LONDON (HedgeWorld.com)–Wealthy folks may not be going for brokers as much as they used to. The shaky condition of the traditional investment market in recent years is steering high-net-worth individuals away from a transactional model of investment and toward a more comprehensive, private banking-centered approach, according to a survey and report by Datamonitor.
The United States has about 8.5 million high-net-worth individuals (“HNWs,” defined as persons with onshore liquid assets in excess of US$300,000), and their number will grow to 12 million by 2008, at an annual rate of 7%, according to Datamonitor. Liquid wealth of HNWs increased from US$6.3 trillion in 2002 to US$7.7 trillion in 2003–the latest dollar figure pegged by Datamonitor–a year in which the U.S. HNW population grew by 16.3%.
According to Datamonitor, the U.S. wealth management domain has had to undergo a structural shift to accommodate wealthy investors’ response to faltering markets. “While the United States has historically been very brokerage-focused,” according to the Datamonitor report, “U.S. HNWs are increasingly demanding a holistic, integrated view of their lives, resulting in a consolidation of their relationships and transfer of a greater share of wallet to their wealth managers.” Major U.S. wealth managers are adapting to this new attitude and market by “broadening their product and service offering to provide a more comprehensive service and to differentiate themselves from the competition.”
Demographic shifts are influencing the trends. The aging of the U.S. population is shifting emphasis toward wealth preservation rather than accumulation. “This will involve incorporating effective services for wealth preservation, retirement planning and wealth distribution, as individuals seek out ways to pass on their wealth to the next generation in the most efficient way,” said Laura Meacham, financial analyst at Datamonitor and author of the report, in a statement. The shift in investment focus, she said, means that brokerages are “hit hard” but also enables firms that provide market-responsive services “to take hold of a much greater share of wallet to help boost revenues.”
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