Global Wealth Market Post-COVID-19

Global Wealth Market Post-COVID-19



The global wealth market will decline by 7% in 2020 due to the coronavirus. The pandemic has forced worldwide markets into lockdown, which will result in severe economic downturn. HNW individuals will be hurt the most due to their appetite for riskier asset classes, which have experienced declines mirroring the 2007-09 recession.

Returns from all asset classes will be low as stock markets have crashed, interest rates are nearing 0%, and emergency government support is reducing yields from other fixed-income products. Recovery is expected to be slow, and will differ from country to country. However, we do predict that 2021 will be the bounce back year, with the global retail savings and investments market set to increase by 10%.

This report explores the impact of COVID-19 on the wealth market from 2020 onwards. It sizes the wealth market both by number of individuals and the value of their liquid assets using proprietary datasets, analyzes which asset classes are favored by global investors, and examines how their preferences will impact the growth of the total savings and investments market.

Scope

- HNW individuals will see their liquid wealth reduce by 11% in 2020 - an approximate loss of $5.2tn.
- Global equity balances will see the largest fall with a 26% decline in 2020 as global stock markets crashed in mid-March, mirroring positions seen during the last global recession.
- US investors will suffer the most in 2020 due to their preference for risky asset classes that have been severely damaged.

Reasons to Buy

- Benchmark your share of the global wealth market against the current market size.
- Forecast your future growth prospects using our revised projections for the market to 2021.
- Identify your most promising client segment by analyzing the penetration of affluent individuals globally.

1. EXECUTIVE SUMMARY
1.1. The global wealth market will suffer due to the coronavirus pandemic
1.2. Key findings
1.3. Critical success factors
2. SIZING AND FORECASTING
2.1. The global wealth market will decline by 7% in 2020, losing $8.3tn
2.1.1. Wealth managers headed into 2020 after a strong showing in 2019
2.1.2. HNW investors will see their wealth reduce by 11% in 2020
2.1.3. Retail investors preference for safe haven assets will protect them from drastic declines
2.1.4. HNW wealth will increase by $7tn in 2021 following the 2020 crash
2.1.5. Mass affluent investors will hold up better but will see less of a bounce back
2.2. The global retail savings and investments market is expected to contract by 7% in 2020
2.2.1. The run-up in equities value means the fall in 2020 is more pronounced
2.3. Global retail savings and investments trends
2.3.1. Global equity balances will suffer significantly, declining by 26% in 2020
2.3.2. Despite their diversification benefits, mutual funds will alsosuffer in this economic crisis
2.3.3. Investors will fly to safety, increasing deposit balances by 8% in 2020
2.3.4. Bonds will see the largest growth of any core asset class, increasing by 9% against 2019
2.3.5. The global reach of the pandemic has reduced investor appetite to offshore wealth
2.4. Key issues in a post-COVID-19 wealth market
2.4.1. Expansion plans will need COVID-19 contingency planning for future waves and disruption
2.4.2. Certain industries will be harder hit than others, requiring differentiated strategies
2.4.3. Expanding advisor count and adapting to the new normal of working from home
2.4.4. Expanding advisor numbers by acquiring smaller or weaker rivals wouldprove beneficial
2.4.5. Greater competition from robo-advisors means different competition dynamics
3. GEOGRAPHICAL ANALYSIS
3.1. The North American wealth market will suffer most during the 2020 crash
3.1.1. HNW North Americans will bear the brunt of the 2020 contraction
3.1.2. The global retail investments market will decline by 7% but North Americas fall will be almost twice as high
3.2. US investors will suffer the most of any country in the 2020 crash
3.2.1. Both mass affluent and HNW investors in the US will see their wealth decline by 15%
3.2.2. The US retail savings and investments market is expected to decrease by 15%
3.3. Despite European investors affinity forsafe haven assets, many markets will suffer in this economic crash
3.4. The coronavirus pandemic will wipe out anypositive economic impact of theBrexit decision
3.4.1. The UK wealth market will decline by 2%
3.4.2. The UK retail savings and investments market will shrink by 2% in 2020
3.4.3. All sectors of UK wealth management will suffer, but players with strong digital channels will be best placed to succeed
3.5. German investors strong preference for safe haven products will keep wealth growth in positive territory
3.6. Italys wealth market will stagnate in 2020
3.6.1. The overall Italian retail savings and investments market will experience 0.2% growth
3.7. Lockdowns and travel bans will severely impactSpain as the country depends on tourism and hospitality to boost the economy
3.7.1. Spains overall retail savings and investments market will increase by 1% due to the strong preference for deposits
3.8. The oil price war and the coronavirus pandemic will have a severe impact on the UAE investment market
3.8.1. The UAE has a strong preference for deposits, which will keep growth on the up in 2020
3.9. Asia Pacific will suffer the least despite being the origin of the virus
3.9.1. Asia Pacifics wealth markets will continue to expand in 2020,although growth will be down
3.9.2. Australia will suffer one of the worst impacts in Asia Pacific with an outright decline in wealth
3.9.3. China is likely to lead the region out of the recession with a relatively strong market
3.9.4. Hong Kongs successful response to the pandemic has been overshadowed by its complex and evolving relationship with the mainland
3.9.5. Indias retail savings and investments market will experience 0% growth for the first time since the globalfinancial crisis
3.9.6. Singapores wealth market has been set back
4. APPENDIX
4.1. Abbreviations and acronyms
4.2. Definitions
4.2.1. Affluent
4.2.2. HNW
4.2.3. Liquid assets
4.2.4. Mass affluent
4.3. Secondary sources
4.4. Further reading

List Of Figures

Figure 1: The affluent wealth market will decline by over $10tn in 2020
Figure 2: Retail investors hold the majority of their portfolio in deposits
Figure 3: Both the number of HNW individuals and their liquid wealth will decrease by 11% in 2020
Figure 4: Asia Pacific is the most risk-averse region
Figure 5: The global retail savings and investments market is expected to decline by 7% in 2020
Figure 6: Selected COVID-19 metrics as of May 2020
Figure 7: The oil price dipped below zero in April 2020 but rebounded quickly
Figure 8: A rapid recovery from the recession is not forecast by most industry watchers
Figure 9: Concern over COVID-19 has been notable since the crisis started, which means higher deposit growth
Figure 10: Equities will take the biggest hit in 2020, declining by 26%
Figure 11: Worldwide daily new coronavirus cases surpassed 130,000 on June 2, 2020
Figure 12: North Americas retail savings and investments market will decrease by 15% in 2020
Figure 13: The majority of the global retail savings and investments market is held in less riskyasset classes
Figure 14: Equity balances in the US will decrease by 30%
Figure 15: Safe haven asset classes will increase their share of the UK retail savings and investments market in 2020
Figure 16: German deposit balances are expected to increase by 9%
Figure 17: In Italy, only deposit balances will increase in 2020 compared to2019
Figure 18: Spains equity balances will decrease by 22% in 2020
Figure 19: Asia Pacifics liquid assets will decline by 1.5%
Figure 20: Equity balances are expected to decrease by 17% in 2020

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