Equities Preferred Constituent of the US HNW Investment Portfolio : Ken Research


Ken Research announced latest publication on, “Wealth in the US: HNW Investors; Understanding HNW investors and wealth management strategies” which provides detailed analysis of wealth management in the US. This report focuses more on the investing inclination and portfolio allocation of the US HNW investors. It puts forward how the new and existing players can use this information on dynamics of the investment preferences in the US to gain an edge in the market. Additionally, it covers what key features to be included in investment options, keeping in mind all the changes taking places in the US wealth segment.

The US is home to a diverse and sizable HNW segment and a handful of client investment portfolios are appropriated into bond investments and more pressure is placed on better returns from alternative investments. Most of the US HNW individuals have gained wealth either by means of family business owner or as a first-generation entrepreneur which has led to increased demand for personalized wealth management services. The basic reason why the US HNW clients opt to have their wealth professionally managed is to gain access to sophisticated investment products while some clients feel that their portfolio is too complicate to handle themselves. There is more preference for discretionary mandates over advisory asset management among the HNW clients. High net worth individual (HNWI) is a part of financial service industry to delegate persons whose investible assets exceed USD 1.0 million. There is a shift in the asset allocation but majority of respondents expect a return to traditional allocation. There is an expectation of shift of advisors from full service to independent models.

According to HNW investors, private equity is the apt place to accumulate wealth over long term. Due to growth in GDP and increasing strength of equity market, HNWI population increased in the 12 largest US metropolitan statistical areas (MSAs). The US continued to experience robust growth, while New York remained the city with highest HNWI. Young HNWI developed their preferences for sophisticated services and digital offerings. Established Wealth management firms will play a major role of delivering high quality advice from both agents as well as automated platforms which will help them secure a vast market segment of the US HNWI population. According to the experts, it is estimated that by 2017 HNWI will allocate US$1.5 trillion of assets for enhancement of automated advisory capabilities. There are also major concerns arising among female HNWI in the US which includes threat of stability in financial position and anxiety about the new environment. . As the US is the largest wealth market, equities is the essential factor of the US HNW investment portfolio whereas alternative investments make up 26% of an average HNW portfolio.

List of figure covered in the Report

Figure 1: US HNW clients gain wealth through earned income more so than the global average

Figure 2: US Trust offers families a holistic approach to wealth management

Figure 3: Property and finance account for almost half of US HNW wealth

Figure 4: Six out of 10 HNW expat clients are classified as long-term US residents

Figure 5: 37.6% of HNW expats in the US are from China or the UK

Figure 6: Almost two thirds of US HNW expat clients invest wealth locally to avoid foreign exchange fees and charges

Figure 7: Exclusivity and complexity drive HNW clients to seek professional advice

Figure 8: The majority of HNW wealth is kept in discretionary mandates

Figure 9: US HNW individuals display strong demand for discretionary mandates

Figure 10: Demand for discretionary asset management is forecast to increase significantly

Figure 11: US HNW investors are confident self-managing their wealth

Figure 12: Equity investments dominate the US HNW portfolio

Figure 13: HNW investors prefer direct equity holdings

Figure 14: Capital appreciation drives clients’ preference for holding equities

Figure 15: The majority of HNW bond allocation is held in direct corporate bonds

Figure 16: Predictability and risk aversion drive HNW bond investment

Figure 17: Only 6% of managed HNW wealth is held in cash investments

Figure 18: Reasons of liquidity and risk aversion drive cash investment

Figure 19: 1% of HNW wealth is allocated to property

Figure 20: Rental income is fueling HNW demand for property

Figure 21: The majority of US HNW commodity investment is allocated to funds

Figure 22: Few investors expect demand for commodity investments to increase

Figure 23: HNW investors prefer funds when it comes to alternative investments

Figure 24: Exclusivity and returns drive HNW demand for alternatives

Figure 25: US HNW individuals show strong demand for pension planning

Figure 26: The Fidelity Giving Account helps philanthropists pass on their work

Figure 27: The already strong HNW demand for planning services is expected to increase

Figure 28: US HNW investors show strong demand for tax planning advice

Figure 29: Demand for investment property advice is forecast to increase

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Ankur Gupta, Head Marketing & Communications




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