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Wealth in Australia: Sizing the Market Opportunity

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Wealth in Australia: Sizing the Market Opportunity

Summary

"Wealth in Australia: Sizing the Market Opportunity", report analyzes the Australian wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.

Although the outlook for Australian wealth growth remains steady, there are significant uncertainties in the financial sector. This includes a series of destabilizing factors in the international economic world order, mainly due to the US's continued attempts to remake international trade in a way the country sees as more advantageous to its own interests. Meanwhile an enquiry into the domestic banking sector has demonstrated significant abuses of clients by the major banks-and the consequences of these findings may be severe. But despite the potential need for caution there is also considerable opportunity.

Specifically the report-

- Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.

- Analyzes which asset classes are favored by Australian investors and how their preferences impact the growth of the total savings and investments market.

- Examines HNW clients' attitudes towards non-traditional investments, such as property and commodities.

- Identifies key drivers and booking centers for offshore investments.

- Examines the tax landscape in Australia and future implications for investors.

Scope

- By the middle of 2018 an estimated 19 million adults were living in Australia. 4.2 million (20.1%) of these individuals could be considered affluent or HNW and eligible for a premium wealth management service.

- Deposits and equities remain by far the most popular means of investment.

- Wealth growth is once again focused on the Eastern Seaboard after the end of the mining boom.

- Offshore retail investors are only a minor element of most of Australia's securities markets, barring bonds.

Reasons to buy

- Benchmark your share of the Australian wealth market against the current market size.

- Forecast your future growth prospects using our projections for the market.

- Identify your most promising client segment by analyzing penetration of affluent individuals in Australia.

- Review your offshore strategy by identifying HNW motivations for offshore investments and their preferred booking centers.

READ MORE

Table Of Content

Scope

Table of Contents

1. EXECUTIVE SUMMARY 2

1.1. Market summary 2

1.2. Key findings 2

1.3. Critical success factors 2

2. SIZING AND FORECASTING THE AUSTRALIAN WEALTH MARKET 8

2.1. Introduction 8

2.2. By 2020, 23% of Australia's adult population will be classed as affluent 8

2.2.1. A large mass affluent population highlights the viability of retail wealth management offerings 8

2.2.2. Private bankers in Australia still have relatively low penetration into the HNW client base 9

2.3. HNW individuals account for 1.1% of adults but 39.1% of liquid assets 10

2.3.1. Wealth is increasingly concentrated among HNW investors as investment returns rebound 10

2.3.2. With the AUSD 10m+ segment growing fastest, assets will become increasingly concentrated in the portfolios of the rich 10

2.4. The future direction of property and lending will shape Australia's regional wealth markets 13

2.4.1. The Banking Royal Commission has adversely affected the industry's reputation 13

2.4.2. There will be investment management opportunities as the property market loses its allure 13

2.4.3. Australia's onshore wealth and growth is concentrated in the populous states of the eastern seaboard 14

3. THE AUSTRALIAN RETAIL INVESTMENT MARKET IS HIGHLY DEVELOPED 16

3.1. Introduction 16

3.2. Asset proportions have remained steady, with growth on all fronts 16

3.2.1. Equities are expected to grow compared to other securities 16

3.2.2. Outside of superannuation, Australians keep most of their liquid wealth in deposits 17

3.2.3. Investment property is typically a key competitor to securities for Australians' savings, but will be less of a threat over the next two years 18

3.3. Stock value continues to increase, driving investor interest 19

3.3.1. Barring a modest correction, higher equity valuations will drive further investment 19

3.3.2. ETFs are rising as a share of the investment mix 20

3.4. Deposits increased-in part due to low interest rates 21

3.4.1. Investors appear to desire a specific return from deposits, with low rates requiring greater investment to achieve it 21

