This report focuses on the onshore liquid wealth of affluent individuals and the liquid assets they hold, sizing, segmenting and forecasting the affluent population across 10 liquid asset bands. It also presents detailed HNW demographic and decision trigger analysis, and strategies to drive revenue growth based on large scale survey of the main players.

• HNW demographic and attitudinal attributes based on our Wealth Management Market Leaders Survey 2008
• Sizes, segments and forecasts the number of affluent invididuals across 10 liquid asset bands from EUR50k
• Extensive primary research from 20 wealth management companies highlights thier strategies for revenue growth, acquiring and keeping clients
• Aggregated data covers onshore liquid assets including cash and deposits, mutual funds, direct investment in equities and direct investment in bonds.

The average French HNW has made his wealth from business ownership or entrepreneurship. Being more risk averse than his European counterparts, the French HNW invest substantially in real estate and cash or deposits. Protecting his current asset base is his top priority and retirement planning, and financing needs are key concerns.

The biggest challenge facing wealth managers in France is going to be delivering adequate performance in today's declining market, particularly since it is the single biggest reason that French HNWs leave their wealth manager. Although these clients are fairly loyal, their risk aversion may make them less tolerant of underperforming portfolios.

In 2007, the French taxation landscape substantially changed with the implementation of two laws: the "Paquet Fiscal" and the "Bouclier Fiscal". Aimed at stimulating the economy, the new laws promote employment and purchasing power and also benefit French HNWs.

• Understand the HNW population's investments by sector and geography, appetite for risk, and reasons for choosing/leaving their wealth service
• Assess market attractiveness by reviewing size and growth forecasts for the potential wealthy client base through 2012
• Assess the threats and opportunities for wealth managers by understanding how peers are planning to grow revenues, acquire and keep clients

Overview
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Catalyst
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Summary
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Methodology
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Executive Summary
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New tax regulations offer opportunities to both French HNWs and wealth managers
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Conservative investments in equities, buoyant bond yields and decent interest rates are driving the growth in France's wealthy population
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The French HNW individuals are younger and more entrepreneurial
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Wealth managers in France have strong relationships yet can improve retention rate
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Table of Contents
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Table of tables
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SPECIAL FEATURE: New taxation landscape
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"Paquet fiscal" and "Bouclier Fiscal" New taxation laws to increase French HNWs' wealth, and providing provide opportunities for wealth managers
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The law provides new opportunities for wealth managers to provide tax-efficient investments
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Innovative example: Crédit Agricole Private Equity launches two innovation funds (FCPIs) to reduce wealth tax liability
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Wealth managers should focus resources on inheritance planning, cash management and funds
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FRANCE'S WEALTH
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Positive bond performance, conservative investments in equities and decent interest rates drive the growth in France's wealthy population
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Moderate interest rates, high savings rates and fairly low per capita debt are boosting France's wealth
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Strong risk aversion shields French investors from bearing the brunt of poor returns from equity investments
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Bond yields have added slowly but steadily to French investors' portfolios
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France's property investment sector is slowing but still growing
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French investors put €40 billion into deposits in 2007 to drive wealth accumulation
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The wealthy population in France has grown moderately but began declining in 2007
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French conservative investments habits and strong investment in a buoyant property market have combined to make France Europe's fourth wealthiest market
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Outlook for France's wealthy population in 2008-12
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2008-09 will be characterized by struggling economies worldwide
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Data Tables
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THE FRENCH HIGH NET WORTH INVESTOR
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France HNWs are younger and more "liquid" than their European counterparts
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French HNWs are concentrated in the 31-50 age range, but there are relatively few under 30
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Wealth management service implication: focus on products appropriate to the client's life stage
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Innovative example from Australia: Macquarie Private Wealth focuses its entire strategy around life stages
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In contrast to the European average, French wealth comes less from earned income and more from business entrepreneurship and stock options
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Wealth management service implication: dedicated client management teams for entrepreneurs and inheritors are critical
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Innovative example from Hong Kong: Deutsche Bank Hong Kong hired high caliber staff to meet demand and structure its Private Wealth Management division in the region
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French HNWs are heavily invested in property and deposits
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Wealth management service implication: innovative strategies are critical as much of the client's wealth is in a safe haven
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Innovative examples from Asia: commodities and Sharia funds launched in response to customers' needs
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French HNWs' onshore investments are more Eurocentric than their peers across the rest of Europe
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Wealth management service implication: look for innovative investment opportunities in Europe and the Americas
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Innovative example from the UK: Acorn Capital Partners launches vulture fund for UK distressed residential properties
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French HNWs customers are risk-averse, wanting to protect their asset base, yet open to new investment ideas, and are more financially sophisticated than their European peers
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French HNW investors want to protect their assets
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Innovative example from the US: Mellon Global Alternative Investments focuses on conservative strategies to make gains regardless of market direction
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French HNWs are risk-averse yet open to new investment ideas
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French HNWs are demanding investments in commercial property and infrastructure funds
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Face to face relationship management is more important to French HNWs today, and personal recommendations are critical
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Wealth management service implication: a structured referral program and regular client surveys
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Innovative example from India: Standard Chartered runs both a formal referral process and a client survey
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French HNWs are more 'connected' to their wealth manager and more loyal
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THE FRENCH WEALTH MANAGER'S VIEW
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French wealth managers have strong relationships with existing clients, and will drive revenues by capturing new ones
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French wealth managers have more long-term customer bases than their European peers, and have to share their clients with at least one other bank
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Wealth managers in France are focused on capturing new clients and improving investment performance
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Increasing face to face contact will be the most effective means employed to increase share of wallet
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Inheritance planning, cash management and pensions hold the greatest business potential for French wealth managers in the coming years
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Wealth managers will focus on conservative product areas and products benefiting from the 'Paquet Fiscal'
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The key to attracting clients will be personal recommendation
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French wealth managers can best attract new clients by leveraging personal recommendation
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Investment banks and referrals from existing clients are the best route to new clients
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The key to keeping clients will be regular communication, problem-solving, and not making any errors
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Inadequate investment performance is the most likely reason for French HNWs to leave a wealth manager
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APPENDIX
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The drivers of growth in the wealthy population
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Income growth (combined with inflation, changes in GDP by sector, household savings rates and debt levels)
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Investment returns (market capitalization, interest rates and bond yields)
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The following measures are not, in themselves, drivers of wealthy population growth
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Market capitalization
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GDP
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The following measures are not drivers of wealthy population growth except under very restricted circumstances
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Primary residence value growth
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Inheritance
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Methodology
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Wealth Management Market Leaders Survey 2008
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Global Wealth Model
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The UK sub model
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Global sub model (for all other countries)
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Forecasting methodology
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Continuous refinement to the understanding of liquid wealth distribution
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Datamonitor's wealth numbers compared with other wealth numbers
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Bibliography
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Definitions
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Western Europe
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Further reading
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Ask the analyst
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Datamonitor consulting
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Disclaimer
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List of Tables
 
