Wealth Management - US - December 2007

Table of Contents

• Scope and Themes
• What you need to know
• Scope of this report
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• Major industry trends and recommendations
• Financial firms need to seek differentiation
• Distribution planning
• Consumers want to diversify investments--not consolidate
• The newest high net worth groups to pursue--Hispanics and women
• Consumer perceptions of financial institutions
• Industry overview
• Market Drivers
• Wealthy investors have increased access to financial information
  • Figure 1: proportion of respondents who believe they are very good at managing money, September 2007
• Need for retirement planning
  • Figure 2: Percentage of clients' assets controlled by financial planner, before and after discussion of retirement planning, 2007
• Competition for capturing asset transfers and rollovers continues to grow
  • Figure 3: How pre-retirees and retirees communicate with financial institutions, 2007
• New wealth markets -- wealthy Hispanics
• New wealth markets -- wealthy women
  • Figure 4: Source of wealth for women, 2007
  • Figure 5: Top characteristics sought in a wealth advisor by women, 2007
  • Figure 6: Individuals with whom women have discussed wealth and wealth transfer, 2007
• How are the wealthy planning their legacies?
  • Figure 7: Prevalence of wealthy investors having wills, by age segment, January 2007
  • Figure 8: How inheritance was typically spent by wealthy investors (multiple responses allowed), January 2007
• Legacy planning for business owners
• Heavy competition in the media
• The wealthy and education
• Market Size
• Size of the global wealth market
  • Figure 9: Millionaire households: The top five countries, 2006
• Size of the U.S. wealth market
  • Figure 10: U.S. household wealth, 2007
  • Figure 11: Number of millionaire households 2001-06
  • Figure 12: Counties with the most millionaire households, 2006
• Employment status of wealthy investors
  • Figure 13: Retirement status of millionaires, January 2007
• The Wealth Managers
• Who is managing global wealth?
  • Figure 14: Top 10 global wealth managers, 2007
• Who is managing U.S. wealth?
  • Figure 15: Top 25 wealth managers in the U.S., 2007
• What are the wealthy investing in?
• Different levels of wealth: different levels of interest in specific investments
  • Figure 16: Level of interest among wealthy investors in certain investments, by investable assets, 2007
• Where do the wealthy get financial information?
  • Figure 17: Percent of millionaires consulting source for investment information, January 2007
• Risk tolerance among wealthy investors
  • Figure 18: Risk tolerance total market and by investable assets, January 2007
• Overall Investment strategies of wealthy investors
  • Figure 19: Portfolio asset allocation of wealthy investors, January 2007
• Differences in investment strategies among wealthy investors: impact of age and level of wealth
  • Figure 20: Investment strategy, January 2007
• Investment goals: do they differ by age?
  • Figure 21: Percentage citing top investment goal, by age, January 2007
• Investment in alternatives: Which investors are interested?
  • Figure 22: Current use of alternative investments, by type of wealth management firm, 2007
  • Figure 23: Why alternatives are being used or considered, 2007
• Investment in separate accounts
  • Figure 24: Net cash flow comparison separate accounts vs. mutual fund advisory, Q3 2006-Q2 2007
• What are the preferred provider channels for wealthy investors?
  • Figure 25: Primary provider channel (company with largest portion of investments), January 2007
  • Figure 26: Preferred investment providers, by age, September 2007
  • Figure 27: Preferred retirement savings providers, September 2007
• What factors influence the choice of primary providers among wealthy investors?
  • Figure 28: Top reasons for beginning relationship with primary provider, January 2007
• What financial events have impacted wealthy investors lately?
