Wealth in Australia: Sizing the Market Opportunity Released on 9th May 2016
Summary Compared to previous years, the Australian wealth market expanded at a slightly lower (but still impressive) rate in 2015, with economic concerns having a negative effect on performance. Weak equity market conditions and economic growth are also expected to contribute to lower growth in 2016, before the market bounces back in the following years thanks to returning economic strength. Between 2015 and 2019 liquid assets held by affluent individuals are forecast to record a compound JSB Market Research Pvt. Ltd.
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annual growth rate (CAGR) of 8.5%, representing a sizable opportunity for wealth managers operating in the country. Yet there is notable regional disparity within Australia in terms of wealth distribution; while the east accounts for the majority of assets, growth is typically found in the capital state and the north. Key Findings - At the end of 2015, of the approximately 17.9 million adults living in Australia, 26.1% (or 4.7 million) could be considered affluent. - While expanding at a slightly slower pace than in previous years, wealth market growth in Australia still dwarfed other developed markets in 2015, and wealth held by affluent retail investors is forecast to record a CAGR of 8.8% between 2015 and 2019. - While Australias stock market struggled in 2015, generous dividend payouts and a friendly tax system have seen retail equity holdings growth outperform the local stock market index. - Australian HNW individuals are heavily exposed to property in their non-traditional investments, and despite a slight rise in interest rates for investors appetite for real estate is forecast to remain strong. Synopsis Wealth in Australia: Sizing the Market Opportunity analyzes Australias wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets. JSB Market Research Pvt. Ltd.
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Specifically the report: - Sizes the affluent market (both by the number of individuals and value of their liquid assets) using our proprietary datasets. - Analyzes which asset classes are favored by Australias investors and how their preferences impact the growth of the total savings and investments market. - Examines HNW clients attitudes towards non-liquid investments, such as property and commodities. - Identifies key drivers and booking centers for offshore investments. Reasons to Buy - Benchmark your share of Australias wealth market against the current market size. - Forecast your future growth prospects using our projections for the market to 2019. - Identify your most promising client segment by analyzing the penetration of affluent individuals in Australia. - Evaluate your HNW proposition by understanding how the local tax system affects your HNW clients. JSB Market Research Pvt. Ltd.
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- Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.
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Table of Contents Executive Summary Australias wealth market continues to represent a sizable opportunity for wealth managers Key findings Critical success factors Sizing And Forecasting the Australian Wealth Market By 2019 affluent individuals will constitute 35% of Australias adult population Australias affluent population is forecast to record an AAGR of 9.3% between 2015 and 2019 HNW individuals account for 1.1% of adults but hold 38.2% of liquid assets Affluent individuals hold 90% of Australian retail liquid assets Australias onshore wealth is concentrated in the populous states of the eastern seaboard, while growth is to be found in the west and north JSB Market Research Pvt. Ltd.
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Drivers of Growth in the Australian Wealth Market While still impressive, retail savings and investment market growth dropped in 2015 Australias investment market is forecast to perform strongly despite weak economic conditions Australians love affair with equities is not expected to come to an end any time soon Growing at above market rate, retail deposit holdings will remain the largest asset class Deposit growth will continue to outstrip GDP growth Economic concerns suppressed retail investment holdings growth in 2014, but this is expected to change Equities and mutual funds are most allied to the performance of the Australian stock market Mutual funds are less sensitive to stock market movements than equities There is a negative correlation between the ASX SandP All Ords and retail bond holdings Retail bond holdings growth will be sluggish despite efforts to spur the asset class Hnw Investment Preferences An opportunity for Australian wealth managers, HNW individuals high allocation into superannuation should not be ignored HNW investors in Australia hold 14% of their wealth offshore Australian HNW investors prefer to invest their wealth at home An expectation of better returns is the primary driver for HNW offshore investment Tax efficiencies are also an important driver for offshore investments HNW offshore wealth is held not in one single location but spread around the globe Australia has signed numerous TIEAs in an effort to combat offshore tax evasion
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Appendix Abbreviations and acronyms Supplementary data Definitions Affluent CRS Domicile DTA FATCA HNW Liquid assets Mass affluent Onshore Residency TIEAs Methodology Global Wealth Model methodology Global Retail Investments Analytics methodology Verdict Financials 2015 Global Wealth Managers Survey Bibliography Further reading About Verdict Financial Disclaimer
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List of Tables Table 1: Australian income tax rates for residents 2015-16, applicable as of July 1, 2015 Table 2: Stamp duty levied in New South Wales, Australia Table 3: Australia: adult population segmented by affluent category and asset band (000s), 2010−14 Table 4: Australia: adult population segmented by affluent category and asset band (000s), 2015e−19f Table 5: Australia: total liquid wealth segmented by affluent category and asset band (A$bn), 201014 Table 6: Australia: total liquid wealth segmented by affluent category and asset band (A$bn), 2015e-19f" List of Figures Figure 1: 26% of the Australian population can be considered affluent Figure 2: HNW individuals hold 38.2% of liquid assets in Australia Figure 3: Eastern Australia accounts for the majority of affluent liquid assets Figure 4: Australias retail investments market is forecast to record a CAGR of 8.7% between 2015 and 2019 Figure 5: Deposits account for 55.7% of the Australian retail investment market Figure 6: Retail deposit holdings will perform strongest over the forecast period Figure 7: Deposit holdings growth is forecast to exceed GDP growth Figure 8: The performance of the local stock market was weak in recent years
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Figure 9: Retail mutual fund and equity investments correlate strongly to the performance of the Australian stock market Figure 10: Mutual funds are heavily invested in property and equity and little else Figure 11: Retail bond holdings tend to move in the opposite direction of Australias All Ords Index Figure 12: HNW investors allocate 17% of their wealth into non-traditional investments Figure 13: HNW individuals in Australia hold 14% of their assets offshore Figure 14: Access to better investment options is the biggest motivation for offshore investment Figure 15: Australian HNW investors prefer to invest in the US, the UK, and Singapore Figure 16: The Australian government has signed 37 TIEAs over the past few years Related reports: Wealth in Poland: Sizing the Market Opportunity Wealth in the US: Sizing the Market Opportunity Wealth in Hong Kong: Sizing the Market Opportunity Commonwealth Scientific and Industrial Research Organisation - Pharmaceuticals & Healthcare - Deals and Alliances Profile
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