Wealth Management in Germany 2006

This report focuses on the onshore liquid wealth of Mass Affluent and High Net Worth customers. It sizes, segments and forecasts the number of affluent individuals and the liquid assets they hold. It investigates the competitive landscape in terms of players and products and services and presents the results of Datamonitor's large scale survey of the main players.

• Sizing and forecasting of mass affluent and high net worth individuals from 2001-2010, generated from Datamonitor's proprietary Global Wealth Model
• Data presented for 10 liquid asset bands, from EUR50K-75K to EUR3M+
• 18 German wealth managers were surveyed during Datamonitor's Wealth Management Market Leaders Survey 2006
• Survey questions covered business and product/service development, client trends and attitudes, and general market issues

There are more than 9,000,000 wealthy individuals in Germany holding more than EUR1,630bn in onshore liquid assets. Onshore liquid assets will grow to EUR2trn by 2010

Europeans largest wealth market is characterized by strong competition and consolidation. Deutsche Bank, UBS and Sal. Oppenheim are perceived by their peers to be the largest wealth managers in Germany

Inheritance planning and alternative investments have the most business potential in Germany in the next few years

• Assess market attractiveness by reviewing size and growth forecasts up to 2010
• Improve client service through a greater awareness of their attitudes and concerns
• Assess the threats and opportunities for wealth managers in the market

EXECUTIVE SUMMARY

Introduction

Wealthy clients in Germany

Competition for wealthy customers

Products and distribution

INTRODUCTION

What is this report about?

Who is the target reader?

How to use this report

Note to readers

CHAPTER 1 WEALTHY CLIENTS IN GERMANY

Introduction

Key findings

The German mass affluent and HNW market has seen steady growth in the least 4 years

There are more than 9,000,000 wealthy individuals in Germany

Wealthy individuals in Germany hold more than EUR1,630bn in onshore liquid assets

Onshore liquid assets in Germany will grow to EUR2trn by 2010

Inheritors represent biggest opportunity in German wealth market

German investors put up to 30% of their liquid assets offshore

The main motivation for German investors to put their liquid assets offshore is tax avoidance

Switzerland and Luxembourg are preferred offshore centres among German investors

Private clients in Germany are demanding a high level of interaction and protection of their current asset base

Personal relationship is the key determinant of choice of wealth manager in Germany

Referrals from existing clients remains the number one customer acquisition technique in Germany

Clients are demanding to know more about their portfolio now than two years ago

Protecting their current asset base is most clients' main interest

Quick problem solving and regular contact are the best ways to retain clients

There are several key reasons why private clients in Germany are leaving a wealth management service

The majority of clients in Germany have more than two wealth managers

German wealth managers should try to increase clients' share of wallet

German wealth managers tend to have relatively long-term relationships with their private clients

Supplementary data

CHAPTER 2 COMPETITION FOR WEALTHY CUSTOMERS

Introduction

Key findings

Europeans largest wealth market is characterized by strong competition and consolidation

Deutsche Bank, UBS and Sal. Openheim are perceived by their peers to be the largest wealth managers in Germany

The German banking sector and private banking in particular are facing further consolidation

Recent trends in the German wealth market indicate retreat of foreign banks

The elite of German wealth managers: who comes first and why?

Minimum investment thresholds for new clients in Germany vary between EUR250K and EUR500K

German wealth managers are most concerned about finding and attracting quality staff

German wealth managers face competition from different parts of the financial industry

The main competitors will remain the same in the next few years

German wealth managers are concentrating on obtaining new clients and improving CRM and support systems

Obtaining new clients will drive revenue in Germany in the next two years

Increasing share of wallet will come through more face to face contact, offering financial planning and better leveraging CRM

Improving CRM and support systems is the key strategic initiative

IT and CRM system costs is the main concern in controlling cost bases

German wealth managers tend to organize their business around a key relationship manager, but not all specialize in key client segments

German wealth managers avoid giving their clients a single point of contact

Almost 40% of German wealth managers do not have dedicated teams organized around specific customer groups

Most relationship managers in Germany are assessed based on revenue, profit and number of clients

New relationship managers will come mostly by hiring them from other wealth managers

Supplementary data

CHAPTER 3 PRODUCTS AND DISTRIBUTION

Introduction

Key findings

Inheritance planning has most potential in Germany while foreign exchange is least attractive

Inheritance planning and alternative investments have the most business potential in Germany

There is only moderate interest in life insurance, deposits and savings products, payment mechanisms and foreign exchange

German wealth managers will focus on alternative investments, financial planning and traditional investments in coming years

Developing new distribution channels/approaches is not on top of the strategic agenda of German wealth managers

German wealth managers seek to improve CRM and support systems

Accountants and lawyers are important distribution channels in German wealth management

Financial advisors remain important distribution channels for wealth managers

More German wealth managers should be focusing on developing new distribution approaches/channels

Supplementary data

APPENDIX

Definitions

Aggregate

CAGR

High net worth (HNW)

Liquid assets

Liquid asset bands

Mass affluent

Research methodology

Wealth Management Market Leaders Survey 2006

Global Wealth Model Methodology

The UK sub model

European sub model

Forecasting methodology

Continuous refinement to the understanding of liquid wealth distribution

Datamonitor's wealth numbers compared with other wealth numbers

Further reading

Global Wealth Management SPP

Interactive Databases

Market Reports

Strategic Insight Reports

Wealth Management Competitor Tracker

Datamonitor Asia Pacific Wealth Management SPP

SPP writing team

List of Tables

Table 1: Number of German MA and HNW individuals by liquid asset band, 000s, 2001-2005

Table 2: German MA and HNW aggregate onshore liquid assets by liquid asset band, EURbn, 2001-2005

Table 3: Forecasted number of German MA and HNW individuals by liquid asset band, 000s, 2006-2010

Table 4: Forecasted German MA and HNW aggregate onshore liquid assets by liquid asset band, EURbn, 2006-2010

Table 5: What client types offer the greatest potential in your country in the next five years?

