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China – The Future of HNWIs to 2015: Opportunities for Wealth Managers and Private Banks
3.1 Political Background.....................................................................................................................16
3.2 Economic Background to the Wealth Sector ..............................................................................18
3.3 Benchmarking German Wealth in Context ..................................................................................20
3.3.1 Distribution of Wealth ......................................................................................................................................... 20
4 Findings from the WealthInsight HNWI Database ............................................................ 24
4.1 Trends in HNWI Wealth to 2016 ....................................................................................................24
4.1.4 Per Capita HNWI Net Worth Trend Analysis ..................................................................................................... 26
4.1.5 Trends of the Wealth Bands .............................................................................................................................. 28
4.2.5 UHNWIs – Industry Breakdown ......................................................................................................................... 36
4.2.6 UHNWIs – Industry Performance ...................................................................................................................... 37
4.2.7 UHNWIs – Industry Forecasts ........................................................................................................................... 38
4.2.8 UHNWIs – Source of Wealth: Entrepreneurship, Earnings or Inheritance ........................................................ 39
4.2.9 UHNWI breakdown by City ................................................................................................................................ 40
4.2.10 UHNWIs – City Performance ............................................................................................................................. 42
4.2.11 UHNWIs – City Forecasts .................................................................................................................................. 44
4.2.12 UHNWIs – Smaller City Review......................................................................................................................... 45
4.3 UHNWIs – The Billionaires ...........................................................................................................47
4.3.3 Billionaire Per Capita Net Worth Trend Analysis ............................................................................................... 48
4.3.4 City-wise Breakdown of Billionaires ................................................................................................................... 48
4.3.5 Industry Breakdown of Billionaires..................................................................................................................... 49
4.3.6 Top 20 Billionaires ............................................................................................................................................. 50
4.4 UHNWIs – The Centimillionaires ..................................................................................................51
4.8.3 Lower Tier Millionaire Per Capita Net Worth Trend Analysis ............................................................................ 61
5 Analysis of German HNWI Investments ............................................................................ 62
5.1 Analysis by Asset Class ...............................................................................................................62
5.1.1 Changing Trends in Liquid Assets – Equity, Fixed Income and Cash and Deposits ........................................ 63
5.1.2 Trends in Alternative Assets .............................................................................................................................. 65
5.1.3 Trends in “Art, Wine and Wheels”...................................................................................................................... 67
5.1.4 Trends of Investments in Real Estate ................................................................................................................ 69
5.1.5 Trends of Investments in Cash and Deposits .................................................................................................... 73
5.1.6 Trends of Investments in Fixed Income ............................................................................................................. 73
5.1.7 Trends of Investments in Equity ........................................................................................................................ 74
5.1.8 Trends of Investments in Business Interest ....................................................................................................... 75
5.2 Analysis of Foreign Investments .................................................................................................76
5.2.1 Trend of Investments in Rest of Europe ............................................................................................................ 78
5.2.2 Trend of Investments in Asia-Pacific ................................................................................................................. 79
5.2.3 Trend of Investments in North America ............................................................................................................. 79
5.2.4 Trend of Investments in Latin America, the Middle East and Africa .................................................................. 79
5.3 Analysis of German Ultra HNWI Investments..............................................................................80
6 Competitive Landscape of the Wealth Sector ................................................................... 82
6.1.3 Family Offices .................................................................................................................................................... 86
6.6.2 Fund Management ............................................................................................................................................. 95
7.2.2 Demand for Intergenerational Wealth Transfer ................................................................................................. 96
7.2.3 Human Resource Availability for the Wealth Management industry ................................................................. 97
7.3 Regulatory Environment in Germany ..........................................................................................97
7.3.2 Regulations on Taxes ........................................................................................................................................ 98
7.3.3 Regulations on Wealth Management and Private Banking ............................................................................. 100
7.3.4 Regulations related to immigration, investment and employment ................................................................... 101
7.4 Key Economic Trends and Drivers ............................................................................................ 102
7.4.1 EUR to USD Moving Annual Average Exchange Rate.................................................................................... 102
