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China – The Future of HNWIs to 2015: Opportunities for Wealth Managers and Private Banks

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Germany – The Future of

HNWIs to 2016:

Wealth in the Powerhouse

of Europe

Publication date: May, 2012.

Report code: WI0034MR

TABLE OF CONTENTS

Germany – The Future of HNWIs to 2016: Wealth in the Powerhouse of Europe

© WealthInsight. This report is a licensed product and is not to be photocopied. Page 1

TABLE OF CONTENTS

1 Introduction ........................................................................................................................... 8

1.1 What is this Report About? ........................................................................................................... 8

2 Executive Summary ............................................................................................................ 12

3 Wealth Sector Fundamentals ............................................................................................. 16

3.1 Political Background.....................................................................................................................16

3.2 Economic Background to the Wealth Sector ..............................................................................18

3.3 Benchmarking German Wealth in Context ..................................................................................20

3.3.1 Distribution of Wealth ......................................................................................................................................... 20

4 Findings from the WealthInsight HNWI Database ............................................................ 24

4.1 Trends in HNWI Wealth to 2016 ....................................................................................................24

4.1.1 HNWI Trend Analysis ........................................................................................................................................ 24

4.1.2 HNWI Volume Trend Analysis ........................................................................................................................... 25

4.1.3 HNWI Wealth Trend Analysis ............................................................................................................................ 25

4.1.4 Per Capita HNWI Net Worth Trend Analysis ..................................................................................................... 26

4.1.5 Trends of the Wealth Bands .............................................................................................................................. 28

4.1.6 HNWIs: Demographic Breakdown ..................................................................................................................... 30

4.2 UHNWIs ..........................................................................................................................................31

4.2.1 UHNWI Volume Trend Analysis......................................................................................................................... 31

4.2.2 UHNWI Wealth Trend Analysis.......................................................................................................................... 32

4.2.3 UHNWIs: Demographic Breakdown .................................................................................................................. 33

4.2.4 UHNWIs – Job Titles ......................................................................................................................................... 35

4.2.5 UHNWIs – Industry Breakdown ......................................................................................................................... 36

4.2.6 UHNWIs – Industry Performance ...................................................................................................................... 37

4.2.7 UHNWIs – Industry Forecasts ........................................................................................................................... 38

4.2.8 UHNWIs – Source of Wealth: Entrepreneurship, Earnings or Inheritance ........................................................ 39

4.2.9 UHNWI breakdown by City ................................................................................................................................ 40

4.2.10 UHNWIs – City Performance ............................................................................................................................. 42

4.2.11 UHNWIs – City Forecasts .................................................................................................................................. 44

4.2.12 UHNWIs – Smaller City Review......................................................................................................................... 45

4.3 UHNWIs – The Billionaires ...........................................................................................................47

4.3.1 Billionaire Volume Trend Analysis ..................................................................................................................... 48

4.3.2 Billionaire Wealth Trend Analysis ...................................................................................................................... 48

4.3.3 Billionaire Per Capita Net Worth Trend Analysis ............................................................................................... 48

4.3.4 City-wise Breakdown of Billionaires ................................................................................................................... 48

4.3.5 Industry Breakdown of Billionaires..................................................................................................................... 49

4.3.6 Top 20 Billionaires ............................................................................................................................................. 50

4.4 UHNWIs – The Centimillionaires ..................................................................................................51

4.4.1 Centimillionaire Volume Trend Analysis ............................................................................................................ 52

4.4.2 Centimillionaire Wealth Trend Analysis ............................................................................................................. 52

TABLE OF CONTENTS



4.4.3 Centimillionaire Per Capita Net Worth Trend Analysis ...................................................................................... 52

4.5 UHNWIs – The Affluent Millionaires .............................................................................................53

4.5.1 Affluent Millionaire Volume Trend Analysis ....................................................................................................... 54

4.5.2 Affluent Millionaire Wealth Trend Analysis ........................................................................................................ 54

4.5.3 Affluent Millionaire Per Capita Net Worth Trend Analysis ................................................................................. 54

4.6 Core HNWIs ...................................................................................................................................55

4.6.1 Core HNWI Volume Trend Analysis .................................................................................................................. 55

4.6.2 Core HNWI Wealth Trend Analysis ................................................................................................................... 56

4.7 Core HNWIs – The Mid Tier Millionaires ......................................................................................58

