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Market Research Report

Wealth in Switzerland: Sizing the Market Opportunity

Published by GlobalData Product code 408009
Published Content info 42 Pages
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Wealth in Switzerland: Sizing the Market Opportunity
Published: October 12, 2018 Content info: 42 Pages
Description

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

Growth continued in the Swiss wealth market, and the country remains a popular destination for offshore investments. However, increasing tax transparency pressures, continued negative interest rates, and global macroeconomic risks will decelerate both resident and non-resident market growth in future years. Wealth managers will need to collaborate closely with clients to maintain revenues in this challenging new reality.

Specifically the report -

  • Sizes the affluent market (both by number of individuals and the value of their assets) using GlobalData's proprietary datasets.
  • Examines HNW clients' attitudes towards non-liquid asset classes such as property, commodities, and offshore investments.
  • Analyzes which asset classes are favored by Swiss investors and how their preferences impact the growth of the overall savings and investments market.
  • Evaluates the size of the retail non-resident (offshore) market in Switzerland and foreign investors' preferences.

Scope

  • At the end of 2017, affluent individuals held 94% of Switzerland's total liquid assets - one of the largest proportions in the world.
  • The value of liquid assets held by affluent individuals increased by 5.6% during the year, driven mostly by positive stock market performance boosting mutual funds and equity investments.
  • Going forward, lethargic stock market performance and economic growth risks will lead to a decrease in the affluent individual population by 2022.
  • With automatic exchange of information now in place Swiss secrecy benefits are reducing, affecting the profitability of the country's private banks.

Reasons to buy

  • Benchmark your share of the Swiss wealth market against the market's current size.
  • Forecast your future growth prospects using our projections for the market to 2022.
  • Identify your most promising client segment by analyzing penetration of affluent individuals in Switzerland.
  • Evaluate your HNW proposition by understanding how the ever-changing tax system affects your HNW clients.
  • Review your offshore strategy and offering for non-resident investors by learning the dynamics in these markets.
Table of Contents
Product Code: FS0166CI

Table of Contents

1. EXECUTIVE SUMMARY2

  • 1.1. Economic factors influenced slow Swiss wealth market growth 2
  • 1.2. Key findings 2
  • 1.3. Critical success factors 2

2. THE SWISS WEALTH MARKET EXPANDED ONLY SLIGHTLY IN 2017 DUE TO SLOW ECONOMIC GROWTH 8

  • 2.1. Introduction 8
  • 2.2. Growth will slow down in future years 8
    • 2.2.1. 2017 saw slow yet positive growth in the Swiss economy 8
    • 2.2.2. HNW individuals account for 2% of the population 9
    • 2.2.3. The proportion of liquid assets held by HNW individuals increased by 1.5pp in 2017 9
    • 2.2.4. A fifth of HNWs' investable portfolio is held in illiquid assets 10
  • 2.3. Offshore investments now account for 30% of Swiss HNW assets 11
    • 2.3.1. Geographic diversification leads Swiss residents to invest offshore 11
    • 2.3.2. Exchange rate fluctuations should encourage wealth repatriation 12
    • 2.3.3. Switzerland introduced non-punishable voluntary disclosure for tax evaders 13

3. DEPOSITS CONSTITUTE OVER HALF OF LIQUID WEALTH IN SWITZERLAND 14

  • 3.1. Introduction 14
  • 3.2. Deposits will slow in growth but continue to contribute the most 14
    • 3.2.1. Negative interest rates and stock market downturn will mute future growth 15
  • 3.3. Mutual funds and equities drive the growth of the retail savings and investments market 16
    • 3.3.1. The SMI is dominated by consumer goods and healthcare 16
    • 3.3.2. Equity investors remain prudent in times of growth 17
    • 3.3.3. Mutual funds growth exceeds other asset classes 18
  • 3.4. Deposits experience steady but slow growth 19
    • 3.4.1. Flows from the equity market offset the impact of negative interest rates on deposit growth 19
  • 3.5. Bonds have experienced outflows since 2010 20
    • 3.5.1. Negative interest rates continue to reduce appetite for bonds 20
    • 3.5.2. The unstable European outlook reduces the chance of interest rate change 20

4. SWITZERLAND HAS BEEN LOSING ITS APPEAL AS AN OFFSHORE CENTER22

  • 4.1. Introduction 22
  • 4.2. Various initiatives and scandals affect the Swiss non-resident market 22
    • 4.2.1. Switzerland agreed to automatic exchange of tax information 22
    • 4.2.2. The appeal of Swiss banks is declining 23
  • 4.3. The majority of retail non-resident assets are held in equities and mutual funds 24
    • 4.3.1. Stock market performance in 2017 encouraged the resurgence of non-resident investors 24

5. APPENDIX26

  • 5.1. Abbreviations and acronyms 26
  • 5.2. Supplementary data 27
  • 5.3. Definitions 32
    • 5.3.1. Affluent 32
    • 5.3.2. Domicile 33
    • 5.3.3. Double taxation convention 33
    • 5.3.4. Emerging affluent 33
    • 5.3.5. FATCA 33
    • 5.3.6. HNW 33
    • 5.3.7. Individual 33
    • 5.3.8. Liquid assets 34
    • 5.3.9. Mass affluent 34
    • 5.3.10. Mass market 34
    • 5.3.11. Onshore 35
    • 5.3.12. Residency 35
    • 5.3.13. Exchange of information 35
    • 5.3.14. TIEAs 36
  • 5.4. Methodology 36
    • 5.4.1. 2018 Global Wealth Managers Survey 36
    • 5.4.2. Retail Investments Analytics 36
    • 5.4.3. Global Wealth Model 38
    • 5.4.4. Exchange rates 39
  • 5.5. Bibliography 40
  • 5.6. Further reading 40

List of Tables

  • Table 1: Number of adults in Switzerland segmented by asset band (000s), 2006-11 27
  • Table 2: Number of adults in Switzerland segmented by asset band (000s), 2012-17 28
  • Table 3: Number of adults in Switzerland segmented by asset band (000s), 2018f-22f 29
  • Table 4: Retail liquid assets in Switzerland segmented by asset band ($m), 2006-11 30
  • Table 5: Retail liquid assets in Switzerland segmented by asset band ($m), 2012-17 31
  • Table 6: Retail liquid assets in Switzerland segmented by asset band ($m), 2018f-22f 32
  • Table 7: US dollar exchange rates with the Swiss franc 40

List of Figures

  • Figure 1: 71% of the Swiss population is affluent 9
  • Figure 2: Affluent individuals account for 94% of total liquid assets 10
  • Figure 3: Commodities are forecast to have the highest increase in demand in terms of HNW asset allocation 11
  • Figure 4: Offshore investments by Swiss residents are above average 12
  • Figure 5: Deposits continue to dominate, although growth has slowed 15
  • Figure 6: Bonds are the only asset class to have decreased 16
  • Figure 7: The healthcare sector has the largest stock market weighting 17
  • Figure 8: Stock market performance boosted equities in 2017 18
  • Figure 9: Mutual funds recorded the highest growth in 2017 19
  • Figure 10: Growth slowed down in 2017 for deposits, and the outlook is poor 20
  • Figure 11: Appetite for bonds continues to fall 21
  • Figure 12: Switzerland has adopted the OECD's CRS 23
  • Figure 13: Equities and mutual funds saw the largest growth among non-resident retail investors 25
  • Figure 14: Example of a four-input forecasting process 38
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