In their monthly Wealth Report for Luxury Society members, Marc Cohen, Director of Ledbury Research, a London-based research agency and James Lawson, Editor of High Net Worth, the agency’s flagship publication, report on the evolving state of world wealth.
Revenue growth in Asia’s wealth management industry is expected to slow significantly over the next two years (Barclays Capital). In 2008, 90% of wealth managers in Asia expected revenue growth of more than 5% per annum in the coming 2 years; this year only 41% expect such growth and 18% anticipate negative returns. China is viewed as the most attractive market with a quarter of wealth managers still forecasting the country to generate revenue growth of over 15% per annum over the next 2 years. 20% anticipate such growth in India. Korea is viewed as the least attractive market with 29% of wealth managers in Asia predicting a decline in revenues.
The new Mobile Wealthy Residence Index found that Switzerland is the most attractive location to live for the international wealthy, beating London and Singapore (Scorpio Partnership). Its appeal is due to its overall ‘rounded offer’. London was marked down due to recent tax increases for the wealthy and Singapore is expected to rise as a destination for the mobile wealthy. The index was constructed using 11 criteria including economic and political stability, legal considerations, education for children, proximity and culture.
The number of brokers leaving Wall Street is rising (Wall Street Journal). In April this year, over 2,800 registered brokers in the US left the industry, leaving the total number of departures so far this year standing at 11,600 (Financial Industry Regulatory Authority). If departures continue at this pace, nearly 35,000 brokers will have exited the industry by the end of the year, leaving about 630,000 registered brokers in the US. Despite this, experienced advisors who generate millions of dollars in client fees annually are still in high demand. Certain banks, such as UBS, are planning on letting go lower-producing brokers and hiring from the more elite ranks.
53% of wealthy Americans (discretionary income of over $100,000) worry that they could run out of money (Harrison Group). Over the past 12 months, they have been saving 16% more of their household income and increasing contributions to their retirement plans by 6%. The shift towards saving versus spending underscores their belief that the recession will continue for a significant period. This group represents 10% of the US population and accounts for 50% of all retail sales.
Soufun Holdings, one of China’s largest real estate companies, has started to offer housing tours of the US to wealthy Chinese individuals looking to take advantage of the country’s lower real estate prices (Business Week). For a fee of $3,600 each, the tour members viewed homes worth $500,000 to $1m. Chinese wealthy allocate 21% of their assets to property (Merrill Lynch) and the drop in housing prices has created an opportunity for them to invest in real estate abroad (Hurun Report). However, Chinese law restricts individuals from taking more than $50,000 out of the country in one year; this means that buyers are predominantly traders or those with businesses that export overseas.