BRICS Wealth Book 2012 China The Future of HNWIs to 2016: Opportunities for Wealth Managers and Private Banks Publication date: September 2012 Report WealthInsight. code: WI0063MR This report is a licensed product and is not to be photocopied.
TABLE OF CONTENTS TABLE OF CONTENTS 1 Introduction... 7 1.1 What is this Report About?... 7 1.2 Definitions... 7 2 Executive Summary... 10 3 Benchmarking BRICS Wealth in Context... 12 3.1 Distribution of Wealth... 12 3.2 HNWI Volume and Wealth Trends... 13 4 Findings from the WealthInsight HNWI Database... 15 4.1 BRICS by HNWIs... 15 4.2 BRICS by UHNWIs... 17 4.3 Top Cities for UHNWIs in 2011... 19 4.4 Fastest-Growing Cities for UHNWIs over the Review Period... 20 4.5 Fastest-Growing Cities for UHNWIs over the Forecast Period... 21 4.6 Top Cities for UHNWIs in 2016... 22 4.7 India... 23 4.7.1 Indian UHNWIs breakdown by city... 23 4.7.2 Indian city performance... 24 4.7.3 Indian city forecasts... 27 4.8 China... 29 4.8.1 Chinese UHNWIs breakdown by region... 29 4.8.2 Chinese city performance... 32 4.8.3 Chinese city forecasts... 34 4.9 Brazil... 37 4.9.1 Brazil s UHNWIs breakdown by city... 37 4.9.2 Brazil s UHNWIs city performance... 38 4.9.3 Brazil s UHNWIs city forecasts... 40 4.10 Russia... 42 4.10.1 Russia s UHNWIs breakdown by city... 42 4.10.2 Russia s UHNWIs city performance... 44 4.10.3 Russia s UHNWIs population densities... 46 4.10.4 Russia s UHNWIs city forecasts... 47 4.11 South Africa... 49 4.11.1 South Africa s UHNWIs breakdown by city... 49 4.11.2 South Africa s UHNWIs city performance... 50 4.11.3 South Africa s UHNWIs population densities... 51 4.11.4 South Africa s UHNWIs city forecasts... 52 4.11.5 South Africa s UHNWIs Johannesburg... 53 4.11.6 South Africa s UHNWIs Cape Town... 54 4.11.7 South Africa s UHNWIs Durban and Pretoria... 55 WealthInsight. This report is a licensed product and is not to be photocopied. Page 1
TABLE OF CONTENTS 4.11.8 South Africa s UHNWIs smaller cities... 56 5 Analysis of HNWI Investments... 57 5.1 Asset Allocation... 57 5.1.1 India... 59 5.1.2 China... 60 5.1.3 Brazil... 61 5.1.4 Russia... 62 5.1.5 South Africa... 63 5.2 Global Trends in Art, Wine and Wheels... 64 5.3 Global Trends in Prime Property... 66 6 The Wealth Sector in the BRICS... 67 6.1 India... 68 6.1.1 Wealth managers... 70 6.1.2 Private banks... 70 6.1.3 Foreign banks and MNCs... 71 6.1.4 Joint ventures... 71 6.1.5 Domestic providers... 71 6.1.6 Leading companies in the wealth management industry... 72 6.1.7 Family offices... 74 6.1.8 Multi-family offices... 74 6.1.9 Single-family offices... 75 6.2 China... 76 6.2.1 A paradigm shift... 76 6.2.2 Competitive structure... 77 6.2.3 Wealth managers... 79 6.2.4 Private banks... 79 6.2.5 Foreign banks and MNCs... 80 6.2.6 Joint ventures... 80 6.2.7 Domestic providers... 80 6.2.8 Trusts... 81 6.2.9 Leading companies in the wealth management and private banking industry... 82 6.2.10 Family offices... 84 6.2.11 Multi-family offices... 84 6.2.12 Single-family offices... 84 6.2.13 Offshore wealth management and private banking industry... 85 6.3 Brazil... 87 6.3.1 Competitive Landscape... 87 6.3.2 Private banks... 87 6.3.3 Wealth managers... 89 6.3.4 Wealth management in each city... 90 6.3.5 Family offices... 91 6.4 Russia... 93 6.4.1 Private Banks... 93 WealthInsight. This report is a licensed product and is not to be photocopied. Page 2
TABLE OF CONTENTS 6.4.2 Wealth managers... 95 6.4.3 Family offices... 95 6.4.4 Wealth management in each city... 97 6.5 South Africa... 98 6.5.1 Competitive landscape... 99 6.5.2 Private banks... 99 6.5.3 Wealth managers... 100 6.5.4 Family offices... 102 6.5.5 Wealth advisors... 103 6.5.6 Wealth management in each city... 104 6.5.7 Fund management in South Africa... 105 7 About WealthInsight... 106 WealthInsight. This report is a licensed product and is not to be photocopied. Page 3