Table 1: Number of affluent individuals in France by liquid asset band, 000s, 2003-07
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Table 2: Number of affluent individuals in France by liquid asset band, 000s, 2008-12
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Table 3: Aggregate onshore liquid assets of French HNWs by liquid asset band, € bn, 2003-07
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Table 4: Aggregate onshore liquid assets of French HNWs by liquid asset band, € bn, 2008-12
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Table 5: What proportion of the HNW customer base in France is in each age band?
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Table 6: What proportion of French HNWs accumulated their wealth through each source?
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Table 7: What proportion of HNW customers' portfolios in France is allocated to each product?
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Table 8: HNW customers' portfolio allocation now versus in two years' time
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Table 9: What proportion of the HNW customers' portfolio in France is allocated to each region?
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Table 10: What are HNW customers in France most interested in today?
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Table 11: HNW customer attributes in France on a scale of one to four (investment openness)
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Table 12: HNW customer attributes in France on a scale of one to four (knowledge)
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Table 13: For which investment opportunities is there a lot of demand from French HNWs?
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Table 14: HNW customer attributes in France on a scale of one to four (relationship drivers)
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Table 15: HNW customer attributes in France (customer involvement)
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Table 16: How long have HNW customers in France been with their wealth manager?
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Table 17: How many wealth managers do HNW customers in France have on average?
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Table 18: What will most determine revenue growth in France's wealth management market in the next two years?
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Table 19: What is the most effective means of increasing share of wealthy clients' wallet in France?
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Table 20: How much business potential do the following product areas have among wealthy clients in France during the next two years?
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Table 21: From the product areas just mentioned, which three will wealth managers focus most resources on in the next two years?
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Table 22: What are the key influences that determine a client's choice of wealth management service in France?
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Table 23: What are the most effective wealth management customer acquisition techniques in France?
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Table 24: What is the best way to retain wealthy clients in France?
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Table 25: What are the most likely reasons for clients in France to leave a wealth management service?
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List of Figures
 
Figure 1: Decline in saving rates combined with a growing indebtedness threat the flows in liquid assets in France
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Figure 2: After losing a percentage point in 2005, French deposit rebounded to a high 4%
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Figure 3: France's stock market index in line with western gloomy markets
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Figure 4: Retail investors moved money from mutual funds into deposits in 2007
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Figure 5: France's affluent population decreased slightly in 2007 as economic difficulties took hold
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Figure 6: After stalling in 2008-09 France's affluent population will exceed 6,500,000 by 2012
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Figure 7: The 31-50 age band accounts for the greatest share of HNW customers in France at 37%
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Figure 8: Business / entrepreneurship is the main source of wealth in France accounting for 39% of all HNWs
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Figure 9: 24% of HNW portfolios in France are invested in fixed income
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Figure 10: In France over the next two years HNW customers will increasingly look to the 'real estate investment' category which will grow its share of HNW investors' portfolios from 24% to 25%
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Figure 11: HNW investors in France have 66% of their portfolios invested in Europe
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Figure 12: Protecting their current asset base is a key priority for 81% of HNW investors in France
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Figure 13: French HNWs have a lower level of investment openness than the average European HNW investor
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Figure 14: French HNWs have a greater level of knowledge than the average European HNW investor
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Figure 15: Direct investment in commercial property is the investment most in demand from French HNWs
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Figure 16: French HNWs place more emphasis on personal relationships than the average HNW European
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Figure 17: HNW investors in France are loyal to their wealth managers
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Figure 18: French HNWs are more likely to manage their own investments today than two years ago
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Figure 19: 14% of French wealth managers have had a relationship with their clients for, on average, more than five years
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Figure 20: Obtaining new clients will be the key driver of revenue growth in the next two years for wealth managers in France
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Figure 21: Increasing face to face contact is the most effective means of increasing share of HNW wallet in France
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Figure 22: Inheritance planning has the greatest business potential for wealth managers in France over the next two years
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Figure 23: 60% of wealth managers in France are planning to focus resources on the 'traditional investments' product area over the next two years
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Figure 24: Personal recommendation is the key influencer that determines a client's choice of wealth manager in France
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Figure 25: Referrals from the investment bank are the most effective customer acquisition technique for wealth managers in France
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Figure 26: Regular communication is the most effective means of retaining HNW customers in France
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Figure 27: Inadequate investment performance is the most likely reason for clients to leave a wealth manager in France
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