3.4.2. Future interest rate increases will require a reassessment of deposits 21

3.5. Mutual fund growth is set to be modest 22

3.5.1. Investor interest in mutual funds needs to be rekindled in Australia 22

3.5.2. Fee-free mutual funds are likely to make their way to Australia 23

3.6. Retail bond holdings growth will rise from almost nil 23

3.6.1. Direct bond holdings never took off among retail investors in Australia 23

4. HNW INVESTORS IN AUSTRALIA HOLD 19% OF THEIR WEALTH OFFSHORE 25

4.1. Introduction 25

4.2. Large private investors remain committed to the Australian market 25

4.2.1. Local Australian HNW investors are mainly offshoring wealth to invest in foreign equities 25

4.2.2. The impact of CRS on Australian wealth management will be minimal 26

4.3. Foreign investment into Australia centers on debt and equity 27

4.3.1. Offshore investors are drawn to the Australian securities market 27

4.3.2. Overseas investors into Australia will largely be unaffected by full implementation of CRS 28

4.3.3. Property investment has been a major focus of offshore retail investors 28

5. APPENDIX 30

5.1. Abbreviations and acronyms 30

5.2. Supplemental data 31

5.3. Definitions 35

5.3.1. Affluent 35

5.3.2. Domicile 35

5.3.3. Double taxation convention 35

5.3.4. Emerging affluent 35

5.3.5. FATCA 35

5.3.6. HNW 36

5.3.7. Liquid assets 36

5.3.8. Mass affluent 36

5.3.9. Mass market 37

5.3.10. Onshore 37

5.3.11. Residency 37

5.3.12. Exchange of information 37

5.3.13. Tax information exchange agreements (TIEAs) 38

5.4. Methodology 38

5.4.1. 2018 Global Wealth Managers Survey 38

5.4.2. Retail Investments Analytics 38

5.4.3. Global Wealth Model 40

5.4.4. Total HNW Wealth Analytics 41

5.4.5. Exchange rates 41

5.5. Bibliography 42

5.6. Further reading 42


List Of Figure

List of Figures

Figure 1: The number of affluent individuals is set to rise over the forecast period 9

Figure 2: Mass affluent assets only narrowly exceed those of the HNW market, highlighting the utility of a private bank offering 11

Figure 3: Interactions with wealth managers are becoming increasingly widespread among affluent Australian investors 12

Figure 4: The Australian economy continues to grow, fueling investment portfolios across the board 17

Figure 5: Low-yielding deposits will outgrow even the relatively high-yielding fund market 18

Figure 6: Australian investors have been slow to reinvest into equities, despite tax incentives to do so 20

Figure 7: Interest rates have plunged, making deposit balance growth dependent upon diminishing inflows 21

Figure 8: Mutual funds will grow, but will face competition from ETFs and exchange-traded products 23

Figure 9: Small gains will not see bonds shift significantly upward in the Australian investment portfolio 24

Figure 10: Australian HNW investors send almost a fifth of their portfolio offshore 26

Figure 11: Foreign retail investors dominate the bond market 28


List Of Table

List of Tables

Table 1: Aggregate HNW investment portfolios by state 14

Table 2: Aggregate mass affluent investment portfolios by state 15

Table 3: Australia: adult population segmented by affluent category and asset band (000s), 2012?17 31

Table 4: Australia: adult population segmented by affluent category and asset band (000s), 2018e?22f 32

Table 5: Australia: retail wealth segmented by affluent category and asset band (000s), 2012?17 33

Table 6: Australia: retail wealth segmented by affluent category and asset band (000s), 2018e?22f 34

Table 7: US dollar exchange rates with the Australian dollar 41

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Single User License:
Report can be used by individual purchaser only

Site License:
Report can be shared by unlimited users within one corporate location, e.g. a regional office

Corporate User License: 
Report can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company

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Products and Companies

Products

private banking, wealth management, Australia, Asia Pacific, investments, savings, HNW, offshore, mass affluent, mutual funds, FATCA, AEOI, CRS, bonds, deposits, Self-Managed Superannuation Funds

Wealth in Australia: Sizing the Market Opportunity

Summary

"Wealth in Australia: Sizing the Market Opportunity", report analyzes the Australian wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.

