Table of Contents
OVERVIEW
- Catalyst
- Summary
- Methodology
EXECUTIVE SUMMARY
- The fight at the top is intensifying in German wealth management
- Fiscal restraint and high savings rates were not enough to protect
Germany' s investors from the market turmoil in 2008
- German HNW investors are ‘parking' in cash, and have shifted
substantially into bonds
- Many wealth managers in Germany are missing opportunities
SPECIAL FEATURE: THE CHANGING FACE OF COMPETITION IN GERMAN WEALTH MANAGEMENT
- The fight at the top is intensifying
- Newly combined Commerzbank-Dresdner plans to leverage its international
presence, SME position and structured products capabilities
- Deutsche Bank Private Wealth Management has suffered in size in the
downturn
- HVB Wealth Management' s profits were down significantly in 2008
- While the traditional German private banks continue to do ‘business
as usual'
- August Lenz continued to increase assets under administration in 2008
- Berenberg Private Bank posted growth in 2008
- BHF-Bank Private Banking saw strong net inflows from entrepreneurial
families in 2007, and continued net inflows in the first half of 2008
- HSBC Trinkaus & Burkhardt withstood 2008' s market volatility fairly well
despite a sharp decline in AUM
- Germany' s wealth management market structure is unlikely to change
significantly because of this downturn
GERMANY' S WEALTH
- Fiscal restraint and high savings rates were not enough to protect
Germany' s investors from the market turmoil in 2008
- Germany' s highly export-dependent economy is in recession
- Germans have among the highest savings rates, and lowest debt per
capita, in Europe
- Negative equity investment returns in 2008 knocked the legs out from
under German investors' portfolios
- Deposit rates did add slowly to German investors' portfolios
- Germany' s retail investors rediscovered bonds in the first half of 2008,
and continued to invest in mutual funds despite negative performance there
- German investors continued to invest in mutual funds through Q2 2008 but
scaled back sharply in Q3 as turmoil took hold
- Germany' s investors sought the safety of bonds in 2008
- The Wealth Data in 2009
THE GERMAN HNW INVESTOR
- German HNWs have defensively positioned their portfolios, but are showing
optimism in the recovery
- German HNW investors are ‘parking' in cash, and have shifted
substantially into bonds
- German HNWs are showing optimism in the recovery, and will shift back
into equities and alternative investments by 2011
- German HNWs will significantly reduce their holdings of both corporate
and government bonds in the next two years
- German HNWs understand the implications of the current market turmoil for
their portfolios, but are at risk of leaving their wealth manager
- German HNWs have a better understanding of the current market conditions
than their counterparts across Europe
- German HNWs are at “high” risk of defection to other wealth
managersUnfortunately for German wealth managers, their clients are also
likely to defect from them. The risk that German HNWs will leave to find
another wealth manager is high, much higher than the European average,
although they are unlikely to leave because they want to manage their own
money. This is a a consequence of mistrust in banks that is felt to a
greater extent across Europe on average.
- HNWs are planning for the future, both in short-term investment
opportunities and long-term succession
- German HNWs want inheritance planning services
- Mortgage financing demand is an opportunity that smart wealth managers
will exploit
- HNW Germans' strong understanding of the market ensures future demand
for more independent services and opportunistic products
- Data tables
THE GERMAN WEALTH MANAGER' S VIEW
- German wealth managers are missing key opportunities
- Germany' s wealth managers don' t plan to exploit their HNW clients'
anticipated demand for execution-only services, and are misaligned with
client demand in other ways too
- HNW investors choose the proactive wealth manager who truly understands
their needs; investment performance will not win clients
- Investment performance is more of a weakness among German wealth
managers than it is a strength
- Demanding clients means more effort is needed from Relationship Managers
- Leveraging their strength in CRM, the best way to increase share of
wallet will be to target relationship managers on cross-selling products
- In a market where everything seems to be going wrong, HNWs will not
tolerate errors from their wealth manager
- Four fifths of German Relationship Managers speak to their clients at
least once a week
- Almost three quarters of German HNWs see their Relationship Managers at
least monthly
APPENDIX
- The drivers of growth in the wealthy population
- Income growth (combined with inflation, changes in GDP by sector,
household savings rates and debt levels)
- Investment returns (market capitalization, interest rates and bond
yields)
- The following measures are not, in themselves, drivers of wealthy
population growth
- Market capitalization
- GDP
- The following measures are not drivers of wealthy population growth except
under very restricted circumstances
- Primary residence value growth
- Inheritance
- Methodology
- Wealth Management Market Leaders Survey 2009
- Global Wealth Model
- Further reading
- Bibliography
- Ask the analyst
- Datamonitor consulting
- Disclaimer
TABLES
- Table: To what extent do you agree with the following statements about
competition in your country?
