While the commodities market bust has not forced the country to contract, it did dent growth in retail savings and investment in 2015. 2016 should see a resurgence in Canadians asset appreciation, but a tepid recovery in oil and gas along with substantial household debt loads will see slower growth over the rest of the forecast period.
The affluent population in Canada will consistently expand over the forecast period, with growth strongest among the $10m+ category.
Over half of onshore liquid retail savings and investments is in the hands of the mass affluent and thus exposed to credit risk, as these investors have often taken on considerable mortgage debt.
After dragging down growth in retail wealth in 2015, equity assets will boost growth in 2016 along with mutual funds.
While Canadians do not offshore substantial portions of their wealth, investing in China is a strong attraction unsurprising given Canadas strong links to the country.
Verdict Financials Wealth in Canada: Sizing the Market Opportunity analyzes the Canadian wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets. Specifically the report: Sizes the affluent market (both by number of individuals and the value of their liquid assets) using our proprietary datasets.
Analyzes which asset classes are favored by Canadian retail investors and how their preferences impact the growth of the total savings and investments market.
Examines HNW clients attitudes towards non-liquid investments such as hedge funds, property, and commodities.
Identifies key drivers and booking centers for offshore investments by Canadian HNW clients.
Benchmark your share of the Canadian wealth market against the current market size.
Forecast your future growth prospects using our projections for the market to 2019.
Identify your most promising client segment by analyzing penetration of affluent individuals in Canada.
Evaluate your HNW proposition by understanding how FATCA and CRS affect your HNW clients.
Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.
Table of Contents
Growth in Canadian wealth will be less pronounced after a rebound in 2016
Critical success factors
SIZING AND FORECASTING THE CANADIAN WEALTH MARKET
Affluent individuals in Canada account for roughly 28% of the adult population
Increasingly favorable domestic conditions will drive further expansion in onshore wealth
Growth in the number of HNW individuals will be strongest among those with more than $10m in assets
The bulk of Canada's onshore assets are concentrated in the hands of the mass affluent
HNW portfolios above $10m in AUM will experience the highest growth
DRIVERS OF GROWTH IN THE CANADIAN WEALTH MARKET
Growth has dipped, but stimulus and higher oil prices should see a rebound
The Canadian retail savings and investments market will perk up in 2016 before a more steady expansion resumes
Deposits and mutual funds form the bulk of the retail wealth market
Equities will provide some much-needed firepower behind the retail investment market value growth over the next two years
Deposit growth will remain moderate as interest rates languish near zero
As cautious investors, Canadians have been drawn to solid bank accounts and other cash products
Interest rates will ensure deposit growth remains modest
The retail bond market will reach new heights, driven by stronger appetite and ample supply
The drag from the primary resource sector will diminish, allowing equity and mutual funds to take flight
The S&P TSX Composite has largely moved sideways since its peak before the financial crisis
Both equities and mutual funds advance much more in value when the market is rising
Investors in Canada have used mutual funds to buy an already diversified portfolio
HNW INVESTMENT PREFERENCES
HNW individuals allocate 15.6% of their investible assets outside of traditional liquid investments
Hedge funds are the most popular HNW alternative asset
Canadian HNW investors have offshored a substantial amount of their portfolio
Offshore wealth management centers are managing a significant amount of Canadian wealth
Tax issues are the main driver for offshoring wealth, raising the stakes for many investors
The large number of expats mean China ranks higher than the US as a booking center
Canada has pursued a large number of tax agreements with a wide range of partners
Abbreviations and acronyms
Verdict Financial's 2015 Global Wealth Managers Survey
About Verdict Financial
List of Tables
Table 1: Federal and Ontario income tax bands and rates for 2016
Table 2: Combined Federal and Ontario non-income tax bands and rates for 2016
List of Figures
Figure 1: Affluent population growth will rebound in 2016 as oil and gas ceases to be a drag on the country
Figure 2: Affluent asset growth will remain solidly positive, if moderate
Figure 3: Canadian retail investments will see stronger growth in 2016
Figure 4: Retail investment value is highly dependent upon mutual funds to provide growth
Figure 5: Returning health to the commodities market will boost retail equity holdings
Figure 6: Wage growth will see Canadians add steadily to their savings accounts and GICs
Figure 7: Bonds will grow at a more sedate pace, driven by consistent wage and GDP growth
Figure 8: The benchmark stock market index has struggled to add value since the global financial crisis
Figure 9: A resurgent stock market will boost growth rates in 2016 before tapering off
Figure 10: Investors are turning to balanced and bond funds for stable returns
Figure 11: Inflows were made into all but short-term funds, but balanced funds are the clear favorite
Figure 12: Canadian HNW individuals invest mostly in traditional asset classes, but can be tempted by alternatives
Figure 13: Almost one fifth of Canadian HNW wealth is booked abroad
Figure 14: Tax considerations are the main reason for offshoring wealth from Canada
Figure 15: HNW Canadians are mostly investing back into the major economies of China and the US
Figure 16: Few countries have not signed a tax agreement with Canada
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