Wealth managers and financial
advisers are clamouring for a
slice of high net worth business
in the rapidly expanding emerging
markets. But before rushing into new
territories, firms need to consider
their strategies carefully
BY DANIEL JUDGE
Any businessman or businesswoman
worth their salt
will have by now assessed
how they can profit from
the rise of the current
crop of emerging markets;
whether by providing
expertise to the industries
and governments of these
countries, accessing the
nascent consumer bases
they present or using them
as centres for cheaper
labour and manufacturing.
Countless examples of
this can be found across
diverse industries, whether
it is Manchester United
opening a bar and restaurant
in Bangkok, Tesco
rolling out a chain of
stores across the Far East
and Eastern Europe or
Dyson, the vacuum cleaner
maker, shifting production
to Malaysia.
l Gaining a toehold
Financial businesses are
no different. Investment
banks, fund managers and
insurers are clamouring to
access new growth markets.
In the case of China,
they are willingly giving
up majority control of their
ventures for the privilege.
These markets are lands
of opportunity for wealth
managers and financial
advisers as well. It is in
them that the world’s new
wealthy, in the form of
high net worth individuals
(HNWIs) and ultra high
net worth individuals
(UHNWIs), will be found.
A new study, the Merrill
Lynch and Capgemini
World Wealth Report,
highlights the growth of
the HNWI and UHNWI
markets, revealing that the
main opportunities are in
the Middle East, Eastern
Europe, Latin America,
with the BRIC countries
of Brazil, Russia, India
and China also playing
an important role in
wealth creation.
In recognition of this,
considerable efforts are
being made by businesses
and the jurisdictions
in which they operate to
forge links with emerging
markets in an attempt to
win a slice of the wealth
being generated and gain a
toehold in these countries.
Financial centres such
as Jersey, Guernsey and
Isle of Man have variously
either established satellite
offices in locations such as
China or the Middle East,
or are looking to do so in
the near future, in addition
to sending regular trade
delegations across the
world to beat their drum.
l Model tactics
For individual businesses,
such a move is a huge step
and presents many challenges,
something high-
Proceed
with caution
lighted by the report. Chris
Gant, head of wealth management
for Capgemini
Financial Services UK,
who produced the report
with Merrill Lynch, says:
“The question for wealth
managers is how best to
go after that growth? The
issues they must consider
include whether the clients
in these newer markets are
the same or different.
“Many HNWIs will have
different backgrounds.
For example, those from
Europe tend to have entrepreneurial
backgrounds
but, in the US, wealth tends
to be based on remuneration.
In emerging markets,
particularly Asia Pacific,
there tends to be a more
entrepreneurial nature
to HNWIs, while in the
Middle East it tends to be
inherited wealth.
“Such differences play
a role in the needs of the
individuals and so services
must be tailored in the right
way to meet those needs
AUGUST 2008 [www.international-adviser.com] INTERNATIONAL ADVISER
analysis
– going into a new market
using the same model may
not work.”
l Double-digit growth
In terms of the opportunity
HNWI growth presents, the
World Wealth Report is
unequivocal. It found that,
in 2007, the wealth of the
average HNWI surpassed
$4m for the first time, with
the Middle East providing
the single largest regional
growth, at 15.6%, followed
by Eastern Europe (14.3%)
and Latin America (12.2%).
In terms of growth in
the number of HNWIs
on a country-by-country
basis, the BRIC nations led
the way.
“The number of HNWIs
– and the amount of
wealth that they control
– continued to increase
in 2007, with the greatest
wealth being created in
the emerging markets of
India, China and Brazil,”
says Nick Tucker, of Merrill
19
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