Although the outlook for Australian wealth growth remains steady, there are significant uncertainties in the financial sector. This includes a series of destabilizing factors in the international economic world order, mainly due to the US's continued attempts to remake international trade in a way the country sees as more advantageous to its own interests. Meanwhile an enquiry into the domestic banking sector has demonstrated significant abuses of clients by the major banks-and the consequences of these findings may be severe. But despite the potential need for caution there is also considerable opportunity.

Specifically the report-

- Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.

- Analyzes which asset classes are favored by Australian investors and how their preferences impact the growth of the total savings and investments market.

- Examines HNW clients' attitudes towards non-traditional investments, such as property and commodities.

- Identifies key drivers and booking centers for offshore investments.

- Examines the tax landscape in Australia and future implications for investors.

Scope

- By the middle of 2018 an estimated 19 million adults were living in Australia. 4.2 million (20.1%) of these individuals could be considered affluent or HNW and eligible for a premium wealth management service.

- Deposits and equities remain by far the most popular means of investment.

- Wealth growth is once again focused on the Eastern Seaboard after the end of the mining boom.

- Offshore retail investors are only a minor element of most of Australia's securities markets, barring bonds.

Reasons to buy

- Benchmark your share of the Australian wealth market against the current market size.

- Forecast your future growth prospects using our projections for the market.

- Identify your most promising client segment by analyzing penetration of affluent individuals in Australia.

- Review your offshore strategy by identifying HNW motivations for offshore investments and their preferred booking centers.

READ MORE

Scope

Table of Contents

1. EXECUTIVE SUMMARY 2

1.1. Market summary 2

1.2. Key findings 2

1.3. Critical success factors 2

2. SIZING AND FORECASTING THE AUSTRALIAN WEALTH MARKET 8

2.1. Introduction 8

2.2. By 2020, 23% of Australia's adult population will be classed as affluent 8

2.2.1. A large mass affluent population highlights the viability of retail wealth management offerings 8

2.2.2. Private bankers in Australia still have relatively low penetration into the HNW client base 9

2.3. HNW individuals account for 1.1% of adults but 39.1% of liquid assets 10

2.3.1. Wealth is increasingly concentrated among HNW investors as investment returns rebound 10

2.3.2. With the AUSD 10m+ segment growing fastest, assets will become increasingly concentrated in the portfolios of the rich 10

2.4. The future direction of property and lending will shape Australia's regional wealth markets 13

2.4.1. The Banking Royal Commission has adversely affected the industry's reputation 13

2.4.2. There will be investment management opportunities as the property market loses its allure 13

2.4.3. Australia's onshore wealth and growth is concentrated in the populous states of the eastern seaboard 14

3. THE AUSTRALIAN RETAIL INVESTMENT MARKET IS HIGHLY DEVELOPED 16

3.1. Introduction 16

3.2. Asset proportions have remained steady, with growth on all fronts 16

3.2.1. Equities are expected to grow compared to other securities 16

3.2.2. Outside of superannuation, Australians keep most of their liquid wealth in deposits 17

3.2.3. Investment property is typically a key competitor to securities for Australians' savings, but will be less of a threat over the next two years 18

3.3. Stock value continues to increase, driving investor interest 19

3.3.1. Barring a modest correction, higher equity valuations will drive further investment 19

3.3.2. ETFs are rising as a share of the investment mix 20

3.4. Deposits increased-in part due to low interest rates 21

3.4.1. Investors appear to desire a specific return from deposits, with low rates requiring greater investment to achieve it 21