  • Figure 29: Top financial events in the past year, January 2007
• Competitive Landscape--The Customers
• Distinguishing characteristics of the "Ultra" wealthy
• North American Ultra Affluent:
• European Ultra Affluent:
• Latin American Ultra Affluent:
• Middle Eastern Ultra Affluent:
• Asia Pacific Ultra Affluent:
• Competitive Landscape--Institutional Products and Services
• What wealth management firms currently provide and plan to provide
  • Figure 30: Non-investment financial services currently provided/will be providing in three years, 2007
• Emergence of new retirement-oriented products
• Developments in Separately Managed Accounts
• Developments in Unified Managed Accounts
• Competitive Landscape--RIAs, Financial Planners and Brokers
• Developments among Registered Investment Advisors (RIAs)
  • Figure 31: Client selection considerations, top RIA firms, top small firms vs. all small firms, 2007
  • Figure 32: Time spent with clients, top firms vs. all firms, 2007
• Use of advisors and financial planners
  • Figure 33: Top five financial decisions, rated very important, 2007
  • Figure 34: Top three reasons for using a financial planner
  • Figure 35: Top three reasons for not using a financial planner
  • Figure 36: Orientation toward advice, 2005 and 2006
  • Figure 37: Primary advisor for investments, 2005 and 2006
  • Figure 38: Types of advice received in past 12 months, 2005 and 2006
• Use of brokers
  • Figure 39: Type of financial institution respondents prefer, September 2007
  • Figure 40: Preferred provider for retirement savings, 2007
• Financial Firms Need to Differentiate
• Are banks, brokerage firms, and mutual fund companies all alike?
  • Figure 41: Preferred HNW financial institution, by gender, September 2007
  • Figure 42: Degree of differentiation between financial institutions, September 2007
  • Figure 43: Degree of differentiation between financial institutions, September 2007
  • Figure 44: Degree of differentiation between financial institutions, September 2007
• Are banks, brokerage firms, and mutual fund companies all alike?--by race/ethnicity
  • Figure 45: Differentiation between financial institutions, by race/ethnicity, September 2007
• Investor Preferences: Where to Invest
• Earned money
  • Figure 46: Financial Institution at which respondents would rather invest their money, September 2007
  • Figure 47: Financial Institution at which respondents would rather invest their money, September 2007
• Retirement savings
  • Figure 48: Financial Institution at which respondents would rather invest their retirement savings, by gender, September 2007
  • Figure 49: Financial Institution at which respondents would rather invest their retirement savings, by income, September 2007
• Savings accounts vs. investment accounts
  • Figure 50: Financial Institution at which respondents would rather invest their standard savings, by gender, September 2007
• Banks still get the checking accounts
  • Figure 51: Preferences for transactions accounts, by gender, September 2007
  • Figure 52: Preferences for transactions accounts, by age, September 2007
• Large sums and inheritance
  • Figure 53: Preferred institution for inherited money, by gender, September 2007
  • Figure 54: Preferred institution for inherited money, by age, September 2007
  • Figure 55: Preferred institution for inherited money, by income, September 2007
• Is there a difference in trust between independent advisors and banks/brokerage firms?
  • Figure 56: Trust in advisors vs. banks and brokerage firms, all respondents with any amount of assets, by gender, September 2007
  • Figure 57: Trust in advisors vs banks and brokerage firms, by HNW investors by age, September 2007
  • Figure 58: Trust in banks vs brokerage firms, by income, September 2007
• Investor Preferences: Where to Invest--by Race/Ethnicity
• Money
  • Figure 59: Preference for investing money, by race/ethnicity group, September 2007
• Retirement savings
  • Figure 60: Preference for retirement savings, by race/ethnicity, September 2007
• Savings accounts vs. investment accounts
  • Figure 61: Preference for savings and investment accounts, by race/ethnicity, september 2007
• Banks still get the checking accounts
  • Figure 62: Preference for having checking accounts at banks, by race/ethnicity, September 2007
• Financial windfalls
  • Figure 63: Preferred investement for lottery money, by race ethnicity, September 2007
• Inheritance
  • Figure 64: Preferences for investsting inherited money, by race/ethnicity, September 2007
• Trust in banks vs. brokerage firms
  • Figure 65: Trust in banks vs. brokerage firms, by race/ethnicity, September 2007
• Independent advisors vs. banks and brokerages
  • Figure 66: Trust in advisors vs. banks and brokerage firms, by race/ethnicity, September 2007
• Consumer Scoring of Financial Institutions
• How financial firms are viewed in general
• Which firms are viewed as most prestigious?
