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Wealth in Switzerland: Sizing the Market Opportunity 2016

Published By :

Verdict Financial

Published Date : Nov 2016

Category :

Banking

No. of Pages : 47 Pages

Summary
Switzerland is known for its high standard of living and well-developed private banking market, as well as a favorable tax system kept in check by each of the 26 Swiss cantons. These factors, along with the countrys favorable level of economic stability, make Switzerland an attractive location for HNW expat investors. While the HNW segment is forecast to grow at an annual rate of over 5% between 2016 and 2020, the rest of the countrys affluent population is expected to develop at a much slower pace.

Key Findings
- Switzerland is one of the largest offshore centers in the world, but increased pressure on information exchange has impacted its attractiveness for tax and offshore purposes.

- Nearly half of non-resident deposits are sourced from the Americas, accounting for the largest share of total non-resident retail deposits in Switzerland.

- At the end of 2014, of the 6.6 million adult individuals living in Switzerland an estimated 74.5% could be considered affluent. The country has by far one of the highest levels of affluent and HNW individuals among sizable economies.

- HNW individuals in Switzerland allocate 81.6% of their assets to traditional liquid investments. The Swiss market has a well-balanced allocation outside of deposits, although these still account for 32.8% of total retail investments.

- Switzerland has signed numerous agreements to improve collaboration with other nations, and previously reached a Model II Foreign Account Tax Compliance Act agreement with the US. From January 1, 2017, Switzerland will also start exchanging information under the OECDs Common Reporting Standard.


Synopsis
Verdict Financials Wealth in Switzerland: Sizing the Market Opportunity 2016 analyzes the Swiss 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 Swiss 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.

- Examines the tax landscape in Switzerland and future implications for investors.


Reasons To Buy
- Benchmark your share of the Swiss 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 penetration of affluent individuals in Switzerland.

- Evaluate your HNW proposition by understanding how the Swiss tax system impacts HNW clients.

- Review your offshore strategy by identifying HNW motivations for offshore investments and their preferred booking centers.


Table of Contents
EXECUTIVE SUMMARY
The Swiss HNW market is forecast to grow at an annual rate of more than 5%
Key findings
Critical success factors
SIZING AND FORECASTING THE SWISS WEALTH MARKET
Switzerland's offshore market is undergoing change
Tax transparency is causing the onshore and offshore wealth markets to diverge
Offshore deposits constitute the largest proportion of non-resident assets
Switzerland's resident and non-resident mutual fund markets display inverse market share growth
The Swiss non-resident retail deposit market is growing
Affluent individuals in Switzerland account for 74.5% of the total adult population
Switzerland has one of the highest levels of affluent individuals among sizable economies
Swiss affluent individuals held over $1,177bn in liquid assets in 2015
DRIVERS FOR GROWTH IN THE SWISS WEALTH MARKET
Growth rates will improve from 2016 after a strong downswing in 2014
The Swiss market is well diversified, with substantial non-deposit holdings
Deposits, equities, and mutual funds will drive growth
Deposits will continue to outperform real GDP growth
Deposits will see steady growth following a lower year-on-year growth rate in 2014
Equities and mutual fund holdings are driven by stock market performance
The Swiss stock market has displayed relatively steady growth in 2016
The performance of the stock market has driven equity and mutual funds
Bond investments are forecast to taper from 2017
HNW INVESTMENT PREFERENCES
HNW individuals allocate 18.4% of their investible assets outside traditional investments
Hedge funds make up the bulk of investments held outside traditional asset classes
Swiss HNW individuals hold 17.9% of their wealth offshore
Tax is a limited driver for offshore investment
Swiss HNW offshore wealth is booked through centers around the world
Switzerland has signed numerous DTCs and information exchange agreements
Switzerland and the US have agreed to a program to settle the ongoing tax dispute between the two countries
APPENDIX
Abbreviations and acronyms
Supplementary data
Definitions
Affluent
Domicile
DTC
FATCA
HNW
Liquid assets
Mass affluent
Mass market
Measures of growth
Onshore
Residency
Exchange of Information
TIEAs
Methodology
2016 Global Wealth Managers Survey
Verdict Financial's Global Wealth Model methodology
The main sub-model
Country sub model
Global Retail Investments Analytics methodology
Verdict Financial's Global Offshore Investments Analytics
Exchange rates
Bibliography
Further reading
About Verdict Financial
Disclaimer


List of Tables
Table 1: Maximum canton income tax rates for single taxpayers with no children
Table 2: Total retail resident and non-resident holdings in Switzerland ($m), 2011-15
Table 3: Total Swiss adult population by asset band (000s), 2011-15
Table 4: Total Swiss adult population by asset band (000s), 2016f-20f
Table 5: Total Swiss onshore liquid wealth segmented by asset band ($bn), 2011-15
Table 6: Total Swiss onshore liquid wealth segmented by asset band ($bn), 2016f-20f
Table 7: Swiss franc-US dollar exchange rates, December 31, 2014 and December 31, 2015


List of Figures
Figure 1: Total retail asset holdings among non-residents decreased in 2015
Figure 2: Offshore retail deposits form the largest non-resident asset class
Figure 3: Non-resident investments into mutual funds have decreased, while resident wealth is increasing
Figure 4: Non-resident retail deposits are showing signs of growth following a period of decline
Figure 5: Offshore centers account for the majority of non-resident deposits in Switzerland
Figure 6: 74.5% of the Swiss population is affluent
Figure 7: HNW individuals will increase their share of total liquid assets to 37% by 2020
Figure 8: Swiss retail savings and investments will display moderate growth out to 2020
Figure 9: The majority of savings in Switzerland are held in deposits
Figure 10: Deposits will outperform the market through to 2020
Figure 11: Steady GDP growth will contribute to improved deposit holdings
Figure 12: SMI industry weightings are strongly concentrated around the healthcare sector
Figure 13: Equity and mutual fund holdings are expected to return to positive growth in 2017
Figure 14: Bond funds constitute 31.9% of retail mutual funds
Figure 15: Bonds growth is set to follow a similar path to GDP performance
Figure 16: 81.6% of Swiss HNW wealth is held in traditional liquid allocations
Figure 17: Swiss HNW individuals hold 17.9% of their liquid wealth offshore
Figure 18: Political instability and currency volatility in Switzerland are the leading motivations for offshore investments
Figure 19: Europe accounts for over half of Swiss HNW offshore booking
Figure 20: Switzerland has agreements with a vast number of countries around the world

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