4.7.1 Mid Tier Millionaire Volume Trend Analysis ...................................................................................................... 59

4.7.2 Mid Tier Millionaire Wealth Trend Analysis ....................................................................................................... 59

4.7.3 Mid Tier Millionaire Per Capita Net Worth Trend Analysis ................................................................................ 59

4.8 Core HNWIs – Lower Tier Millionaires .........................................................................................60

4.8.1 Lower Tier Millionaire Volume Trend Analysis .................................................................................................. 60

4.8.2 Lower Tier Millionaire Wealth Trend Analysis ................................................................................................... 61

4.8.3 Lower Tier Millionaire Per Capita Net Worth Trend Analysis ............................................................................ 61

5 Analysis of German HNWI Investments ............................................................................ 62

5.1 Analysis by Asset Class ...............................................................................................................62

5.1.1 Changing Trends in Liquid Assets – Equity, Fixed Income and Cash and Deposits ........................................ 63

5.1.2 Trends in Alternative Assets .............................................................................................................................. 65

5.1.3 Trends in “Art, Wine and Wheels”...................................................................................................................... 67

5.1.4 Trends of Investments in Real Estate ................................................................................................................ 69

5.1.5 Trends of Investments in Cash and Deposits .................................................................................................... 73

5.1.6 Trends of Investments in Fixed Income ............................................................................................................. 73

5.1.7 Trends of Investments in Equity ........................................................................................................................ 74

5.1.8 Trends of Investments in Business Interest ....................................................................................................... 75

5.2 Analysis of Foreign Investments .................................................................................................76

5.2.1 Trend of Investments in Rest of Europe ............................................................................................................ 78

5.2.2 Trend of Investments in Asia-Pacific ................................................................................................................. 79

5.2.3 Trend of Investments in North America ............................................................................................................. 79

5.2.4 Trend of Investments in Latin America, the Middle East and Africa .................................................................. 79

5.3 Analysis of German Ultra HNWI Investments..............................................................................80

6 Competitive Landscape of the Wealth Sector ................................................................... 82

6.1.1 Private Banks ..................................................................................................................................................... 82

6.1.2 Wealth Managers ............................................................................................................................................... 84

6.1.3 Family Offices .................................................................................................................................................... 86

6.1.4 Financial advisors .............................................................................................................................................. 89

6.2 Developments in German Private Banking Industry ...................................................................89

6.3 German Wealth Management Industry – Clientele Model and Maturity .....................................90

6.4 Behavioral Mapping of Wealth Management and Private Banking Industry in Germany .........92

6.5 Porter’s Five Force Analysis – Wealth management industry in Germany ...............................93

6.6 Financial Services Review ............................................................................................................95

TABLE OF CONTENTS



6.6.1 Retail Banks ....................................................................................................................................................... 95

6.6.2 Fund Management ............................................................................................................................................. 95

6.6.3 Hedge funds....................................................................................................................................................... 95

7 Appendix .............................................................................................................................. 96

7.1 Major Cities in Germany ...............................................................................................................96

7.2 Additional Components of the Wealth Sector in Germany ........................................................96

7.2.1 Philanthropy ....................................................................................................................................................... 96

7.2.2 Demand for Intergenerational Wealth Transfer ................................................................................................. 96

7.2.3 Human Resource Availability for the Wealth Management industry ................................................................. 97

7.3 Regulatory Environment in Germany ..........................................................................................97

7.3.1 Banking Regulations .......................................................................................................................................... 97

7.3.2 Regulations on Taxes ........................................................................................................................................ 98

7.3.3 Regulations on Wealth Management and Private Banking ............................................................................. 100

7.3.4 Regulations related to immigration, investment and employment ................................................................... 101

7.4 Key Economic Trends and Drivers ............................................................................................ 102

7.4.1 EUR to USD Moving Annual Average Exchange Rate.................................................................................... 102

7.4.2 Real GDP Growth ............................................................................................................................................ 103

7.4.3 Per Capita GDP ............................................................................................................................................... 104

7.4.4 Gross Savings Rate as a % of GDP ................................................................................................................ 105

7.4.5 Domestic Market Capitalization ....................................................................................................................... 106

7.4.6 Housing Price Index ......................................................................................................................................... 107

7.4.7 Commodity Index ............................................................................................................................................. 108

7.4.8 Foreign Direct Investment (FDI) ...................................................................................................................... 109

