High growth potential opportunities in these firms are attracting HNWIs attention
Equity has taken over from real estate as the preferred option, commercial Real estate and lease rental discounting are helping push investments in Real Estate
Kids going abroad, diversification, currency movement are pushing offshore investment
Source: EY Analysis
Global Wealth Management Trends

14. What have these guys done right to build their wealth?
Globally the rich are getting richer… How can wealth management firms work to build their wealth?
The top 1% own almost 40% of wealth. And the top 10% hold almost 90%
What have these guys done right to build their wealth?
Invest in their Businesses
Diversification of investments
Source: The Economist
Global Wealth Management Trends

15. Forecast growth in HNWIs 2014 - 2024
20 April 2017
Changing wealth demographics Asia, Africa and Latin America lead the global charge
Forecast growth in HNWIs
EUROPE
+25%
+25%
+25%
NORTH AMERICA
ASIA
MIDDLE EAST
+25%
+25%
+24%
+40%
+35%
+48%
+57%
+70%
LATIN AMERICA
AFRICA
+59%
+56%
+60%
+50%
+53%
+51%
AUSTRALASIA
+23%
+24%
EY Knowledge analysis – “Wealth management – changing reality”; KnightFrank, Wealth Report 2015
Global growth rates
UHNWIs (+ USD 30m)
+34% Forecast global growth
Centa-millionaires (+ USD100m)
+35% Forecast global growth
Billionaires (+USD 1,000m)
+41% Forecast global growth
Source: Knight Frank report, 2014
Global Wealth Management Trends
[Document title]

16. Where is wealth concentrated today
HNWIs wealth distribution
Source: Knight Frank report, 2015
Global Wealth Management Trends

17. Ernst & Young LLP EY | Assurance | Tax | Transactions | Advisory
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