France – The Future of HNWIs to 2015: The Wealth Sector from Ile de France to the French Riviera
France is the fifth-largest economy in the world and second-largest in Europe. The French economy is relatively diversified with large manufacturing, fast-moving consumer goods, and retail and fashion sectors. It is home to 38 of the world’s largest 500 companies by enterprise value, including market leaders such as AXA, Airbus, Air France, L’Oreal, Areva, Veolia, Michelin, JCDecaux, BNP Paribas and Carrefour. The country’s total wealth is the fourth-highest in the world behind the US, Japan and China and perhaps more importantly, the highest in Europe, topping both Germany and the UK.
Slow economic rebound from the financial crisis compounded by the debt crisis
As of 2011, there were over 555,000 high net worth individuals (HNWIs) in France, accounting for roughly 16% of France’s total wealth. This is a review period (2007 to 2011) decline of 12.8% and consequently HNWI wealth decreased by 16.4%. The wealth of French HNWIs was negatively influenced by a large decline in the French stock markets in 2008 and slow rates of economic recovery since the global financial crisis. Growth in HNWI wealth and volumes over the forecast period (2012–2016) will be moderate as projections are constrained by ongoing concern of a double dip recession in the European markets. Over the forecast period, the total wealth of French HNWIs is forecast to grow by 12.2% at a CAGR of 2.9%. HNWI volumes will record a smaller percentage increase of 9.1% at a CAGR of 2.2% to reach just over 606,000 individuals by 2015. Notably, this is below the level of 637,000 reached at the end of 2007.
Asset classes to shift focus towards alternative and fixed income offerings
In 2011, real estate was the largest asset class for HNWIs in France, accounting for 24% of total HNWI assets, followed by fixed income, which represented 22%, business interests which comprised 20%, equities which accounted for 19.8%, cash which represented 7.5% and alternatives which equaled 6.5%. Fixed income and cash holdings were the best-performing asset classes over the review period, driven by their comparative stability during and after the global financial crisis. Against international norms, the share of HNWIs assets held in real estate also increased substantially over the review period, as the French real estate market outperformed global markets. Over the forecast period, WealthInsight expects a movement away from real estate towards alternative and fixed income products as local and international interest rates begin to rise.
Private Banking at the core of wealth management market
There are 51 private banks and 562 wealth managers currently operating in France. French HNWIs account for 31% of the total assets under management (AuM), meaning that 22% of the total French HNWI wealth is managed by the wealth management sector which is centered around Paris., The Ile-de-France region accounts for 83% of wealth management offices, followed by Rhone Alpes which represents 5.5%. In 2011, the French wealth management industry managed funds for just over 182,000 individuals worldwide. Underscoring their importance to the sector, ultra high net worth individuals (UHNWIs) accounted for 71% of AuM despite accounting for only 4% of the client base, which is representative of 7,288 UHNWIs globally.
WealthInsight provides detailed data and insightful analysis on the global wealth sector. With decades of experience providing business information, we help organizations in the wealth industry make informed decisions, position themselves more effectively and uncover and capitalize on opportunities to win new business.
At the core of WealthInsight is our proprietary HNWI database of the world’s wealthiest individuals. Your business can utilise this database to identify which wealthy individuals to reach out to. You can use our reports and briefings to analyse where the greatest opportunities lie.