7.4.2 Real GDP Growth ............................................................................................................................................ 103
7.4.3 Per Capita GDP ............................................................................................................................................... 104
7.4.4 Gross Savings Rate as a % of GDP ................................................................................................................ 105
7.4.6 Housing Price Index ......................................................................................................................................... 107
7.4.7 Commodity Index ............................................................................................................................................. 108
7.4.8 Foreign Direct Investment (FDI) ...................................................................................................................... 109
7.4.9 Investments of FII’s in Equity Products ........................................................................................................... 110
7.4.12 Balance of Payments ....................................................................................................................................... 113
7.4.13 Government Debt ............................................................................................................................................ 114
7.4.15 HNWI Wealth vs. GDP Ratio ........................................................................................................................... 116
7.4.16 Capital Formation as % of GDP....................................................................................................................... 117
7.4.17 Disposable Income as % of GDP .................................................................................................................... 118
7.5 Case Study – Financial regulation in the European Union (EU) .............................................. 119
7.6 Social Background of Germany ................................................................................................. 122
7.7 Technological Background of Germany .................................................................................... 123
8 About WealthInsight ......................................................................................................... 127
TABLE OF CONTENTS
Germany – The Future of HNWIs to 2016: Wealth in the Powerhouse of Europe
Table 1: HNWI Wealth Band and Group Definitions ..................................................................................................................................... 9
Table 2: Major Regions in Germany, 2010 ................................................................................................................................................. 17
Table 5: Top 10 German cities for UHNWIs, 2007 - 2011 .......................................................................................................................... 40
Table 6: UHNWIs – Top 10 Cities by Wealth Growth, 2007–2011 ............................................................................................................. 43
Table 7: UHNWIs – WealthInsight forecasts for Top 10 cities .................................................................................................................... 44
Table 8: UHNWIs – Smaller German Cities, 2011 ..................................................................................................................................... 45
Table 9: UHNWIs – Former East German Cities, 2011 .............................................................................................................................. 46
Table 20: HNWIs – Trends of Investments in Alternative Assets (%), 2007-16 .......................................................................................... 66
Table 22: HNWIs – Trends in “Art, Wine and Wheels”, 2006-11 ................................................................................................................ 67
Table 23: HNWIs – Residential real estate index per city, 2011 ................................................................................................................. 70
Table 24: HNWIs – Commercial real estate rental prices per city, 2011 ..................................................................................................... 71
Table 25: HNWIs – Prime International Cities, 2007- 2011 ........................................................................................................................ 71
Table 27: UHNWIs – Allocations and Share of HNWI Assets, 2011 ........................................................................................................... 81
Table 28: UHNWIs – Allocations and Share of HNWI Assets, 2011 ........................................................................................................... 82
Table 29: Private bank branches by city, 2011........................................................................................................................................... 83
Table 30: Other major Private Banks, 2011 ............................................................................................................................................... 83
Table 31: Wealth Managers per City .......................................................................................................................................................... 84
Table 32: Emerging cities in Wealth Management ..................................................................................................................................... 85
Table 33: WealthInsight City Ratings of Private Banking Potential ............................................................................................................. 86
Table 34: Asset Allocation of Typical European Single Family Office, 2011 ............................................................................................... 87
Table 35: German Family Offices by city ................................................................................................................................................... 88
Table 36: Family Offices in Germany ......................................................................................................................................................... 88
Table 37: Wealth Management Industry in Germany – Recent Deal Activity .............................................................................................. 89
Table 38: Largest 10 Cities in Germany, 2010 ........................................................................................................................................... 96
Table 40: Euro to USD Moving Annual Average Exchange Rate, 2006–16 .............................................................................................. 102
Table 41: Real GDP Growth Rate, 2006–16 ............................................................................................................................................ 103
Table 42: GDP Per Capita, 2006–16 ....................................................................................................................................................... 104
TABLE OF CONTENTS
Germany – The Future of HNWIs to 2016: Wealth in the Powerhouse of Europe
Table 43: Gross Savings as a % of Real GDP, 2006–2016 ..................................................................................................................... 105
