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Market Research Report

Wealth in Australia: Sizing the Market Opportunity

Published by GlobalData Product code 357427
Published Content info 43 Pages
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Wealth in Australia: Sizing the Market Opportunity
Published: November 2, 2018 Content info: 43 Pages
Description

"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.
Table of Contents
Product Code: FS0170CI

Table of Contents

1. EXECUTIVE SUMMARY

  • 1.1. Market summary
  • 1.2. Key findings
  • 1.3. Critical success factors

2. SIZING AND FORECASTING THE AUSTRALIAN WEALTH MARKET

  • 2.1. Introduction
  • 2.2. By 2020, 23% of Australia's adult population will be classed as affluent
    • 2.2.1. A large mass affluent population highlights the viability of retail wealth management offerings
    • 2.2.2. Private bankers in Australia still have relatively low penetration into the HNW client base
  • 2.3. HNW individuals account for 1.1% of adults but 39.1% of liquid assets
    • 2.3.1. Wealth is increasingly concentrated among HNW investors as investment returns rebound
    • 2.3.2. With the A$10m+ segment growing fastest, assets will become increasingly concentrated in the portfolios of the rich
  • 2.4. The future direction of property and lending will shape Australia's regional wealth markets
    • 2.4.1. The Banking Royal Commission has adversely affected the industry's reputation
    • 2.4.2. There will be investment management opportunities as the property market loses its allure
    • 2.4.3. Australia's onshore wealth and growth is concentrated in the populous states of the eastern seaboard

3. THE AUSTRALIAN RETAIL INVESTMENT MARKET IS HIGHLY DEVELOPED

  • 3.1. Introduction
  • 3.2. Asset proportions have remained steady, with growth on all fronts
    • 3.2.1. Equities are expected to grow compared to other securities
    • 3.2.2. Outside of superannuation, Australians keep most of their liquid wealth in deposits
    • 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
  • 3.3. Stock value continues to increase, driving investor interest
    • 3.3.1. Barring a modest correction, higher equity valuations will drive further investment
    • 3.3.2. ETFs are rising as a share of the investment mix
  • 3.4. Deposits increased - in part due to low interest rates
    • 3.4.1. Investors appear to desire a specific return from deposits, with low rates requiring greater investment to achieve it
    • 3.4.2. Future interest rate increases will require a reassessment of deposits
  • 3.5. Mutual fund growth is set to be modest
    • 3.5.1. Investor interest in mutual funds needs to be rekindled in Australia
    • 3.5.2. Fee-free mutual funds are likely to make their way to Australia
  • 3.6. Retail bond holdings growth will rise from almost nil
    • 3.6.1. Direct bond holdings never took off among retail investors in Australia

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

  • 4.1. Introduction
  • 4.2. Large private investors remain committed to the Australian market
    • 4.2.1. Local Australian HNW investors are mainly offshoring wealth to invest in foreign equities
    • 4.2.2. The impact of CRS on Australian wealth management will be minimal
  • 4.3. Foreign investment into Australia centers on debt and equity
    • 4.3.1. Offshore investors are drawn to the Australian securities market
    • 4.3.2. Overseas investors into Australia will largely be unaffected by full implementation of CRS
    • 4.3.3. Property investment has been a major focus of offshore retail investors

5. APPENDIX

  • 5.1. Abbreviations and acronyms
  • 5.2. Supplemental data
  • 5.3. Definitions
    • 5.3.1. Affluent
    • 5.3.2. Domicile
    • 5.3.3. Double taxation convention
    • 5.3.4. Emerging affluent
    • 5.3.5. FATCA
    • 5.3.6. HNW
    • 5.3.7. Liquid assets
    • 5.3.8. Mass affluent
    • 5.3.9. Mass market
    • 5.3.10. Onshore
    • 5.3.11. Residency
    • 5.3.12. Exchange of information
    • 5.3.13. Tax information exchange agreements (TIEAs)
  • 5.4. Methodology
    • 5.4.1. 2018 Global Wealth Managers Survey
    • 5.4.2. Retail Investments Analytics
    • 5.4.3. Global Wealth Model
    • 5.4.4. Total HNW Wealth Analytics
    • 5.4.5. Exchange rates
  • 5.5. Bibliography
  • 5.6. Further reading

List of Tables

  • Table 1: Aggregate HNW investment portfolios by state
  • Table 2: Aggregate mass affluent investment portfolios by state
  • Table 3: Australia: adult population segmented by affluent category and asset band (000s), 2012-17
  • Table 4: Australia: adult population segmented by affluent category and asset band (000s), 2018e-22f
  • Table 5: Australia: retail wealth segmented by affluent category and asset band (000s), 2012-17
  • Table 6: Australia: retail wealth segmented by affluent category and asset band (000s), 2018e-22f
  • Table 7: US dollar exchange rates with the Australian dollar

List of Figures

  • Figure 1: The number of affluent individuals is set to rise over the forecast period
  • Figure 2: Mass affluent assets only narrowly exceed those of the HNW market, highlighting the utility of a private bank offering
  • Figure 3: Interactions with wealth managers are becoming increasingly widespread among affluent Australian investors
  • Figure 4: The Australian economy continues to grow, fueling investment portfolios across the board
  • Figure 5: Low-yielding deposits will outgrow even the relatively high-yielding fund market
  • Figure 6: Australian investors have been slow to reinvest into equities, despite tax incentives to do so
  • Figure 7: Interest rates have plunged, making deposit balance growth dependent upon diminishing inflows
  • Figure 8: Mutual funds will grow, but will face competition from ETFs and exchange-traded products
  • Figure 9: Small gains will not see bonds shift significantly upward in the Australian investment portfolio
  • Figure 10: Australian HNW investors send almost a fifth of their portfolio offshore
  • Figure 11: Foreign retail investors dominate the bond market
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