TABLE OF CONTENTS LIST OF TABLES Table 1: HNWI Wealth Band and Group Definitions... 8 Table 2: BRICS: HNWIs Number of HNWIs, 2007 2016... 16 Table 3: BRICS: UHNWIs Number of UHNWIs, 2007 2016... 18 Table 4: BRICS: UHNWIs Top 30 cities for UHNWIs, 2011... 19 Table 5: BRICS: UHNWIs Top 20 Fastest-Growing Cities for UHNWIs, 2007 2011... 20 Table 6: BRICS: UHNWIs Top 20 Fastest-Growing Cities for UHNWIs, 2011 2016... 21 Table 7: BRICS: UHNWIs Top 30 cities for UHNWIs, 2016... 22 Table 8: India: UHNWIs Top Cities for UHNWIs, 2011... 24 Table 9: India: UHNWIs Major Cities, 2007 2011... 25 Table 10: India: UHNWIs Emerging Cities, 2007 2011... 27 Table 11: India: UHNWIs WealthInsight city ratings and forecasts to 2016... 28 Table 12: China: UHNWIs Top Cities for UHNWIs, 2011... 31 Table 13: China: UHNWIs Major Cities, 2007 2011... 33 Table 14: China: UHNWIs WealthInsight City Ratings and Forecasts to 2016... 34 Table 15: Brazil: UHNWIs Top Brazilian Cities for UHNWIs, 2011... 37 Table 16: Brazil: UHNWIs UHNWI Population Density in Major Cities, 2011... 39 Table 17: Brazil: UHNWIs Growth Rates for Top 14 Cities, 2007 2016... 41 Table 18: Russia: UHNWIs Top Cities, 2011... 42 Table 19: Russia: UHNWIs Smaller Cities, 2011... 43 Table 20: Russia: UHNWI Population Density in Major Cities, 2011... 46 Table 21: Russia: UHNWI Growth Rates for Top Cities, 2007 2016... 47 Table 22: South Africa: UHNWIs Top South African Cities for UHNWIs, 2011... 49 Table 23: South Africa: UHNWIs UHNWI Population Density in Major Cities, 2011... 51 Table 24: South Africa: UHNWIs UHNWI Growth Rates for Top Cities, 2007 2016... 52 Table 25: South Africa: UHNWIs Johannesburg, UHNWIs by Suburb, 2011... 53 Table 26: South Africa: UHNWIs Cape Town, UHNWIs by Suburb, 2011... 54 Table 27: South Africa: UHNWIs Durban, UHNWIs by Suburb, 2011... 55 Table 28: South Africa: UHNWIs Pretoria, UHNWIs by Suburb, 2011... 55 Table 29: South Africa: UHNWIs Other Hotspots, 2011... 56 Table 30: South Africa: UHNWIs Large Cities with Low Numbers of UHNWIs, 2011... 56 Table 31: BRICS: HNWIs Asset Class Composition, 2011... 58 Table 32: Global: Trends in Art, Wine and Wheels, 2007 2011... 64 Table 33: Global: HNWIs Prime International Cities, 2007 2011... 66 Table 34: India: Wealth Management Industry Main Companies Operating in India, 2011... 73 Table 35: India: Wealth Management Industry Major SFOs and MFOs Operating in India, 2011... 74 Table 36: China: Major Companies in China s Wealth Management Industry, 2011... 83 Table 37: Brazil: Largest Private Banks in Brazil, 2011... 88 Table 38: Brazil: Emerging Private Banks in Brazil, 2011... 88 Table 39: Brazil: Wealth Manager Asset Allocation in Brazil, 2011... 89 Table 40: Brazil: Wealth Management Companies Per City, 2011... 90 Table 41: Brazil: Family Offices in Brazil, 2011... 92 Table 42: Russia: The Largest Private Banks, 2011... 94 WealthInsight. This report is a licensed product and is not to be photocopied. Page 4
TABLE OF CONTENTS Table 43: Russia: Other Private Banks, 2011... 94 Table 44: Russia: Local Wealth Managers, 2011... 95 Table 45: Russia: Multi-Family Offices, 2011... 96 Table 46: Russia: Wealth Management Companies Per City, 2011... 97 Table 47: South Africa: The Largest Private Banks in South Africa, 2011... 100 Table 48: South Africa: Local Wealth Managers, 2011... 100 Table 49: South Africa: Foreign Wealth Managers Operating in South Africa, 2011... 101 Table 50: South Africa: Wealth Advisors in South Africa, 2011... 103 Table 51: South Africa: Wealth Management Companies Per City, 2011... 104 Table 52: South Africa: The largest fund managers in South Africa, 2010... 105 WealthInsight. This report is a licensed product and is not to be photocopied. Page 5
