In this Strategy Brief we suggest that lower value portfolios represent a substantial opportunity to the European wealth management industry, and that flexibility on product entry points may be a pragmatic solution to concerns about industry growth over the next 2‐3 years. We conclude that individuals in the $1m‐$2m investable asset band represent the largest new profit pool in the European HNW sector.
Across Europe the largest new profit pool is with individuals holding $1m ‐ $2m in investable assets. The profit potential in this sector has been resilient during the economic downturn, while the profit potential of the $2m+ segment has fallen over the past 18 months.
The drivers of the profit potential in the $1m ‐ $2m sector are:
• The number of individuals not already wealth management clients but who have expressed an interest in the service.
• The relatively high level of first year and annual fees and relative price insensitivity
• The long tenure of clients in this segment and high potential “share of wallet”
• The relatively low average cost of maintaining the client relationship.
• Growth in the next 2‐3 years is likely to be higher in this sector than in the $2m+ sector.
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