PBI: What impact is
eurozone financial uncertainty having on wealth management in
European Union (EU) emerging markets?
Most of the wealthy clients in
emerging EU countries suffered moderately in the crisis compared to
mature capital markets. This is because emerging wealthy in these
markets are more conservative in their investment behaviour. They
still tend to secure holdings such as liquid assets, bonds and
investments. The interest in gold as an investment has also risen
significantly in emerging EU wealth markets. The financial
uncertainty has affirmed for wealthy clients from the emerging EU
regions that their cautious investment approach has been the right
one and has reinforced their current investment preference to
remain with less-risky asset classes.
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Increased demand for higher returns
with almost no risk is coming to an end. We are now seeing more
product developments which provide guaranteed returns or a 100%
capital guarantee.
PBI: Are ultra high
net worth clients (UHNW) looking to move their funds out of riskier
markets and into more established wealth markets?
This is not happening in emerging
EU wealth markets, which mostly describes UHNW in Central and
Eastern Europe countries that have recently joined the EU.
Primarily all of these countries are members of the EU now so we
are not seeing a trend for booking centres within the EU towards
more mature markets like Germany or Luxembourg.
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By GlobalDataHowever, there is still a
significant proportion of offshore wealth, held in Switzerland or
other regions outside the EU, which is not likely to decline
heavily within the next years. Concerning currency management, we
see more active clients in emerging EU wealth markets now seeking
advice on whether to allocate wealth in euro, local currencies or
in US dollars.
PBI: Where are the
growth opportunities in emerging EU wealth markets
now?
There is a growth story here. We
see higher economic growth rates and the creation of
entrepreneurial wealth is higher relative to mature markets.
However, the baseline is still
quite small in comparison to the large European mature markets.
Additionally, wealth creation in emerging EU wealth markets has
more and more to do with the affluent client segment, which is not
primarily driven by entrepreneurial wealth.
Wealth succession is also beginning
to become an issue; the extremely positive development of real
estate prices has also created significantly more wealth within the
affluent wealth band.
Additionally, product developments
which meet more conservative investment behaviour of their clients,
such as guaranteed products, should have additional growth momentum
for wealth managers. There might be room too for client-orientated
product providers.
PBI: What are the
evolving trends in emerging EU wealth markets? How are things
changing?
Emerging EU wealth markets client
behaviour and investment style will become more and more aligned
with the more mature markets in Europe.
This means that holistic wealth
management services comprising issues of financial planning or
succession planning will gain momentum. Thus, providers of wealth
management services which are able to adapt to a more holistic
advisory services scheme, including real estate management and
alternative investments, will attract more future market share.
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This is an edited extract from
a contribution by Gregor Broschinski, a member of the board at Sal
Oppenheim, Germany, and Jozef Komornik, a professor in management
at Comenius University Bratislava, Slovakia