TABLE OF CONTENTS LIST OF FIGURES Figure 1: HNWI Wealth Band Definitions... 9 Figure 2: Global: Asset Price Performance, 2007 2011... 12 Figure 3: BRICS, Local Currencies versus US Dollar, 2007 2011... 13 Figure 4: BRICS: HNWI Performance (US$ Billion), 2007 2016... 14 Figure 5: BRICS: HNWIs Number of HNWIs, 2007 2011... 15 Figure 6: BRICS: HNWIs Number of HNWIs, 2011 2016... 16 Figure 7: BRICS: UHNWIs Number of UHNWIs, 2007 2011... 17 Figure 8: BRICS: UHNWIs Number of UHNWIs, 2011 2016... 18 Figure 9: India: UHNWIs Regional Distribution by City, 2011... 23 Figure 10: India: UHNWIs City Performance, 2011... 25 Figure 11: India: UHNWIs City Performance, 2011... 26 Figure 12: China: UHNWIs Regional Distribution by Region, 2011... 29 Figure 13: China: UHNWIs Regional Distribution, 2011... 30 Figure 14: China: UHNWIs City Comparison, 2007 2011... 32 Figure 15: Brazil: UHNWIs City Performance, 2007 2011... 38 Figure 16: Brazil: UHNWIs Regional Forecasts, 2011 2016... 40 Figure 17: Russia: UHNWIs City Performance, 2007 2011... 44 Figure 18: Russia: UHNWIs City numbers, 2007 2011... 45 Figure 19: Russia: UHNWIs Regional Forecasts, 2011 2016... 47 Figure 20: Russia: UHNWIs City Numbers, 2011 2016... 48 Figure 21: South Africa: UHNWIs City Performance, 2007 2011... 50 Figure 22: South Africa: UHNWIs Regional Forecasts, 2011 2016... 52 Figure 23: BRICS: HNWIs Asset Class Composition, 2011... 57 Figure 24: India: HNWIs Asset Class Composition, 2007 2016... 59 Figure 25: China: HNWIs Asset Class Composition, 2007 2016... 60 Figure 26: Brazil: HNWIs Asset Class Composition, 2007 2016... 61 Figure 27: Russia: HNWIs Asset Class Composition, 2007 2016... 62 Figure 28: South Africa: HNWIs Asset Class Composition, 2007 2016... 63 Figure 29: Global: Trends in Art, Wine and Wheels, 2007 2011... 64 Figure 30: BRICS: Wealth Management Industry Maturity Level Of Players... 67 Figure 31: India: Wealth Management Industry Structure... 69 Figure 32: China: Offshore and Onshore Wealth Management Segments in China... 86 WealthInsight. This report is a licensed product and is not to be photocopied. Page 6
INTRODUCTION 1 Introduction 1.1 What is this Report About? This report is the result of WealthInsight s extensive research covering the high net worth individual (HNWI) populations and wealth management market in Brazil, Russia, India, China and South Africa (the BRICS). It provides a market overview and forecast of the HNWI population and HNWI wealth across asset classes. By utilizing the WealthInsight HNWI Database, it also provides information on HNWIs across demographic factors. This report categorizes the HNWI population across five wealth bands that are defined in table one. To provide a comprehensive analysis of HNWI wealth, wealth in this report is defined as the net value of assets, which includes both financial holdings and tangible assets. Financial holdings and tangible assets include alternative assets, real estate (excluding the primary residence), cash and deposits, fixed-income, equities, and business interests. 1.2 Definitions Wealth management is defined as the provision of banking services to wealthy individuals and their families. It generally involves the management of trusts, inheritance and the allocation of client funds. For the purposes of this report, the phrase coverage period refers to the period of 2007 2016, while the review period relates to the years 2007 2011 and the forecast period relates to the years 2011 2016. A private bank is defined as a division of the banking group that provides wealth management services. A wealth manager is defined as a specialist wealth management service provider. A family office is defined as a wealth management company that focuses on a single or small group of selected HNW clients. WealthInsight. This report is a licensed product and is not to be photocopied. Page 7