  • Figure 67: Wealth management providers described as "best overall," by household income of respondent, February 2006
• Customer service not always superior
• Perceived attributes of financial institutions: Familiar
  • Figure 68: Perceived attributes of financial institutions by HNW and all respondents, by gender: "Familiar", September 2007
• Perceived attributes of financial institutions: Knowledgeable
  • Figure 69: Perceived attributes of financial institutions by HNW and all respondents: "Knowledgeable", September 2007
  • Figure 70: Rankings of wealth management providers described as "knowledgeable," February 2006
• Perceived attributes of financial institutions: Safe
  • Figure 71: Perceived attributes of financial institutions by HNW and all respondents, by gender: "safe", September 2007
• Perceptions of financial institutions: Reliable
  • Figure 72: Perceived attributes of financial institutions by HNW and all respondents, by gender: "reliable", September 2007
• Perceptions of financial institutions: Unique
  • Figure 73: Perceived attributes of financial institutions by HNW and all respondents, by gender: "unique", September 2007
• Perceptions of financial institutions: Expensive
  • Figure 74: Perceived attributes of financial institutions by HNW and all respondents, by gender: "expensive", September 2007
• Perceptions of financial institutions: Convenient
  • Figure 75: Perceived attributes of financial institutions by HNW respondents, by gender: "convenient", September 2007
• Future Trends and Forecast
• Multi-family offices may grow
• Potential emergence of structured products
• More "Concierge Services"
• Separately Managed Accounts will become more creative
• Hedge funds of funds will target wealthy
• Increasing emphasis on retirement management
• Growing markets of wealth
• Market forecast
• Millionaire households
  • Figure 76: Forecast of total U.S. millionaire households, 2006-11
• Appendix: Advertising and Promotion
• Wachovia
  • Figure 77: Wachovia Wealth Management print ad, focus on investment expertise, 2007
  • Figure 78: Wachovia Wealth Management print ad, focus on investors needs, 2007
• U.S. Trust, Bank of America Private Wealth Management
  • Figure 79: Bank of America/U.S. Trust print ad, focus on trust, 2007
  • Figure 80: Bank of America/U.S. Trust print ad, focus on partnership, 2007
• Northern Trust
  • Figure 81: Northern Trust print ad, focus on client contentment, 2007
• UBS
  • Figure 82: UBS print ad, focus on personal attention (You & Us), 2007
  • Figure 83: UBS print ad, focus on global expertise and goals of the client, 2007
• Bessemer Trust
  • Figure 84: Bessemer Trust print ad, focus on its independence and stability, 2007
• Bank of New York/Mellon
• Smith Barney
• Barclays
• Appendix: General Investor Attitudes
• Shopping for the best deal
  • Figure 85: Investor feels they always shop for the best deal in financial services, by gender, September 2007
  • Figure 86: Investor feels they always shop for the best deal in financial services, by age, September 2007
  • Figure 87: Investor feels they always shop for the best deal in financial services, by income, September 2007
• Feeling financially secure
  • Figure 88: Investor feels they are financially secure, by gender, September 2007
  • Figure 90: Investor feels they are financially secure, by age, September 2007
  • Figure 91: Investor feels they are financially secure, by age, September 2007
• Being careful with money
  • Figure 92: Investor feels they are careful with money, by gender, September 2007
  • Figure 93: Investor feels they are careful with money, by age, September 2007
  • Figure 94: Investor feels they are careful with money, by income, September 2007
• Company ethics
  • Figure 95: Investor feels that company ethics are important, by gender, September 2007
  • Figure 96: Investor feels that company ethics are important, by gender, September 2007
  • Figure 97: Investor feels that company ethics are important, by income, September 2007