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Wealth in the US: HNW Investors

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Wealth in the US: HNW Investors

Summary

GlobalData's "Wealth in the US: HNW Investors" report analyzes the investing preferences and portfolio allocation of US HNW investors. The report is based on our proprietary Global Wealth Managers Survey.

The US is the largest wealth market in the world, and home to a diverse and sizable HNW segment. As the population continues to age, building ties with younger generations will ensure the successful transfer of wealth to beneficiaries. The range of countries of origin among HNW expats in the US is diverse, with the majority from China and the UK. Over one third of client investment portfolios are allocated into equity investments, and with continued market uncertainty expected in the future, greater importance is placed on cash holdings.

Specifically, the report-

Profiles the average US HNW investor in terms of their demographics and analyzes the expat opportunity in the US.

Analyzes which wealth management mandates are preferred among US HNW investors and how the demand will develop looking forward.

Examines the allocation of US HNW investors' portfolios into different asset classes and how the allocation is expected to develop in the future.

Analyzes the product and service demand among US HNW investors.

Scope

38.2% of US HNW individuals have gained wealth either as family business owners or as first-generation entrepreneurs. As these sources of wealth continue to increase in importance, greater demand is expected for personalized wealth management services.

The majority of HNW investments are held in discretionary mandates. However, wealth managers expect growing demand for execution-only asset management and automated investment services in the next two years. This is reflective of some clients preferring a higher level of involvement in their investment choices.

Equities are the main constituent of a US HNW investment portfolio, representing nearly half of an average US HNW portfolio. Though cash investments make up just 5.1% of an average HNW portfolio, they are gaining importance.

Among planning services, financial planning shows the strongest demand. But wealth managers will do well to provide a complete suite of tax planning services, as 68.9% expect demand for these services to increase in the near future.

Reasons to Buy

Develop and enhance your client targeting strategies using our data on HNW profiles and source of wealth.

Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors' drivers for seeking investment advice vs self-directing.

Tailor your investment product portfolio to match the current and future demand for different asset classes among HNW individuals.

Develop your service proposition to match the service and product demand expressed by US HNW investors and react proactively to the forecasted change in demand.

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Table Of Content

Scope

Table of Contents

Executive Summary

1.1. US HNW clients prefer custom and discretionary approaches to wealth management

1.2. Key findings

1.3. Critical success factors

2 Profiling the US HNW Investor

2.1. Earned income accounts for the largest proportion of US HNW wealth

2.1.1. The majority of US HNW individuals are males over the age of 50

2.1.2. US HNW clients accumulate wealth in different ways

2.1.3. HNW wealth is sourced from property, professional services, and IT

2.2. Expats in the US are a small but important segment

2.2.1. Expats account for 5.4% of the US HNW population

2.2.2. The increase of US HNW expats from China is notable

2.2.3. Foreign exchange is the main reason HNW expats move investments to the US

3 US HNW Investment Style Preferences

3.1. US HNW investors prefer their wealth professionally managed

3.1.1. Discretionary mandates are the most favored among US HNW investors

3.1.2. Lack of time is driving uptake of advice

3.1.3. US HNW investors prefer to use fewer wealth management firms than the global average

3.2. US HNW individuals prefer their portfolios to be managed by a professional

3.2.1. Discretionary and advisory asset management are greatly in-demand by HNW clients

3.2.2. Greater demand for discretionary mandates is widely forecast

3.2.3. HNW investors perceive advisory asset management as a high-return time saver

3.2.4. HNW individuals who choose to invest themselves do so for exclusive control

4 Understanding Asset Allocation Trends among US HNW Investors

4.1. Current asset allocation is heavily weighted towards equities

4.1.1. Equity and alternative investments dominate HNW portfolios

4.1.2. Equity investments make up nearly half of US HNW portfolios

4.1.3. US HNW investor portfolios display noticeable demand for bond investments

4.1.4. HNW individuals shift assets away from cash investments

4.1.5. HNW client portfolios allocate a minimal proportion of wealth to property investments

4.1.6. Commodity investments are of little interest to US HNW clients

4.1.7. Alternatives constitute 7% of the typical HNW portfolio

5 US HNW Product and Service Demand

5.1. Planning services are in high demand in the US

5.1.1. Inheritance planning presents an opportunity for wealth managers to resonate with recipients

5.1.2. A holistic approach to providing wealth management services is key for resonating with the US HNW market

6 Appendix

6.1. Abbreviations and acronyms

6.2. Definitions

6.2.1. HNW

6.2.2. Liquid assets

6.3. Methodology

6.3.1. GlobalData's 2016 Global Wealth Managers Survey

6.3.2. GlobalData's 2015 Global Wealth Managers Survey

6.3.3. GlobalData's GlobalData

6.4. Bibliography

6.5. Further reading


List Of Figure

List of Figures

Figure 1: Women constitute a minimal proportion of the US HNW population

Figure 2: More US HNW clients gain wealth through earned income than the global average

Figure 3: Property and real estate is the main industry through which HNW individuals accumulate wealth

Figure 4: The majority of US HNW individuals hold presidential or executive positions

Figure 5: Expats represent a minimal proportion of the US HNW population

Figure 6: Almost one quarter of HNW expats in the US are from China

Figure 7: Almost two thirds of US HNW expat clients invest wealth locally to avoid foreign exchange fees

Figure 8: Lombard International Assurance outlines its company ambitions for 2016

Figure 9: The vast majority of HNW wealth is kept in discretionary mandates

Figure 10: Time and access to sophisticated investments drive demand for professional management

Figure 11: US HNW clients place the majority of their wealth with their main wealth manager

Figure 12: US HNW individuals display strong demand for discretionary mandates

Figure 13: Demand for discretionary asset management is forecast to increase significantly

Figure 14: The expectation of higher returns prompts HNW investors to opt for discretionary mandates

Figure 15: US HNW investors value the ability to have exclusive control over parts of their portfolio

Figure 16: Equities dominate the US HNW portfolio

Figure 17: HNW investors prefer to hold equity in funds

Figure 18: Dividend income drives clients' preference for holding equities

Figure 19: US HNW investors prefer a diversified approach to bond holdings

Figure 20: Risk aversion drives HNW bond investments

Figure 21: When it comes to cash, US HNW investors prefer money market funds

Figure 22: Wealth managers expect demand for cash to increase over the next year

Figure 23: A minimal proportion of HNW wealth is allocated to property

Figure 24: US HNW individuals predominantly hold property investments for diversification

Figure 25: The majority of US HNW commodity investment is allocated to funds

Figure 26: Few investors expect demand for commodity investments to increase

Figure 27: When it comes to alternative investments, HNW individuals prefer diversification

Figure 28: Wealth managers are less confident in the demand for alternatives than the global average

Figure 29: Financial and tax planning are the most in-demand services for HNW investors

Figure 30: The already strong HNW demand for planning services is expected to increase

Figure 31: RBC's What Are You Afraid Of? tool visualizes the impact from uncontrollable variables

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Products and Companies


Companies

Lombard International Assurance, MoneyGuidePro, RBC Wealth Management