7.4.9 Investments of FII’s in Equity Products ........................................................................................................... 110

7.4.10 Inflation Rate .................................................................................................................................................... 111

7.4.11 Interests Rate................................................................................................................................................... 112

7.4.12 Balance of Payments ....................................................................................................................................... 113

7.4.13 Government Debt ............................................................................................................................................ 114

7.4.14 Stock Market Performance .............................................................................................................................. 115

7.4.15 HNWI Wealth vs. GDP Ratio ........................................................................................................................... 116

7.4.16 Capital Formation as % of GDP....................................................................................................................... 117

7.4.17 Disposable Income as % of GDP .................................................................................................................... 118

7.5 Case Study – Financial regulation in the European Union (EU) .............................................. 119

7.6 Social Background of Germany ................................................................................................. 122

7.7 Technological Background of Germany .................................................................................... 123

8 About WealthInsight ......................................................................................................... 127

TABLE OF CONTENTS



LIST OF TABLES

Table 1: HNWI Wealth Band and Group Definitions ..................................................................................................................................... 9

Table 2: Major Regions in Germany, 2010 ................................................................................................................................................. 17

Table 3: HNWIs – Volume Distribution Wealth Pyramid, 2011 ................................................................................................................... 28

Table 4: HNWIs – Wealth Distribution Wealth Pyramid, 2011 .................................................................................................................... 29

Table 5: Top 10 German cities for UHNWIs, 2007 - 2011 .......................................................................................................................... 40

Table 6: UHNWIs – Top 10 Cities by Wealth Growth, 2007–2011 ............................................................................................................. 43

Table 7: UHNWIs – WealthInsight forecasts for Top 10 cities .................................................................................................................... 44

Table 8: UHNWIs – Smaller German Cities, 2011 ..................................................................................................................................... 45

Table 9: UHNWIs – Former East German Cities, 2011 .............................................................................................................................. 46

Table 10: Billionaires – Market Overview, 2007-16 .................................................................................................................................... 47

Table 11: Billionaires – Cities by Wealth Growth, 2007–2011 .................................................................................................................... 49

Table 12: Billionaires – Sector Breakdown, 2011 ....................................................................................................................................... 49

Table 13: Billionaire’s Top 20 List, 2011 .................................................................................................................................................... 50

Table 14: UHNWIs – Centimillionaires – Market Overview, 2007-16 .......................................................................................................... 51

Table 15: UHNWIs – The Affluent Millionaires – Market Overview, 2007-16 .............................................................................................. 53

Table 16: Core HNWIs – Mid Tier Millionaires – Market Overview, 2007-16 .............................................................................................. 58

Table 17: Core HNWIs – Lower Tier Millionaires – Market Overview, 2007-16 .......................................................................................... 60

Table 18: HNWIs – HNWI Holdings Growth (%), 2007-16 .......................................................................................................................... 63

Table 19: HNWIs – Liquid Asset Composition (%), 2007-16 ...................................................................................................................... 64

Table 20: HNWIs – Trends of Investments in Alternative Assets (%), 2007-16 .......................................................................................... 66

Table 21: HNWIs – Alternative Asset Composition (%), 2007-16 ............................................................................................................... 66

Table 22: HNWIs – Trends in “Art, Wine and Wheels”, 2006-11 ................................................................................................................ 67

Table 23: HNWIs – Residential real estate index per city, 2011 ................................................................................................................. 70

Table 24: HNWIs – Commercial real estate rental prices per city, 2011 ..................................................................................................... 71

Table 25: HNWIs – Prime International Cities, 2007- 2011 ........................................................................................................................ 71

Table 26: HNWIs – % Foreign Allocation, 2007-16 – X Axis ...................................................................................................................... 76

Table 27: UHNWIs – Allocations and Share of HNWI Assets, 2011 ........................................................................................................... 81

Table 28: UHNWIs – Allocations and Share of HNWI Assets, 2011 ........................................................................................................... 82

Table 29: Private bank branches by city, 2011........................................................................................................................................... 83

Table 30: Other major Private Banks, 2011 ............................................................................................................................................... 83

Table 31: Wealth Managers per City .......................................................................................................................................................... 84

Table 32: Emerging cities in Wealth Management ..................................................................................................................................... 85

Table 33: WealthInsight City Ratings of Private Banking Potential ............................................................................................................. 86

