0 8 min 4 mths

Analysis of wealth management market, with a focus on HNW segment’s demographics, investment preferences and services demand. Examine allocation of HNW Investors portfolios into different asset classes and gives insights of product and services demand among Canadian HNW investors.

The HNW market is dominated by family business owners and expat clients drawn from Asia Pacific and The US. These owners prefer discretionary asset management and since they are very cautious investors they favor classic investments such as equities and bonds more than property and commodity. The majority of HNW individuals have accumulated their wealth through first-generation entrepreneurship and family business. Expats, particularly from China and The US, represent large segments in the HNW market.

HNW investors heavily favor equities, followed by fixed income security of bonds. Such investors are preoccupied with tax issues since they lie in highest income brackets in Canada. Thus, their portfolio construction takes into account such investment that can provide them with maximum yields and ensure minimum tax payments. Wealthy Canadians prefer dividend stocks since these have lower tax payments associated with them. Many recent trends observed show that that real estate is emerging as largest share of an average HNW individual’s portfolio followed by followed by public and private equities.

North America has highest population of HNW investors and highest amount of HNWI wealth in the world. Canada is contributing significantly in to HNWI wealth in North America. Number of Canadian millionaires are increasing at a steady pace. Further, Equity market has recovered beautifully in 2016 sending positive signals to the HNW investors. This is aiding in expansion of HNW market of Canada preventing outflow of Canadian wealth out of Canada to other nations. According to Royal Bank of Canada HNWI are focusing on growth of their wealth which is leading to expansion in HNW market in Canada. There is no sign of abating in the market.

However, many HNW investors continue to predict signs of trouble and weakness in Canadian economy and this is the reason that they are cautious about placing too much money in Canadian economy. The reason for the trouble is excessive supply of real estate in Canadian economy that might lead to recession, uncertainty associated with developed nations and many other factors like contracting demand, economic contraction, etc.

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