Growth in Frances retail savings and investment market will be dampened by a faltering economic recovery and a weaker stock market performance. Economic and political challenges continue to reverberate in the development of the affluent market, with lower growth forecast in both individuals and assets to 2020.
-Affluent individuals account for 17.5% of the French adult population and hold 80.6% of liquid assets. This wealth distribution is similar to other developed economies. The proportion of affluent individuals among the French adult population is expected to increase by 2 percentage points by 2020.
-Slow but steady growth is forecast in the French retail savings and investments market (2.2% compound annual growth rate to 2020). Lower growth rates are anticipated across all asset classes due to continuing economic and political struggles.
-Deposits dominate the retail savings and investments market, accounting for just under 70% of liquid assets. They are forecast to be the main driver of growth to 2020 as a result of their ongoing status as a safe haven.
-Investment in illiquid assets has increased significantly. In 2016, they constitute over 30% of a typical HNW portfolio. Real estate investment trusts are the most important type of investment in this field.
-Offshore investments account for just over 14% of HNW assets. These are primarily driven by the desire for tax efficiency, but concerns over local political stability are also significant.
Verdict Financials Wealth in France: Sizing the Market Opportunity 2016 analyzes the French 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 the number of individuals and the value of their liquid assets) using our proprietary datasets.
-Analyzes which asset classes are favored by French 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 property and commodities.
-Identifies key drivers and booking centers for offshore investments.
-Benchmark your share of the French wealth market against the current market size.
-Forecast your future growth prospects using our projections for the market to 2020.
-Identify your most promising client segment by analyzing the penetration of affluent individuals in France.
-Evaluate your HNW proposition by understanding how the French tax system will impact HNW clients.
-Review your offshore strategy by learning HNW motivations for offshore investments and their preferred booking centers.
Table of Contents
France's economic and political challenges continue to dampen market growth
Critical success factors
SIZING AND FORECASTING THE FRENCH WEALTH MARKET
The French wealth market will remain concentrated at the top end
Affluent individuals represented 17.5% of the adult population in 2015
French affluent individuals hold over 80% of total liquid assets
DRIVERS OF GROWTH IN THE FRENCH WEALTH MARKET
Retail savings and investments growth will remain subdued as France's economy continues to struggle
Growth in retail savings and investments will remain subdued
Deposits dominate the retail savings and investments market
Deposits will grow steadily over the forecast period
The ECB lowering the main interest rate to 0% has reduced the appeal of deposits
Deposit growth is set to continue, albeit at a slower pace
Equities and mutual funds benefited from relatively strong stock market performance in 2015
The CAC 40 showed signs of recovery in 2015 in spite of continued volatility
Equity and mutual fund growth is strongly linked to the performance of the CAC 40
Retail bond holdings will continue to decline
HNW INVESTMENT PREFERENCES
French HNW individuals hold just over 30% of their portfolios in alternative and illiquid assets
Property investment forms the majority of French HNW illiquid portfolios
Offshore investments are relatively low and are driven by the desire for tax efficiency
French HNWs invest just over 14% of their portfolios offshore
Tax efficiency is the number one motivation for offshore investment
The majority of French HNW offshore wealth is held close to home
France is taking numerous steps to tackle offshore tax evasion
France's complex and heavy tax regime will continue to change
Abbreviations and acronyms
Verdict Financial's 2016 Global Wealth Managers Survey
Verdict Financial's 2015 Global Wealth Managers Survey
Global Wealth Model methodology
Verdict Financial's Global Retail Investments Analytics methodology
About Verdict Financial
List of Tables
Table 1: French income tax rates and thresholds for individuals, 2015
Table 2: Tax surcharges on property gains, 2015
Table 3: French social tax rates, 2015
Table 4: French wealth tax rates, 2015
Table 5: Onshore liquid assets ($m) by asset band, 2011-15
Table 6: Onshore liquid assets ($m) by asset band, 2016-20
Table 7: Adult population (000s) segmented by wealth band, 2011-15
Table 8: Adult population (000s) segmented by wealth band, 2016-20
Table 9: Euro-US dollar exchange rate, December 31, 2014 and December 31, 2015
List of Figures
Figure 1: Affluent individuals account for 17.5% of the total adult population in France
Figure 2: Affluent individuals account for over 80% of total liquid assets in France
Figure 3: Growth in the French retail savings and investments market will steadily rise to 2020
Figure 4: Deposits will continue to dominate French retail savings and investments
Figure 5: Slower growth is forecast across all retail investment classes to 2020, but deposits will be the largest contributor
Figure 6: Retail deposits will outperform wage and GDP growth to 2020
Figure 7: After a strong 2015, the CAC 40 has struggled in 2016
Figure 8: The performance of the CAC 40 closely aligns with mutual fund and equity investment growth rates
Figure 9: Retail bond holdings will marginally decline
Figure 10: REITs account for the majority of illiquid assets
Figure 11: French HNWs allocate 14% of their assets offshore
Figure 12: Tax efficiency is the main driver of offshore investments for French HNWs
Figure 13: French HNW individuals tend to hold their offshore wealth in European centers
Figure 14: France has signed a number of DTCs and TIEAs with international jurisdictions
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