Table 34: Asset Allocation of Typical European Single Family Office, 2011 ............................................................................................... 87

Table 35: German Family Offices by city ................................................................................................................................................... 88

Table 36: Family Offices in Germany ......................................................................................................................................................... 88

Table 37: Wealth Management Industry in Germany – Recent Deal Activity .............................................................................................. 89

Table 38: Largest 10 Cities in Germany, 2010 ........................................................................................................................................... 96

Table 39: HNWIs – Inheritance tax bands ................................................................................................................................................ 100

Table 40: Euro to USD Moving Annual Average Exchange Rate, 2006–16 .............................................................................................. 102

Table 41: Real GDP Growth Rate, 2006–16 ............................................................................................................................................ 103

Table 42: GDP Per Capita, 2006–16 ....................................................................................................................................................... 104

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Table 43: Gross Savings as a % of Real GDP, 2006–2016 ..................................................................................................................... 105

Table 44: Domestic Market Capitalization, 2006–11 ................................................................................................................................ 106

Table 45: Housing Price Index, 2006–11 ................................................................................................................................................. 107

Table 46: Commodity Indices, 2006–16 ................................................................................................................................................... 108

Table 47: Foreign Direct Investments, 2006–2016 ................................................................................................................................... 109

Table 48: Investments of FIIs in Equity Products, 2006–10 ...................................................................................................................... 110

Table 49: Inflation Rate, 2006–16 ............................................................................................................................................................ 111

Table 50: Money Market Rate, 2006–16 .................................................................................................................................................. 112

Table 51: Balance of Payments, 2006-11 ................................................................................................................................................ 113

Table 52: Government Debt to GDP, 2006–16 ........................................................................................................................................ 114

Table 53: Stock Market Performance, 2006–11 ....................................................................................................................................... 115

Table 54: HNWI Wealth vs. GDP Ratio, 2006–16 .................................................................................................................................... 116

Table 55: Capital Formation as % of GDP, 2006-16 ................................................................................................................................ 117

Table 56: Disposable Income as % of GDP, 2006-16 .............................................................................................................................. 118

Table 57: Patent applications by country, 2010........................................................................................................................................ 124

Table 58: Appendix 1 ............................................................................................................................................................................... 125

Table 59: Appendix 2 ............................................................................................................................................................................... 126

TABLE OF CONTENTS



LIST OF FIGURES

Figure 1: HNWI Wealth Band Definitions ................................................................................................................................................... 10

Figure 2: Map of Germany ......................................................................................................................................................................... 11

Figure 3: Asset Price Performance, 2007-11 ............................................................................................................................................. 21

Figure 4: German HNWI Performance, 2007-15 ........................................................................................................................................ 22

Figure 5: HNWI – Germany vs. the World .................................................................................................................................................. 23

Figure 6: HNWIs – Growth Factor Correlation, 2007-11 ............................................................................................................................. 24

Figure 7: HNWIs – Volume by Wealth Band, 2007-16 ............................................................................................................................... 25

Figure 8: HNWIs – Wealth by Wealth Band (in US$ Billion), 2007-16 ........................................................................................................ 26

Figure 9: HNWIs – Per Capita Net Worth (in US$ Million), 2007-16 ........................................................................................................... 27

Figure 10: HNWIs – Volume Distribution Wealth Pyramid, 2011 ................................................................................................................ 28

Figure 11: HNWIs – Wealth Distribution Wealth Pyramid, 2011 ................................................................................................................. 29

Figure 12: HNWIs – Age Distribution, 2011 ............................................................................................................................................... 30

Figure 13: UHNWIs – Wealth Share vs. Volume Growth............................................................................................................................ 31

Figure 14: UHNWIs – Volume by Wealth Band, 2007-16 ........................................................................................................................... 32

Figure 15: UHNWIs – Wealth by Wealth Band (in US$ Billion), 2007-16 .................................................................................................... 33

Figure 16: UHNWIs – Age Distribution, 2011 ............................................................................................................................................. 34

Figure 17: UHNWIs – Job Titles, 2007- 2011 ............................................................................................................................................. 35

Figure 18: UHNWIs – Distribution by Industry, 2011 .................................................................................................................................. 36

Figure 19: UHNWIs – Sector Performance, 2007–2011 ............................................................................................................................. 37

Figure 20: UHNWIs – Sector Forecasts, 2011–2016 ................................................................................................................................. 38

