Wealth in Indonesia: HNW Investors 2017
"Wealth in Indonesia: HNW Investors 2017" analyzes the investment preferences and portfolio allocation of Indonesian HNW investors. The report is based on our proprietary Global Wealth Managers Survey.
HNW investors have predominately accumulated their wealth through business interests, with property and manufacturing key wealth generators. Investors show strong demand for advisory mandates, but a significant proportion of wealth remains unmanaged. Defensive investments dominate the average portfolio, and while this is not expected to change we do forecast a decrease in demand for cash, while demand for fixed income is expected to rise. Tax planning is most sought after, but demand for pension and financial planning is on the rise.
Specifically the report -
- Profiles the average Indonesian HNW investor in terms of their demographics and analyzes the expat opportunity in Indonesia.
- Analyzes which wealth management mandates are preferred among Indonesian HNW investors and how demand will develop looking forward.
- Examines the allocation of Indonesian HNW investors portfolios into different asset classes and how this is expected to develop in the future.
- Analyzes product and service demand among Indonesian HNW investors.
- Indonesian HNW individuals tend to be older than their regional peers.
- The expat opportunity is less developed than in Asia Pacific, but wealth managers reaching out to HNW expats from South Korea or Singapore will find them to be a lucrative target market.
- The countrys HNW investors engage multiple wealth management firms, which is symptomatic of a relatively underdeveloped and risk-averse wealth market.
- A lack of expertise and time are the top drivers for Indonesian HNW investors to seek professional advice, while non-financial investments are the main reason they self-direct.
- HNW demand for equity, fixed income, and alternatives is forecast to rise over the next 12 months, while demand for cash and near-cash products is expected to decrease.
- A multi-service strategy - encompassing tax, financial, and pension planning - is becoming increasingly important as demand for these services is on the rise.
Reasons to buy
- Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors drivers for seeking investment advice vs self-directing.
- Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.
- Develop your proposition to match the product and service demand expressed by Indonesian HNW investors and react proactively to forecasted changes in demand.
Table of Contents
1. EXECUTIVE SUMMARY 3
1.1. Entrepreneurship is the leading generator of HNW wealth 3
1.2. Key findings 3
1.3. Critical success factors 3
2. PROFILING THE INDONESIAN HNW INVESTOR 9
2.1. Indonesian HNW investors skew heavily towards males and are typically older than their Asia Pacific peers 9
2.1.1. The majority of Indonesian HNWs are family business owners and entrepreneurs 10
2.1.2. A lower proportion of Indonesian HNW individuals are directors or chairmen 11
2.1.3. The majority of Indonesian HNW investors have established their fortunes in either property or manufacturing 12
2.2. Expats form a small proportion of the overall HNW population 13
2.2.1. The number of HNW expats in Indonesia is below the Asia Pacific average 13
2.2.1. Most HNW expats are from South Korea or Singapore 15
3. INDONESIAN HNW INVESTMENT STYLE PREFERENCES 16
3.1. Indonesian HNW investors use several wealth management firms to save them time and to benefit from their expertise 16
3.1.1. Indonesian HNW investors are more likely to spread their wealth across multiple wealth management firms than their regional peers 16
3.1.2. Indonesian wealth managers are chosen for the time they save their HNW clients and their expertise 17
3.2. The large pot of Indonesian HNW wealth that remains unmanaged is a significant opportunity 18
3.2.1. A majority of Indonesian HNW investors portfolio is not placed with a professional wealth manager 18
3.2.2. Indonesian investors opt for advisory asset management to save time and cap costs, whereas discretionary asset management is about optimizing returns 20
3.2.3. Significant investments in non-financial assets mean a noteworthy proportion of HNW wealth is self-directed 21
3.3. Already high demand for advisory wealth management will increase further among HNW Indonesians 23
3.3.1. Indonesian wealth managers are experiencing the most demand for advisory mandates 23