INTRODUCTION Table 1: HNWI Wealth Band and Group Definitions Wealth Band Billionaires Centimillionaires Affluent Millionaires Mid-Tier Millionaires Lower-Tier Millionaires Wealth Group HNWIs UHNWIs Core HNWIs Definition Billionaires are those HNWIs with wealth of US$1 billion or more, including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary residence), alternative assets and business interests. Centimillionaires are those HNWIs with wealth of between US$100 million and less than US$1 billion, including equities, bonds, cash and deposits, fixed-income products real estate (excluding primary residence), alternative assets and business interests. Affluent millionaires are those HNWIs with wealth of between US$30 million and less than US$100 million, including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary residence), alternative assets and business interests. Mid-tier millionaires are those HNWIs with wealth of between US$5 million and less than US$30 million, including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary residence), alternative assets and business interests. Lower-tier millionaires are those HNWIs with wealth of between US$1 million and less than US$5 million, including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary residence), alternative assets and business interests. Definition The high-net-worth individuals (HNWIs) wealth group comprises all wealth bands. It represents those individuals with wealth of US$1 million or more, including equities, bonds, cash and deposits, fixedincome products, real estate (excluding primary residence), alternative assets and business interests. The ultra-high-net-worth individuals (UHNWIs) wealth group comprises the billionaire, centimillionaire and affluent millionaire wealth bands. It represents those individuals with wealth of US$30 million or more, including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary residence), alternative assets and business interests. The core HNWIs group comprises the mid-tier millionaire and lower-tier millionaire wealth bands. It represents those individuals with wealth of between US$1 million and less than US$30 million, including equities, bonds, cash and deposits, fixed-income products, real estate (excluding primary residence), alternative assets and business interests. Source: WealthInsight WealthInsight WealthInsight. This report is a licensed product and is not to be photocopied. Page 8
INTRODUCTION Figure 1: HNWI Wealth Band Definitions Source: WealthInsight WealthInsight WealthInsight. This report is a licensed product and is not to be photocopied. Page 9
ABOUT WEALTHINSIGHT 2 About WealthInsight WealthInsight provides detailed data and insightful analysis on the world's HNWI and wealth sector. With decades of experience providing business information, WealthInsight helps organizations to make informed decisions and win new business. At WealthInsight's core is our proprietary HNWI Database of the world's wealthiest individuals. Around this database we have built a number of valuable research-based products and services that make WealthInsight much more than just a rich contact list. We work with and provide solutions for: Wealth managers Private banks Family offices Technology providers Professional services consultants, accountants, lawyers and real estate professionals Fund managers, hedge fund managers, asset managers, venture capitalists Non-profit and educational institutions WealthInsight s corporate headquarters are located in London, with offices in New York, San Francisco, Sydney, Seoul and Hong Kong. For more information on WealthInsight please visit www.wealthinsight.com Reports WealthInsight publishes high-quality research reports focused on the wealth sector. The reports provide comprehensive analysis of countries, regions and special