3.4.2. Future interest rate increases will require a reassessment of deposits 21

3.5. Mutual fund growth is set to be modest 22

3.5.1. Investor interest in mutual funds needs to be rekindled in Australia 22

3.5.2. Fee-free mutual funds are likely to make their way to Australia 23

3.6. Retail bond holdings growth will rise from almost nil 23

3.6.1. Direct bond holdings never took off among retail investors in Australia 23

4. HNW INVESTORS IN AUSTRALIA HOLD 19% OF THEIR WEALTH OFFSHORE 25

4.1. Introduction 25

4.2. Large private investors remain committed to the Australian market 25

4.2.1. Local Australian HNW investors are mainly offshoring wealth to invest in foreign equities 25

4.2.2. The impact of CRS on Australian wealth management will be minimal 26

4.3. Foreign investment into Australia centers on debt and equity 27

4.3.1. Offshore investors are drawn to the Australian securities market 27

4.3.2. Overseas investors into Australia will largely be unaffected by full implementation of CRS 28

4.3.3. Property investment has been a major focus of offshore retail investors 28

5. APPENDIX 30

5.1. Abbreviations and acronyms 30

5.2. Supplemental data 31

5.3. Definitions 35

5.3.1. Affluent 35

5.3.2. Domicile 35

5.3.3. Double taxation convention 35

5.3.4. Emerging affluent 35

5.3.5. FATCA 35

5.3.6. HNW 36

5.3.7. Liquid assets 36

5.3.8. Mass affluent 36

5.3.9. Mass market 37

5.3.10. Onshore 37

5.3.11. Residency 37

5.3.12. Exchange of information 37

5.3.13. Tax information exchange agreements (TIEAs) 38

5.4. Methodology 38

5.4.1. 2018 Global Wealth Managers Survey 38

5.4.2. Retail Investments Analytics 38

5.4.3. Global Wealth Model 40

5.4.4. Total HNW Wealth Analytics 41

5.4.5. Exchange rates 41

5.5. Bibliography 42

5.6. Further reading 42


List Of Figure

List of Figures

Figure 1: The number of affluent individuals is set to rise over the forecast period 9

Figure 2: Mass affluent assets only narrowly exceed those of the HNW market, highlighting the utility of a private bank offering 11

Figure 3: Interactions with wealth managers are becoming increasingly widespread among affluent Australian investors 12

Figure 4: The Australian economy continues to grow, fueling investment portfolios across the board 17

Figure 5: Low-yielding deposits will outgrow even the relatively high-yielding fund market 18

Figure 6: Australian investors have been slow to reinvest into equities, despite tax incentives to do so 20

Figure 7: Interest rates have plunged, making deposit balance growth dependent upon diminishing inflows 21

Figure 8: Mutual funds will grow, but will face competition from ETFs and exchange-traded products 23

Figure 9: Small gains will not see bonds shift significantly upward in the Australian investment portfolio 24

Figure 10: Australian HNW investors send almost a fifth of their portfolio offshore 26

Figure 11: Foreign retail investors dominate the bond market 28


List Of Table

List of Tables

Table 1: Aggregate HNW investment portfolios by state 14

Table 2: Aggregate mass affluent investment portfolios by state 15

Table 3: Australia: adult population segmented by affluent category and asset band (000s), 2012?17 31

Table 4: Australia: adult population segmented by affluent category and asset band (000s), 2018e?22f 32

Table 5: Australia: retail wealth segmented by affluent category and asset band (000s), 2012?17 33

Table 6: Australia: retail wealth segmented by affluent category and asset band (000s), 2018e?22f 34

Table 7: US dollar exchange rates with the Australian dollar 41

Single User License:
Report can be used by individual purchaser only

Site License:
Report can be shared by unlimited users within one corporate location, e.g. a regional office

Corporate User License: 
Report can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company

To know more information on Purchase by Section, please send a mail to support@kenresearch.com

INQUIRE FOR COVID-19 IMPACT ANALYSIS

Products

private banking, wealth management, Australia, Asia Pacific, investments, savings, HNW, offshore, mass affluent, mutual funds, FATCA, AEOI, CRS, bonds, deposits, Self-Managed Superannuation Funds