views from affluent & hnw individuals in asia, europe and north-america

Financial and Stock Market Confidence - Use of Wealth Management Companies - Investment in Cryptocurrencies

introduction

The past few years have proved to be highly challenging for investors, with international developments such as Brexit (Brexit & the Affluent Investor) and Coronavirus (The Post-covid Luxury Consumer) creating significant uncertainty. Wealth managers are arguably even more important now to help affluent individuals to navigate these uncertain times.

The purpose of this overview is to offer an independent view of wealth management-related behaviours and sentiments from validated global affluent and High Net Worth Individuals (HNWI). Since 2018, we have been tracking wealthy consumers' views in Europe, Asia and North America through our quarterly Global Luxury & Asset Management monitor (GLAM).

With today’s unique off-shoot, you will find our most up-to-date data related to wealth management covering a wide range of topics ranging from global confidence in financial markets, to the past and future utilisation of financial services and interest in cryptocurrencies. As you will see below, Covid-19 had a clear and immediate impact on financial confidence. Nevertheless, we are now seeing this confidence gradually returning as the world edges back towards something approaching normality.

We welcome the free and fair use of our data to meet your individual and business objectives, only asking that you clearly link your readers to the source of the data whenever applicable. In the event you have any questions about the data, please contact us at contact@altiant.com.’

KEY TAKEAWAYS

·       Q1 2021 saw confidence in the global financial market broadly return to pre-Covid levels, with 30% of global respondents perceiving stability and 48% seeing instability.

·       From 33% in Q2, the share of global respondents expecting a performance improvement in their stocks rose to 40% in Q3, 52% in Q4 and 54% in Q1 2021.

·       More than half (51%) of affluent/HNWIs globally in Q1 2021 said that they expected to use wealth management companies more in the next year, the highest point in all 11 quarters to date.

·       Among the 24% who did not report using a wealth manager in Q1 2021, a third planned to start doing so this year.

·       Typically hovering around the 20-25% mark, the share of ‘long-term’ crypto investors rose to 29% in Q1 2021. All three regions saw an increase in long-term investors, although this was most pronounced among Americans (up from 26% to 38%).

ABOUT THE POPULATION

Data in this report is taken from Altiant’s luxury tracker GLAM, using survey responses from its proprietary panel, LuxuryOpinions. The report uses only those questions looking specifically at finance and wealth management, with the tracker also covering many other subjects such as travel and sustainability (see more here). Across the nine quarters of 2019, 2020 and Q1 2021, a total of over 4,000 interviews were conducted for GLAM, with around n=450 in each quarter.

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Confidence returns among the global affluent population

“How stable do you feel the global financial system currently is?”

Coronavirus continues to have a significant international impact on the finance industry. As expected, there was an immediate shift in investor sentiment, with a drop (down to 20%) in the share of investors feeling that the global financial system was stable. Meanwhile, perceived instability rose to 67%, with 31% of respondents thinking that it was very unstable.

The following quarters have seen a cautious return to perceived stability, and surprisingly, Q1 2021 had broadly returned to pre-Covid levels for this metric. While a much higher share of wealthy individuals continue to perceive instability over stability – 48% vs 30% respectively in Q1 2021 – this is in line with pre-Covid trends. Wealthy Americans remain by far the most bullish in the last quarter, with 45% perceiving stability, compared to 25% of Asians and only 19% of Europeans.

Figure 1: Perceived stability of the global financial system

Stock market knowledge remains high…

“How knowledgeable do you think you are about topics related to the stock market?”

Self-claimed stock market knowledge has historically shown little quarterly variation in our study, hovering around the 75% mark. However, this reached a new high of 82% in Q1 2021, with 24% claiming to be very knowledgeable. Men and Americans comfortably remain the most likely groups to state that they are very knowledgeable. Indeed, at 37%, Americans are more than three times as likely to do so than the 12% of Europeans (Asia stands at 21%). 16% feel that they only have a little stock market knowledge, with only 3% saying they have no knowledge at all. Women are more likely than men to profess having little or no understanding of the stock market (25% vs 14%).

…while confidence is on the rise

Meanwhile, the ongoing effects of Coronavirus continue to have a significant impact on the data for stock market confidence. The first two quarters of 2020 saw a clear negative shift, but there are ongoing signs that confidence is returning. From 33% in Q2, the share of respondents expecting a performance improvement rose to 40% in Q3, 52% in Q4 and now 54% in Q1 2021, the highest point of the tracker so far. After the losses in 2020, many affluent respondents appear to be much more bullish about their prospects in the year ahead.

“How do you think the stock markets in your region will perform during the next 12 months when compared to the past 12 months?”