- Table: Regarding nationalized/part-nationalized banks, to what extent do
you agree with the following?
- Table: What proportion of your HNWs' portfolios is allocated to the
following five asset classes?
- Table: HNWs' portfolio allocation now versus in 2 years' time
- Table: HNWs' portfolio allocation by product area now versus in 2 years'
time
- Table: Please rate your high net worth clients in Germany on a scale of 1
to 4 (openness to new investment ideas, understanding of current market )
- Table: Please rate your high net worth clients in Germany on a scale of 1
to 4 (relationship drivers )
- Table: Please rate your German high net worth clients' demand TODAY for
the following on a scale of 1 to 4
- Table: Please rate the following product areas in terms of expected demand
from your HNW clients during the next two years
- Table: To what extent do you agree with the following statements about the
motivations of your HNWs clients in your country to make their investment
decisions today?
- Table: To what extent do you agree with the following statements about the
motivations of your HNWs clients in your country to make their investment
decisions today? Continued
- Table: To what extent do you agree with the following statements about the
motivations of your HNWs clients in your country to make their investment
decisions today? Continued
- Table: To what extent do you agree with the following statements about the
motivations of your HNWs clients in your country to make their investment
decisions today? Continued
- Table: From the product areas just mentioned, which two will your wealth
management service focus most resources on in the next two years?
- Table: In your experience, what will most determine a German client' s
choice of wealth management service over the next two years?
- Table: What are your company' s biggest strengths and weaknesses?
- Table: What is the most effective means of increasing share of wallet
today?
- Table: What is the best way to retain clients today?
- Table: On average how often do your Relationship Managers speak by phone
to each HNW client living in Germany?
- Table: On average how often do your Relationship Managers speak by phone
to each HNW client living in Germany?
- Table: On average how often do your Relationship Managers speak in person
to each HNW client living in Germany?
- Table: When you speak with clients, what do they most want to talk about?
FIGURES
- Figure: Despite weak markets in 2008, retail investors put faith in mutual
funds in the first half
- Figure: The greatest strength of Wealth Managers in Germany is their
personal relationships with clients
- Figure: Investment losses in 2008 wiped out € 40 billion from
Deutsche Bank PWM' s client portfolios
- Figure: Wealth managers in Germany think that nationalized/part
nationalized banks will be more formidable competitors than they were
- Figure: The view of wealth managers is that nationalized and part
nationalized banks will attract good relationship managers because they are
financially secure
- Figure: German investors are retrenching for the recession, as debt per
capita falls and savings rates rise
- Figure: The Deutsche Borse market cap has felt the pinch of the recession
as badly as the rest of the market
- Figure: German deposit rates have fallen back from 2007 highs, but still
offer a return
- Figure: Despite weak markets in 2008, retail investors put faith in mutual
funds in the first half
- Figure: Federal bond yields provide small investment returns on
short-dated maturities, rising with time
- Figure: The majority of HNW wealth in Germany is invested in the ' cash or
near cash' asset category, with this accounting for 26% of all investments
- Figure: German HNWs will shift strongly away from fixed income by 2011 and
into equities and alternative investments
- Figure: In 2011, the majority of high net worth assets in Germany will be
invested in the ' Equities' category, with this accounting for 27% of all
investments
- Figure: HNW investors in Germany have a lower level of market knowledge
than the average European HNW investor
- Figure: There is a lower risk of HNW clients in Germany leaving to find
another wealth manager than the average European HNW investor
- Figure: The recession has strongly impacted the amount of wealth transfer
to the next generation
- Figure: In Germany, HNW investors' greatest demand is for execution-only
asset management services
- Figure: In 2 years time, the greatest demand amongst HNW investors in
Germany will be for deposits and savings products with 27% of HNW investors
demanding this category of product
- Figure: Wealth managers in Germany will be focusing most of their
resources on direct equity investment in two years time
- Figure: HNW investors in Germany are most influenced by ability to
identify investment opportunities in the downturn in their choice of Wealth
Manager
- Figure: The greatest strength of Wealth Managers in Germany is their
personal relationships with clients
- Figure: The best way for Wealth Managers in Germany to increase share of
wallet is to target relationship managers on cross-selling products
- Figure: The best way for Wealth Mangers in Germany to retain HNW investors
is to not make errors
- Figure: In Germany the Wealth Management relationship managers speak to
clients by phone approximately once a week
- Figure: In the Wealth Management relationship managers speak to in person
to clients approximately once a month
- Figure: The majority of clients in Germany want to speak to their wealth
manager about performance of specific asset classes within their portfolio
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