Figure 21: UHNWIs – Importance of Entrepreneurship, 2011 .................................................................................................................... 39

Figure 22: UHNWIs – Human Capital Development Index by Region, 2011 .............................................................................................. 41

Figure 23: UHNWIs – Regional Performance, 2007-2011 .......................................................................................................................... 42

Figure 24: UHNWIs – Regional Forecasts, 2011-2016 .............................................................................................................................. 44

Figure 25: Billionaires – Market Overview, 2007-16 ................................................................................................................................... 47

Figure 26: UHNWIs – Centimillionaires – Market Overview, 2007-16 ......................................................................................................... 51

Figure 27: UHNWIs – The Affluent Millionaires – Market Overview, 2007-16 ............................................................................................. 53

Figure 28: Core HNWIs – Volume by Wealth Band, 2007-16 ..................................................................................................................... 56

Figure 29: Core HNWIs – Wealth by Wealth Band (in US$ Billion), 2007-16 .............................................................................................. 57

Figure 30: Core HNWIs – Mid Tier Millionaires – Market Overview, 2007-16 ............................................................................................. 58

Figure 31: Core HNWIs – Lower Tier Millionaires – Market Overview, 2007-16 ......................................................................................... 61

Figure 32: HNWIs – Asset Class Composition, 2007-16 ............................................................................................................................ 62

Figure 33: HNWIs – Changing Trends in Total Liquid Assets (as % of Total Assets), 2007-16 ................................................................... 63

Figure 34: HNWIs – Liquid Assets Composition (US$ Billions), 2007-16.................................................................................................... 64

Figure 35: HNWIs – Trends of Investments in Alternative Assets (in US$ Billion), 2007-16 ....................................................................... 66

Figure 36: HNWIs – Trends in “Art, Wine and Wheels”, 2006-11 ............................................................................................................... 67

Figure 37: HNWIs –Foreign Asset Allocation vs. Growth, 2011-2016 ......................................................................................................... 76

Figure 38: HNWIs – Global Distribution of Foreign Investments, 2007-16 .................................................................................................. 78

Figure 39: UHNWIs – Asset Class Composition, 2007-16 .......................................................................................................................... 80

Figure 40: Wealth Management Industry in Germany – Maturity level of players ....................................................................................... 91

Figure 41: German Wealth Management Industry – Behavioral Mapping, 2011 ......................................................................................... 92

Figure 42: GBP to USD Moving Annual Average Exchange Rate, 2006–16 ............................................................................................ 102

TABLE OF CONTENTS



Figure 43: Real GDP Growth (%), 2006–16 ............................................................................................................................................. 103

Figure 44: GDP Per Capita, 2006–16 ...................................................................................................................................................... 104

Figure 45: Gross Savings as a % of Real GDP, 2006–2016 .................................................................................................................... 105

Figure 46: Domestic Market Capitalization, 2006–11 ............................................................................................................................... 106

Figure 47: Housing Price Index, 2006–11 ................................................................................................................................................ 107

Figure 48: Commodity Indices, 2006–16.................................................................................................................................................. 108

Figure 49: Foreign Direct Investments, 2006–2016.................................................................................................................................. 109

Figure 50: Investments of FIIs in Equity Products, 2006–10 .................................................................................................................... 110

Figure 51: Inflation Rate, 2006–16 ........................................................................................................................................................... 111

Figure 52: Money Market Rate, 2006-16 ................................................................................................................................................. 112

Figure 53: Balance of Payments, 2006-11 ............................................................................................................................................... 113

Figure 54: Government Debt to GDP, 2006–16 ....................................................................................................................................... 114

Figure 55: Stock Market Performance, 2006–11 ...................................................................................................................................... 115

Figure 56: HNWI Wealth vs. GDP Ratio, 2006–16 ................................................................................................................................... 116

Figure 57: Capital Formation as % of GDP, 2006-16 ............................................................................................................................... 117

Figure 58: Disposable Income as % of GDP, 2006-16 ............................................................................................................................. 118

INTRODUCTION



1 Introduction

1.1 What is this Report About?

This report is the result of WealthInsight’s extensive research covering the high-net-worth individual

(HNWI) population and wealth management industry in Germany.

It provides a market overview and forecast of the HNWI population and HNWI wealth across asset

classes. By utilizing the WealthInsight HNWI Database, it provides key demographic breakdowns.

