A new report by GlobalData finds that 65% of wealth managers target high-net worth (HNW) individuals. Our article looks at the global nature of the HNW market, and why smaller players should specialise or risk disappearing in the cluttered space.

Can financial advisers and wealth managers look beyond their local market and grab a bigger piece of the pie? Or should they consider a more tailored approach?

Those are the questions posed by GlobalData, which has found that the global market of high net-worth (HNW) individuals has increased to 1.2 million in 2017 from 1 million in 2014.

The report, ‘Seizing the Global HNW Expat Opportunity’, finds that emerging markets – particularly in Asia – are developing quickly.

More than 131,000 of the HNW market are from India, while Chinese HNW individuals are all expanding in number.

As a result, GlobalData has found that advisers are providing market-specific products, particularly for Indian and Chinese expats.

However, understanding how to target them becomes more complicated when considering where they have relocated.

For example, expat hubs such as Hong Kong, Singapore and the United Arab Emirates (UAE) see “fierce” competition, according to Heike van den Hövel, wealth management analyst at GlobalData.

Because of this, you would be “hard-pressed” to find a wealth manager that has failed to employ a dedicated expat team in areas such as UAE.

For smaller financial advisory firms, targeting the big hubs will be incredibly risky.

Instead, van den Hövel recommends aiming at more modest areas – and finding a middle ground between having a less intense market but still potentially profitable.

“Smaller or domestically-focused players should consider adopting a more niche business model focused on less competitive markets, such as Canada,” he suggests.

“While expats only constitute 5.6% of the local HNW population in the country, this still equates to just over 10,800 individuals – not the largest of markets, but one that is not as hotly contested. Going after the biggest slice of the pie may not necessarily be the best strategy for everyone; a more targeted approach focused on niche segments can go a long way.”

Kevin Reed is one of the UK’s most senior accounting and finance journalists. He is a former editor of Accountancy Age and Financial Director, and writes regularly on corporate and professional services governance.

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