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Wealth In Australia: Sizing The Market Opportunity 2017

Published on: Jan 2017 | From USD $3450 | Published By: GLOBAL DATA | Number Of Pages: 46

Wealth in Australia: Sizing the Market Opportunity 2017

Summary
We expect 2017 to be a turning point for the Australian wealth market, after growth slowed down over the past few years, with economic concerns having a negative effect on performance. Returning economic strength and more favorable equity market conditions will contribute to stronger retail investment savings growth, which in turn will translate into more robust wealth growth. Between 2016 and 2020 liquid assets held by affluent individuals are forecast to record a compound annual growth rate (CAGR) of 5.9%, representing a sizable opportunity for wealth managers operating in the country. Yet there is notable regional disparity within Australia in terms of wealth distribution, with the vast majority of wealth found on the Eastern seaboard.

Key Findings
- At the end of 2016, of the approximately 18.7 million adults living in Australia, 19.1% (or 3.57 million) could be considered affluent.
- While expanding at a slightly slower pace than in previous years, wealth market growth in Australia will still be dwarfed by many other developed markets through to 2020, and wealth held by affluent retail investors is forecast to record a CAGR of 5.9% over the forecast period.
- While Australia's stock market has struggled in recent years (before regaining momentum in 2016), generous dividend payouts and a friendly tax system have seen retail investors' love affair with equities continue.
- Australian HNW individuals are heavily exposed to property in their non-traditional investments, with real estate investment trusts of particular interest.
- While HNW individuals in Australia invest offshore for a multitude of reasons, access to a wider range of investments is the main factor. But investors only hold a comparatively small proportion of their wealth offshore.

Synopsis
GlobalData's “Wealth in Australia: Sizing the Market Opportunity 2017” analyzes the Australian wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.

Specifically the report:
- Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.
- Analyzes which asset classes are favored by Australian investors and how their preferences impact the growth of the total savings and investments market.
- Examines HNW clients' attitudes towards non-traditional investments such as property and commodities.
- Identifies key drivers and booking centers for offshore investments.
- Examines the tax landscape in Australia and future implications for investors.

Reasons To Buy

- Benchmark your share of the Australian wealth market against the current market size.
- Forecast your future growth prospects using our projections for the market to 2020.
- Identify your most promising client segment by analyzing penetration of affluent individuals in Australia.
- Evaluate your HNW proposition by understanding how the Australian tax system impacts HNW clients.
- Review your offshore strategy by identifying HNW motivations for offshore investments and their preferred booking centers.

EXECUTIVE SUMMARY
Australia's wealth market continues to represent a sizable opportunity
Key findings
Critical success factors
TABLE OF CONTENTS
SIZING AND FORECASTING THE AUSTRALIAN WEALTH MARKET
By 2020 affluent individuals will constitute 23% of Australia's adult population
Australia's affluent population is forecast to record an AAGR of 5.8% between 2016 and 2020
HNW individuals account for 1.0% of adults but hold 37.2% of liquid assets
Affluent individuals hold 77% of Australian retail liquid assets
Australia's onshore wealth is concentrated in the populous states of the eastern seaboard, while growth is to be found in the west and north
DRIVERS OF GROWTH IN THE AUSTRALIAN WEALTH MARKET
While still impressive compared to other developed countries, retail savings and investment market growth dropped in 2016
Australia's investment market outlook remains robust over the long term
Australians' love affair with equities is not expected to 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 2016, 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 strong over the forecast period
HNW INVESTMENT PREFERENCES
HNW individuals' high allocation into superannuation is an opportunity for wealth managers
HNW investors in Australia hold just over 14% of their wealth offshore
Australian HNW investors prefer to invest their wealth at home
Access to better investment options is the primary driver for HNW offshore investment
The importance of tax efficiencies as a driver for offshore investments has decreased over the past few years
HNW offshore wealth is held predominately in the US and the UK
Australia has signed numerous TIEAs in an effort to combat offshore tax evasion
APPENDIX
Abbreviations and acronyms
Supplementary data
Definitions
Affluent
CRS
Domicile
DTC
Exchange of information
FATCA
HNW
Liquid assets
Mass affluent
Onshore
Residency
TIEAs
Methodology
2016 Global Wealth Managers Survey
2015 Global Wealth Managers Survey
Global Wealth Model methodology
Global Retail Investments Analytics methodology
Bibliography
Further reading
About GlobalData
Disclaimer

Figure 1: 19% of the Australian population can be considered affluent
Figure 2: HNW individuals hold 37.2% of liquid assets in Australia
Figure 3: Eastern Australia accounts for the majority of affluent liquid assets
Figure 4: Australia's retail investments market is forecast to record a CAGR of 7.0% between 2016 and 2020
Figure 5: Deposits account for 55.5% of the Australian retail investment market
Figure 6: Retail deposit holdings will continue to dominate, but bond holdings will perform strongest
Figure 7: Deposit holdings growth is forecast to exceed GDP growth
Figure 8: The local stock market regained momentum in 2016
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 Australia's All Ords index
Figure 12: HNW investors allocate 35% of their wealth into non-traditional investments
Figure 13: HNW individuals in Australia hold 14.1% of their assets offshore
Figure 14: Access to better investment options is the biggest motivation for offshore investment
Figure 15: Australian HNW individuals prefer to invest in the US and the UK
Figure 16: The Australian government has signed 38 TIEAs

SECONDARY RESEARCH
Secondary Research Information is collected from a number of publicly available as well as paid databases. Public sources involve publications by different associations and governments, annual reports and statements of companies, white papers and research publications by recognized industry experts and renowned academia etc. Paid data sources include third party authentic industry databases.

PRIMARY RESEARCH
Once data collection is done through secondary research, primary interviews are conducted with different stakeholders across the value chain like manufacturers, distributors, ingredient/input suppliers, end customers and other key opinion leaders of the industry. Primary research is used both to validate the data points obtained from secondary research and to fill in the data gaps after secondary research.

MARKET ENGINEERING
The market engineering phase involves analyzing the data collected, market breakdown and forecasting. Macroeconomic indicators and bottom-up and top-down approaches are used to arrive at a complete set of data points that give way to valuable qualitative and quantitative insights. Each data point is verified by the process of data triangulation to validate the numbers and arrive at close estimates.

EXPERT VALIDATION
The market engineered data is verified and validated by a number of experts, both in-house and external.

REPORT WRITING/ PRESENTATION
After the data is curated by the mentioned highly sophisticated process, the analysts begin to write the report. Garnering insights from data and forecasts, insights are drawn to visualize the entire ecosystem in a single report.

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