topics. With the HNWI Database as the foundation for its primary research and analysis, WealthInsight is able to obtain an unsurpassed level of granularity, insight and authority on the HNWI universe in each of the countries and regions covered. All reports are available as a part of the WealthInsight Intelligence Centre. Reports can also be purchased on a subscription or one-off basis. Every WealthInsight report is uniquely formulated for the region, country or topic covered. Key features of the reports include: Market sizing Forecasting Benchmarking HNWI asset allocation Behavioral mapping Family offices WealthInsight. This report is a licensed product and is not to be photocopied. Page 10
ABOUT WEALTHINSIGHT Methodology WealthInsight s teams of in-house analysts devise and collect data over a historical period of five years and develop forecasts for a five-year forecast period. All WealthInsight wealth reports are rigorously sourced and created according to a comprehensive methodological process: Internal audit Review of in-house databases to gather existing data: Historic market databases and reports HNWI Database Wealth management, private bank and family office database Financial deals and news archive Secondary research Collection of the latest market-specific data from a wide variety of industry sources: Government statistics Industry associations Company filings Broker reports International organizations Primary research Review of the latest wealth management and private banking industry trends Surveys using panels compiled from across the wealth sector: Wealth management and private banking professionals Financial services experts HNWIs Expert opinion Collation of opinion taken from WealthInsight interviews of leading industry experts Analysis of third-party opinion and forecasts: Broker reports Industry associations Wealth management and private banking media Official government sources Leading academic research and commentary WealthInsight. This report is a licensed product and is not to be photocopied. Page 11
ABOUT WEALTHINSIGHT Data consolidation and verification Consolidation of data and opinion to create historical datasets Creation of models to benchmark data across sectors, asset classes and geographies Market forecasts Feed of forecast data into market models: Macroeconomic indicators Industry-specific drivers Analysis of the WealthInsight HNWI Database and Wealth sector company databases to identify key trends: Latest wealth trends Key drivers of the wealth management industry Report writing Analysis of market data Discussion of company and industry trends and issues Integration of survey results Annual review of financial deals and wealth management trends Standardization of market definitions using recognized industry classifications Quality control Peer review Senior-level QC Random spot checks on data integrity Benchmark checks across databases Market data cross-checked for consistency with accumulated data from: Internal databases Company filings WealthInsight. This report is a licensed product and is not to be photocopied. Page 12
ABOUT WEALTHINSIGHT Contributors to this report: Andrew Amoils Senior Analyst & Head of Reports Team, WealthInsight andrew.amoils@wealthinsight.com +44 (0)20 7406 6564 Shekhar Tripathi Senior Analyst, WealthInsight Sunil Agarwal Analyst, WealthInsight Disclaimer All Rights Reserved. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that WealthInsight delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such WealthInsight can accept no liability whatever for actions taken based on any information provided herein. WealthInsight. This report is a licensed product and is not to be photocopied. Page 13
ABOUT WEALTHINSIGHT WealthInsight. This report is a licensed product and is not to be photocopied. Page 14