The phrase “coverage period” refers to the period 2007–2016, whereas the “review period” relates to the

years 2007–2011 and the “forecast period” to the years 2011–2016.

This report segments the German HNWI population across five wealth bands (defined in Table 1) and

HNWI wealth investments across asset classes and regions.

In order to provide a fully comprehensive analysis of HNWI wealth, wealth is defined as the net value of

assets, including both financial holdings and tangible assets. Financial holdings and tangible assets

include alternative assets, real estate (excluding the primary residence), cash and deposits, fixed-

income, equities and business interests.

INTRODUCTION



Table 1: HNWI Wealth Band and Group Definitions

Wealth Band Definition

Billionaires Billionaires are those HNWIs holding investable assets of US$1 billion or more, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

Centimillionaires Centimillionaires are those HNWIs holding assets between US$100 million and less than US$1 billion, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

Affluent Millionaires

Affluent millionaires are those HNWIs holding assets between US$30 million and less than US$100 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

Mid-Tier Millionaires

Mid-tier millionaires are those HNWIs holding assets between US$5 million and less than US$30 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

Lower-Tier Millionaires

Lower-tier millionaires are those HNWIs holding assets between US$1 million and less than US$5 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

Wealth Group Definition

HNWIs The high-net-worth individuals (HNWIs) wealth group comprises all wealth bands. It represents those individuals holding assets of US$1 million or more, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

UHNWIs

The ultra-high-net-worth individuals (UHNWIs) wealth group comprises the billionaire, centimillionaire and affluent millionaire wealth bands. It represents those individuals holding assets of US$30 million or more, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

Core HNWIs

The core HNWIs group comprises the mid-tier millionaire and lower-tier millionaire wealth bands. It represents those individuals holding assets between US$1 million and less than US$30 million, including equities, bonds, cash and deposits, fixed-income products, real estate, alternative assets and business interests.

Source: WealthInsight © WealthInsight

INTRODUCTION



Figure 1: HNWI Wealth Band Definitions

Source: WealthInsight © WealthInsight

INTRODUCTION



Figure 2: Map of Germany

Source: CIA Factbook © WealthInsight

EXECUTIVE SUMMARY



2 Executive Summary

HNWIs – Slow rebound from the financial crisis and moderate growth forecast

Germany has the 4th

highest number of HNWIs in the world after the US, Japan and China. As of

2011, there are just over 1,253,000 HNWIs in Germany, with a combined wealth of US$3.9

trillion, accounting for roughly 36% of Germany’s total wealth (US$11.0 trillion).

The total number of HNWIs in Germany declined by 8.4% over the review period (2007 to 2011),

while HNWI wealth dropped by 12.5%.

The wealth of HNWIs in Germany was negatively influenced by a large decline in German stock

markets in 2008 and a slow stock market recovery since the crisis.

Growth in HNWI wealth and volumes over the forecast period will be moderate as projections

are constrained by ongoing concerns of a double dip recession in European markets. Growth of

the number of HNWIs in Germany, however, is expected to be greater than in other major EU

markets such as the UK and France.

Over the forecast period, HNWI volumes will increase by 16.5% at a CAGR of 3.1% to reach just

over 1,460,000 individuals in 2016. This is well above the level of 1,367,000 reached at the end

of 2007.

Total wealth of Germany’s HNWIs is forecast to grow by 20% at a CAGR of 3.8%, to reach

US$4.7 trillion in 2016.

Asset classes – HNWIs will move away from real estate and towards alternatives and fixed

income offerings

In 2011, equities are the largest asset class for HNWIs in Germany, accounting for 24% of total

HNWI assets, followed by real estate (23%), business interests (22%), fixed income (16.0%),

alternatives (8.8%) and cash (6.4%).

Fixed income, alternative assets and cash holdings were the best performing asset classes over

the review period, driven by a flight to safety during and after the global financial crisis. Against

international norms, the share of HNWIs assets held in real estate also increased substantially

over the review period, as the German real estate market outperformed global markets.

Alternative asset allocations were boosted by a strong commodities market – the commodity

holdings of German HNWIs increased significantly over the review period, from 1.7% of total

assets in 2007 to 3.3% in 2011.

Over the forecast period, WealthInsight expects a movement away from real estate and towards

alternatives and fixed income products.

