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Wealth in the US: Sizing the Market Opportunity

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Summary
 
 The US is home to the largest affluent population in the world and hosts a very advanced financial services sector, including the most sophisticated mutual fund and equity markets globally. The large affluent population is financially literate with high retail participation in both equities and mutual funds. US wealth managers thus have a lucrative target market onshore. In the future, growth in the affluent populations liquid assets will be pronounced compared to other developed economies. At the end of 2015, nearly two thirds of the US adult population was considered affluent, making the US home to the largest affluent population in the world. This compares very favorably to Western Europe, the second-largest wealth market in the world, where only 20.1% of the population is considered affluent.
 
 Key Findings
 
 - High net worth (HNW) individuals account for 1.8% of the US population, and their numbers are expected to swell by nearly 7% year-on-year to 2019. Ultra-high net worth individuals (those with over $10m in assets) are expected to increase by over 10%.
 
 - The US retail investments market remains buoyant, but growth slowed significantly throughout 2014 and 2015, largely due to outflows of equities following a bumper year for the stock market in 2013. Against an uncertain economic backdrop, bonds are already bouncing back and are predicted to record 4% year-on-year growth to 2019.
 
 - HNW individuals are now allocating 28.1% of their investible assets outside of traditional investments, with hedge funds the most popular alternative option in 2015 and private equity a relatively close second.
 
 - Offshore investment continues to decrease (now at 6.1%) following the onset of the Foreign Account Tax Compliance Act (FATCA), with client anonymity and tax efficiency the key drivers.
 
 Synopsis
 
 Verdict Financials “Wealth in the US: Sizing the Market Opportunity” analyzes the American 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 the number of individuals and value of their liquid assets) using our proprietary datasets.
 
 - Analyzes which asset classes are favored by American retail 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 hedge funds, property, and commodities.
 
 - Identifies key drivers and booking centers for offshore investments by HNW clients.
 
 Reasons To Buy
 
 - Benchmark your share of the US wealth market against the current size of the market.
 
 - Forecast your future growth prospects using our projections for the market to 2019.
 
 - Identify your most promising client segment by analyzing penetration of affluent individuals in the US.
 
 - Evaluate your HNW proposition by understanding how FATCA is affecting your HNW clients.
 
 - Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.
 

 EXECUTIVE SUMMARY
 Key findings
 Critical success factors
 SIZING AND FORECASTING THE US WEALTH MARKET
 Affluent individuals in the US account for nearly two thirds of the adult population
 HNW investors account for 1.8% of the market, and the very rich will get richer
 Overall growth of total liquid assets has been highly variable in recent years
 Wealth held by affluent investors has risen robustly, providing wealth managers with ample opportunities
 US HNW individuals hold over one third of total liquid assets, a share that will rise
 DRIVERS OF GROWTH IN THE US WEALTH MARKET
 2015 saw growth stagnate, and this is unlikely to change over the next five years
 The US market is heavily weighted towards equity and mutual funds
 The bond market will rise again, but the market will remain weighted to mutual funds and equities
 Deposits will see slightly slower but steadier growth, supported by benign inflation and higher interest rates
 A moderate rise in inflation and small interest rate hikes will have little effect on the deposit market
 GDP growth is also unlikely to strongly affect deposit allocations, especially if there is no real wage upturn on the horizon to kick-start consumer spending
 Bonds, equities, and mutual funds are more closely aligned with the fortunes of the stock market
 The US stock market has struggled to add value in recent years and has had a rough start to 2016
 Retail bonds are set to grow significantly in 2016 as the effects of QE and the zero interest rate policy diminish
 The performance of the stock market also has a direct impact on equities and mutual funds
 HNW INVESTMENT PREFERENCES
 HNW individuals allocate 28.1% of their investible assets outside of traditional investments
 Hedge funds are the most popular HNW illiquid asset
 HNW individuals hold 6.1% of their assets offshore
 Client anonymity and tax efficiency are the biggest drivers of offshore investment
 The UK and Japan are now the most popular booking centers for US HNW individuals
 APPENDIX
 Abbreviations and acronyms
 Supplementary data
 Definitions
 Affluent
 Bonds
 Cash
 Deposits
 Domicile
 Equities
 Exchange of information
 FATCA
 HNW
 Liquid assets
 Mass affluent
 Mutual funds
 Onshore
 Residency
 Methodology
 Verdict Financials 2015 Global Wealth Managers Survey
 Global Retail Investments Analytics methodology
 Bibliography
 Further reading
 About Verdict Financial
 Disclaimer


List Of Tables

 

Table 1: Income tax rates and income bands for 2016
Table 2: US: number of affluent individuals by asset band (000s), 2011-15
Table 3: US: number of affluent individuals by asset band (000s), 2016e-19f
Table 4: US: value of liquid assets held by affluent individuals by asset band ($bn), 2011-15
Table 5: US: value of liquid assets held by affluent individuals by asset band ($bn), 2016e-19f


List Of Figures

 Figure 1: 62% of the total US population is affluent, which represents the worlds largest wealth opportunity
 Figure 2: HNW and mass affluent individuals account for almost all onshore US liquid assets
 Figure 3: The US retail savings and investments market will stagnate over the forecast period
 Figure 4: Equity and mutual fund holdings account for 67.3% of the total onshore market
 Figure 5: The US market is heavily weighted towards equity and mutual funds
 Figure 6: Deposits will see steadier growth, adding $2.46tn over four years
 Figure 7: IT and financial services account for 37% of the NYSE Composite Index
 Figure 8: Retail bond holdings will see strong growth in 2016
 Figure 9: Mutual funds and equities mirror the NYSE Index
 Figure 10: US retail mutual funds are heavily weighted in equities
 Figure 11: Direct property investments are the most popular asset outside traditional liquid allocations among US HNW investors
 Figure 12: US HNW individuals allocate 6.1% of their wealth offshore
 Figure 13: Client anonymity is the primary reason HNW clients offshore wealth
 Figure 14: The UK and Japan are now the booking centers of choice for US HNW citizens
 Figure 15: FATCA agreements have been signed across the world
 


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Reports Details

Published Date : Apr 2016
No. of Pages :39
Country :United States of America
Category :Finance and Banking
Publisher :Verdict Financial
Report Delivery By :Email
Report Delivery Time :12 to 24 hours after placing the order.

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