Switzerland – The Future of HNWIs to 2016: Opportunities for Wealth Management Professionals
Switzerland’s policy of long-term monetary security and political stability has made it a safe haven for investors and it is currently regarded as one of the world’s most stable economies. Switzerland is also an unusually wealthy country for its size. It has the highest per capita wealth in the world and the third-highest per capita GDP in the world, after Norway and Luxemburg.
HNWIs registered a slow recovery from the global economic crisis and a moderate growth forecast
There were just over 297,900 HNWIs in Switzerland in 2011, with a combined wealth of US approximately 60% of Switzerland’s total wealth. The total number of HNWIs in Switzerland declined by 7.2% during the review period (2007–2011), while the HNWI wealth fell by 7.8%. The wealth of HNWIs in Switzerland was negatively affected by a large decline in local and international stock markets in 2008, and by the country’s slow recovery from the global economic crisis. Growth in HNWI wealth and volume will be moderate over the forecast period, as the projections are constrained by the ongoing concern of a double dip recession in European countries. However, the total wealth of Switzerland’s HNWIs is projected to grow by 19.4% over the forecast period, to over US$1.5 trillion in 2016. Meanwhile, HNWI volumes are anticipated to increase by 16.8%, to over 340,000 individuals in 2016.
HNWIs will move investments away from real estate assets in preference of alternatives and equities asset classes
Equities was the largest asset class for HNWIs in Switzerland during the review period. In 2011, equities accounted for 31.5% of total HNWI assets, while real estate accounted for 22.3%, business interests accounted for 18.3%, fixed income accounted for 15.8%, alternatives accounted for 6.9% and cash accounted for 5.2%. The Swiss HNWI equity allocations of 31.5% are significantly higher than the global average of 20–25%. The real estate asset class recorded the strongest growth during the review period, which was driven by the rapidly developing local residential property market. However, WealthInsight expects there will be a movement away from investments in real estate assets towards alternatives and equities asset classes over the forecast period
Well-developed Swiss wealth management market
The global private banking business had assets under management (AuM) of over US$16 trillion in 2011. The Swiss wealth management market accounts for a high share of 17% of this, giving it the second-largest amount of AuM after the United States. Offshore HNWIs account for the majority, or over US$2 trillion, of Swiss AuM, while the rest is sourced from local HNWIs. The 20 leading Swiss private banks account for US$3.6 trillion of the global AuM and over US$660 billion of the Swiss AuM. UBS is the largest Swiss private bank by global AuM, while Credit Suisse is the largest by Swiss AuM. HSBC is the largest foreign bank operating in Switzerland in terms of Swiss AuM, although Credit Agricole, Coutts, BNP and Deutsche also have a strong presence. Among the leading Swiss cities for UHNWIs, Zug and Lausanne have the lowest number of wealth management companies per UHNWI and they may therefore offer the greatest potential for the wealth management market. However, Bern and Basel are relatively saturated with a large number of wealth management companies per UHNWI