Table 51: Balance of Payments, 2006-11 ................................................................................................................................................ 113
Table 52: Government Debt to GDP, 2006–16 ........................................................................................................................................ 114
Table 54: HNWI Wealth vs. GDP Ratio, 2006–16 .................................................................................................................................... 116
Table 55: Capital Formation as % of GDP, 2006-16 ................................................................................................................................ 117
Table 56: Disposable Income as % of GDP, 2006-16 .............................................................................................................................. 118
Table 57: Patent applications by country, 2010........................................................................................................................................ 124
Figure 4: German HNWI Performance, 2007-15 ........................................................................................................................................ 22
Figure 5: HNWI – Germany vs. the World .................................................................................................................................................. 23
Figure 8: HNWIs – Wealth by Wealth Band (in US$ Billion), 2007-16 ........................................................................................................ 26
Figure 9: HNWIs – Per Capita Net Worth (in US$ Million), 2007-16 ........................................................................................................... 27
Figure 15: UHNWIs – Wealth by Wealth Band (in US$ Billion), 2007-16 .................................................................................................... 33
Figure 16: UHNWIs – Age Distribution, 2011 ............................................................................................................................................. 34
Figure 18: UHNWIs – Distribution by Industry, 2011 .................................................................................................................................. 36
Figure 21: UHNWIs – Importance of Entrepreneurship, 2011 .................................................................................................................... 39
Figure 22: UHNWIs – Human Capital Development Index by Region, 2011 .............................................................................................. 41
Figure 29: Core HNWIs – Wealth by Wealth Band (in US$ Billion), 2007-16 .............................................................................................. 57
Figure 32: HNWIs – Asset Class Composition, 2007-16 ............................................................................................................................ 62
Figure 33: HNWIs – Changing Trends in Total Liquid Assets (as % of Total Assets), 2007-16 ................................................................... 63
Figure 35: HNWIs – Trends of Investments in Alternative Assets (in US$ Billion), 2007-16 ....................................................................... 66
Figure 36: HNWIs – Trends in “Art, Wine and Wheels”, 2006-11 ............................................................................................................... 67
Figure 38: HNWIs – Global Distribution of Foreign Investments, 2007-16 .................................................................................................. 78
Figure 39: UHNWIs – Asset Class Composition, 2007-16 .......................................................................................................................... 80
Figure 40: Wealth Management Industry in Germany – Maturity level of players ....................................................................................... 91
Figure 41: German Wealth Management Industry – Behavioral Mapping, 2011 ......................................................................................... 92
Figure 42: GBP to USD Moving Annual Average Exchange Rate, 2006–16 ............................................................................................ 102
TABLE OF CONTENTS
Germany – The Future of HNWIs to 2016: Wealth in the Powerhouse of Europe
Figure 43: Real GDP Growth (%), 2006–16 ............................................................................................................................................. 103
Figure 44: GDP Per Capita, 2006–16 ...................................................................................................................................................... 104
Figure 45: Gross Savings as a % of Real GDP, 2006–2016 .................................................................................................................... 105
Figure 53: Balance of Payments, 2006-11 ............................................................................................................................................... 113
Figure 54: Government Debt to GDP, 2006–16 ....................................................................................................................................... 114
Figure 56: HNWI Wealth vs. GDP Ratio, 2006–16 ................................................................................................................................... 116
Figure 57: Capital Formation as % of GDP, 2006-16 ............................................................................................................................... 117
Figure 58: Disposable Income as % of GDP, 2006-16 ............................................................................................................................. 118
INTRODUCTION
Germany – The Future of HNWIs to 2016: Wealth in the Powerhouse of Europe
Billionaires Billionaires are those HNWIs holding investable assets of US$1 billion or more, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.
Centimillionaires Centimillionaires are those HNWIs holding assets between US$100 million and less than US$1 billion, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.
Affluent Millionaires
Affluent millionaires are those HNWIs holding assets between US$30 million and less than US$100 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.
Mid-Tier Millionaires
Mid-tier millionaires are those HNWIs holding assets between US$5 million and less than US$30 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.
Lower-Tier Millionaires
Lower-tier millionaires are those HNWIs holding assets between US$1 million and less than US$5 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.
Wealth Group Definition
HNWIs The high-net-worth individuals (HNWIs) wealth group comprises all wealth bands. It represents those individuals holding assets of US$1 million or more, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.
UHNWIs
The ultra-high-net-worth individuals (UHNWIs) wealth group comprises the billionaire, centimillionaire and affluent millionaire wealth bands. It represents those individuals holding assets of US$30 million or more, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.
Core HNWIs
The core HNWIs group comprises the mid-tier millionaire and lower-tier millionaire wealth bands. It represents those individuals holding assets between US$1 million and less than US$30 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.