Figure 2: Stock market confidence

Figure 3: Stock market confidence, by region

Interestingly, this increase in confidence in Q1 is driven solely by the European response which rose strongly for the second consecutive quarter to reach 51%. This was at odds with the marginal fall in the American and Asian response, both of which are now only slightly higher at 55%. This is perhaps indicative that after a particularly fraught year, European investor confidence is rebounding especially strongly. The share of respondents who believe that their stocks’ performance will remain broadly even has also continued to nudge upwards to 24%, rising from 20% last quarter, and again driven by Europeans.

Those expecting a downturn in performance jumped to 53% in Q2 2020, by far the highpoint for the study so far. This figure was driven by a notable rise in responses for a ‘much worse’ performance, which rose to 23% in Q2. Q3 and Q4 saw the share of those expecting a downturn fall to 42% and then 28%. After the challenges of 2020, only 22% of the Q1 sample expect their stocks to perform worse in the year ahead. As a full year of Covid-19’s impact is reached, many wealthy respondents appear to view 2021 more positively with hopes that the worst has passed. Asians are now the least sceptical (18%), but Europeans are also becoming clearly less sceptical also (down to just 22% in Q1).

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Growing use of financial services, especially in Asia

Prior to 2020, around two-thirds of our affluent/HNW respondents said that they used wealth management companies, a number which nudged upwards towards the 75% mark across the year. Around 80% of wealthy Americans and Asians used them, compared to just over half of Europeans. This remained broadly true in Q1 2021, although the share of wealthy Asians using wealth managers forged ahead to 87%.

“In which of the following categories have you purchased a luxury brand or service within the past year?” [wealth management]

Figure 4: Regional use of wealth management companies in 2020

“Do you expect to spend more or less in the next 12 months, compared to the last 12 months?”

As seen in our previous research, many affluent/HNWIs moved quickly to modify their investment portfolios and encouragingly for wealth managers, there is a clear shift towards a potential future uplift in their use. From a steady share of 43-44% in 2019, the share of wealthy individuals expecting to increase their use of wealth management providers saw notable fluctuation last year.

As Covid-19 spread in Q2, there was an evident downturn driven by a conservative approach towards outgoings. This has continued to fluctuate but is broadly trending upwards and reached 51% in Q1 2021. Over-40s and under-40s and both genders are broadly equally likely to invest more in 2021, with Americans leading the way for expected increased investment (58%).

Among the 24% who did not report using a wealth manager in Q1 2021, two-thirds do not plan to start using one in the year ahead. However, a third say that they do expect to start doing so, suggesting that now is an excellent time to target these new customers, particularly in key European markets such as the UK, France and Switzerland.

Figure 5: Expected use of wealth management companies ‘within the next year’

Growing interest in long-term cryptocurrency investment

Typically hovering around the 20-25% mark, the share of ‘long-term’ crypto investors rose to 29% in Q1 2021. All three regions saw an increase in long-term investors, although this was most pronounced among Americans (up from 26% to 38%). Furthermore, a notable share of this has come from Americans who said they were not previously interested in investing (down from 30% to 24%), as well as a small transference from short-term investors (down from 14% to 12%).

"Please select one of the following options in relation to your interest in virtual cryptocurrencies like Bitcoin and Ethereum."

Figure 6: Investment in cryptocurrencies

Elsewhere, the small rise in European and Asian ‘short-term’ crypto investors led to the average nudging up to 15%. Much of this crypto investment is also driven by under-40s who remain much more likely than over-40s to be active cryptocurrency users. In Q1 2021, under-40 investors jumped to 58% (from 42% in Q4). Cryptocurrency could still attract new investors into the market, with around three in ten in each quarter being current non-investors but interested in doing so. In contrast, less than a quarter are now non-investors and unlikely to start doing so in the future.

Figure 7: Cryptocurrency investment among under-40s

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To view the data set in full, or speak to us about any of your luxury research requirements, please email us at contact@altiant.com.

Contributors

Chris Wisson, Knowledge Director

Todd Barth, Co-founder & CFO

Contact

reports@altiant.com

NOTE

We welcome the free and fair use of our data to meet your individual and business objectives, only asking that you clearly link your readers to the source of the data whenever applicable. In the event you have any questions about the data, please contact us at contact@altiant.com.

ABOUT ALTIANT

Altiant is a specialised fieldwork company which enables large scale, global research among affluent consumers/High Net Worth Individuals (HNWIs) in 15+ countries worldwide.

By servicing dozens of the world’s top luxury and wealth brands, Altiant helps renowned brands and their research agencies to answer critical questions among this very hard-to-reach demographic. We ensure that all of our survey respondents are genuinely affluent by having their identities verified and wealth levels validated.

Altiant is a corporate member of ESOMAR, the World’s leading association for standards & Ethics within market research. Altiant adheres to, and abids by their strict guidelines governing the best practice in the industry.

Publications contained in the Altiant Knowledge Center are free to use, we simply require proper attribution. In no event shall Altiant be liable for any indirect, special or consequential damages in connection with any use of the provided data. Altiant does prohibit the selling of any information contained within or derived from these reports and monitors.