3.3.2. A majority of Indonesian wealth managers expect demand for advisory and execution-only mandates to increase in the next two years 24
4. ASSET ALLOCATION TRENDS AMONG INDONESIAN HNW INVESTORS 26
4.1. Investors reliance on cash looks set to subside as equities and bonds come to the fore 26
4.1.1. Indonesian HNW asset allocation currently over-indexes with cash and bonds compared to elsewhere in Asia 26
4.1.2. HNW demand for equities will increase as investors seek higher returns 27
4.1.3. Already popular bond investments are forecast to further increase in popularity 29
4.1.4. Cash and near-cash allocation will likely fall as real returns deteriorate 31
4.1.5. Property will become a slightly more attractive option for risk-averse investors 33
4.1.6. Although only a small component of HNW portfolios, demand for alternatives is forecast to increase 35
4.1.7. Demand for commodities has fallen since 2014 as prices have trended downwards 37
5. HNW PRODUCT AND SERVICE DEMAND 40
5.1. Tax advice should be a staple in every wealth managers service proposition 40
5.1.1. Inheritance planning solutions are sold rather than bought 40
5.1.2. The outlook for financial, pension, and tax planning is relatively positive 41
6. APPENDIX 43
6.1. Abbreviations and acronyms 43
6.2. Definitions 43
6.2.1. Affluent 43
6.2.2. HNW 43
6.2.3. Liquid assets 43
6.2.4. Mass affluent 43
6.3. Methodology 44
6.3.1. GlobalDatas 2016 Global Wealth Managers Survey 44
6.3.2. GlobalDatas WealthInsight HNW data 44
6.4. Bibliography 44
6.5. Further reading 45
List of Figures
Figure 1: Indonesian HNW investors are typically male, and are older than their Asia Pacific peers 10
Figure 2: Business interests are the leading generator of Indonesian HNW wealth 11
Figure 3: A higher proportion of Indonesian HNW individuals are presidents or commissioners compared to the wider region 12
Figure 4: Property and real estate is the main way HNW investors accumulate their wealth 13
Figure 5: The proportion of HNW expats in Indonesia is lower than elsewhere in the region 14
Figure 6: South Koreans account for over half of Indonesian HNW expats 15
Figure 7: Indonesian HNW clients use four or more wealth managers on average, but place over half of their investments with their main wealth manager 17
Figure 8: Lack of time and expertise drive demand for professional wealth management among HNW Indonesians 18
Figure 9: Allocations in execution-only mandates are above the regional average, but most Indonesian investments are not professionally managed 19
Figure 10: An expectation of higher returns is driving demand for discretionary asset management 21
Figure 11: Execution-only HNW clients are driven to self-direct by a range of factors 22
Figure 12: Local wealth managers currently experience limited demand for automated advice 24
Figure 13: Over half of Indonesian wealth managers expect to see an increase in advisory asset management demand 25
Figure 14: Current Indonesian HNW asset allocation differs from the wider region, as do expectations around future demand 27
Figure 15: Approaching two thirds of Indonesias HNW equity portfolio is held in funds 28
Figure 16: HNW demand for equities is expected to increase by the majority of local wealth managers 29
Figure 17: Indonesian HNW bond holdings skew towards direct allocation 30
Figure 18: Nearly all local wealth managers expect bond demand to increase 31
Figure 19: Indonesian HNW investors hold just over a third of investments in cash and near-cash products, which is notably higher than the regional average 32
Figure 20: Indonesian HNW investors are expected to shift their allocation away from cash deposits 33
Figure 21: Indonesian HNW investors hold less than 4% of their wealth in property investments 34
Figure 22: The perception of safety is the key driver of property investments 35
Figure 23: Indonesian HNW investment in alternatives is mostly in private equity 36
Figure 24: Demand for alternatives is expected to rise in the future 37
Figure 25: A tiny proportion of Indonesian HNW investments are held in commodities, aligned with the regional average 38
Figure 26: Demand for commodity investments will increase as investors seek inflation protection 39
Figure 27: Demand for planning services is relatively limited in Indonesia 41
Figure 28: Demand for pension and tax planning services is strongly expected to increase 42
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