Table 6: In your opinion, what proportion of liquid assets do investors in your country put offshore?

Table 7: What is the main motivation for investors in your country to put money offshore?

Table 8: In your opinion, where do investors from your country prefer to put their offshore money?

Table 9: In your experience, what are the key influences that determine a client's choice of wealth management service?

Table 10: In your experience, what are the most effective customer acquisition techniques in your market?

Table 11: To what extent do you agree with the following?

Table 12: What are your clients most interested today?

Table 13: What is the best way to retain clients?

Table 14: In your experience, what are the most likely reasons for clients to leave a wealth management service?

Table 15: Which statement do you most agree with?

Table 16: Approximately what share of your clients' wallet do you think you have on average?

Table 17: How long has your client base, on average, been with you?

Table 18: Number of German banks and branch offices, 1995-2004

Table 19: German wealth managers: recent changes of ownership

Table 20: In your opinion, who are the biggest wealth managers in Germany? (open-end)

Table 21: What is your minimum asset threshold for new clients?

Table 22: What are the most pressing concerns for your business at present?

Table 23: How much of a threat to your wealth business are the following competitors today?

Table 24: How much of a threat to your wealth business will the following competitors be in three years?

Table 25: What will most determine revenue growth in the German market in the next two years?

Table 26: What is the most effective means of increasing share of wallet?

Table 27: What strategic initiatives are you planning or implementing in the next year?

Table 28: What are your main areas of concern in controlling your cost base?

Table 29: Which best applies to your company's relationship management?

Table 30: Do you have dedicated teams set up in Germany to attract and manage any of the following customer groups?

Table 31: What quantitative measures are used to assess your relationship managers?

Table 32: Where will you get your staff from in the next three years?

Table 33: Please rate the following product areas in terms of their business potential among wealthy clients in your market during the next two years

Table 34: From the product areas just mentioned, which three will your company focus most resources on in the next two years?

Table 35: What strategic initiatives are you planning or implementing in the next year?

Table 36: How important are the following distribution channels for your wealth business today?

Table 37: To what extent do you agree with the following?

List of Figures

Figure 1: The number of German mass affluent and HNW individuals has grown

Figure 2: Liquid wealth of German mass affluent and HNW individuals amounted to more than EUR1.6trn in 2005

Figure 3: The German mass affluent and HNW market will reach EUR2trn by 2010, held by more than 10.5m people

Figure 4: Datamonitor forecasts steady growth in all asset bands for the German market in the next 5 years

Figure 5: Inheritors offer the greatest potential in the German market in the next five years

Figure 6: German investors put up to 30% of their liquid assets offshore

Figure 7: Tax avoidance is the main motivation for German investors to put their money offshore

Figure 8: Switzerland is the number one offshore destination for German investors

Figure 9: Personal relationship is the most important determinant of a client's choice of wealth management service

Figure 10: Word of mouth remains most effective for client acquisition

Figure 11: Clients are demanding to know more about the management of their portfolio now than two years ago

Figure 12: Clients are most interested in protecting their asset base

Figure 13: The best ways to retain clients are talking to them regularly and quick problem solving

Figure 14: German wealth managers identify several reasons why clients are leaving a wealth management service

Figure 15: The majority of wealthy individuals in Germany has more than two wealth managers

Figure 16: German wealth managers should concentrate on gaining a bigger share of clients' wallets

Figure 17: German wealth managers tend to have relatively long-term relationships with their clients

Figure 18: Deutsche Bank, UBS and Sal. Oppenheim are perceived to be the biggest wealth managers in Germany

Figure 19: The German wealth management market is characterized by a diverse mix of domestic providers

Figure 20: The elite of German wealth managers according to German newspaper Welt am Sonntag, 2006

Figure 21: Many German wealth managers target clients with EUR250K+

Figure 22: German wealth managers are most concerned about finding and attracting quality staff

Figure 23: Large wealth managers are perceived as strongest competitors

Figure 24: The main competitors will remain the same in the next 3 years

Figure 25: Obtaining new clients and increasing share of wallet will most determine revenue growth in Germany in the next tow years

Figure 26: Increasing face to face contact is the most effective way of increasing share of wallet

Figure 27: Improving CRM and support systems is the key initiative ahead

Figure 28: IT and CRM system costs are the main concern in controlling cost bases

Figure 29: German wealth managers tend to provide their clients more than one contact

Figure 30: 40% of surveyed wealth managers stated that they do not have dedicated teams set up to target and attract specific customers

Figure 31: Most relationship managers in Germany are assessed on revenue, profit and number of clients

Figure 32: New relationship managers will come mostly by hiring them from competitors

Figure 33: The biggest business potential lies in inheritance planning and alternative investments

Figure 34: Deposits and savings products, payment mechanisms and foreign exchange are perceived to have less business potential

Figure 35: German wealth managers will focus on alternative investments

Figure 36: German wealth managers seek to improve CRM and support systems in the next year

Figure 37: Accountants and lawyers are seen as important distribution channels for German wealth managers

Figure 38: German wealth managers will increasingly develop services to manage financial advisors as part of their client base