Alternative allocations are forecast to rise by the highest margin, as HNWIs seek to take

advantage of the development of alternative asset products geared towards taking advantage of

growth in Asia, especially in China.

EXECUTIVE SUMMARY



The geographic distribution of HNWI investments – Allocations to Europe will decrease as

allocations to Asia and the emerging world increase

In 2011, Europe accounts for 55.1% of the foreign asset held by German HNWIs, followed by

North America with 23.5%, Asia-Pacific with 11.8% and Latin America with 6.3%.

Led by increases in investments into Hong Kong and Singapore, the share of foreign assets that

German HNWIs allocated to the Asia-Pacific region rose substantially over the review period

from 8.2% in 2007 to 11.8% in 2011.

Of the assets German HNWIs hold abroad, the share allocated to the rest of Europe increased

slightly over the review period from 54.8% in 2007 to over 55.1% in 2011. This was despite a

significant drop in investments into Spain and Italy, in particular.

Over the forecast period, WealthInsight expects that, of the share of wealth German HNWIs hold

abroad, the share they allocate to the Asia-Pacific will increase to 13.8% of foreign holdings,

while the allocation to the rest of Europe will decline to 53.1% of foreign holdings.

Core millionaires – Volume and wealth trends

There are 1,241,632 core millionaires in Germany, with combined wealth of US$2,583 billion and

an average wealth of US$2.1 million.

Over the review period, the number of core HNWIs decreased by 8.4% which was in line with

the HNWI average.

According to WealthInsight’s projections, the number of core HNWIs in Germany will grow by

16.5% over the forecast period to reach 1,446,895 by 2016.

UHNWIs – Volume and wealth trends

Germany has the third highest number of UHNWIs in the world, behind the US and Japan. There

are 11,392 Ultra HNWIs in Germany, with an average wealth of US$118 million per person and

a combined wealth of US$1.3 trillion.

There are currently 81 billionaires, 2529 centimillionaires and 8,782 affluent millionaires in

Germany as of year-end 2011.

During the review period, the number of Ultra HNWIs increased by 0.7% compared to the

decline of 8.4% for all HNWIs. This was due to the particularly strong performance of affluent

millionaires. There was a wide range of performance between the different Ultra bands: the

number of billionaires dropped by 24%, while the number of centimillionaires decreased by

4.9%. Affluent millionaires, by contrast, grew by 2.8% over the period.

Over the forecast period, WealthInsight expects the number of Ultra HNWIs to rise by 17.9%, to

reach 13,426 individuals in 2016. Billionaire volumes will grow by 21%, the most of any UHNWI

wealth band, while centimillionaire and affluent millionaire volumes are set to increase by 18.0%

and 17.8%, respectively.

EXECUTIVE SUMMARY



Over the coverage period, 2007 to 2016, Billionaires are the only ultra wealth band forecast to

register negative growth in terms of volumes, declining by 8.0%, from 106 individuals in 2007 to

97 individuals in 2016. On the other extreme, the number of affluent millionaires is expected to

increase by 21%, the largest percentage growth of all wealth bands over the coverage period.

UHNWIs – Demographic and sector trends

The average age of UHNWIs in Germany is 61 years. Billionaires have the highest average age

of 67 years, while the average age of centimillionaires and affluent millionaires is 63 years and

60 years, respectively.

Manufacturing (including automotive) and retail & fashion are the two main industries in which

UHNWIs have accumulated their wealth, serving as the source of wealth for 19.5% and 15.5%

of UHNWIs, respectively. Other important industries in which German UHNWIs have made

their fortunes include FMCG (12.7%), diversified (9.6%) and financial services (8.4%).

Over the review period, the number of UHNWIs who have acquired their wealth through retail &

fashion grew by 19.2% – more than any other major sector. UHNWIs who acquired their wealth

in manufacturing – the most important sector for UHNWI wealth creation – were more severely

impacted by the global financial crisis, with their total number rising by a lower 2.7% over the

review period. However, this is still above the overall growth in the number of Germany’s

UHNWIs of 0.7% over the period.

The number of UHNWIs who acquired their wealth in the technology sector declined by more

than for any other sector – 23% over the period.

UHNWIs – Regional trends

Frankfurt is home to the largest portion of Germany’s UHNWIs (16.4% or 1,868 UHNWIs). This

is above Paris (1,501 UHNWIs), but still well below London (4,224 UHNWIs). There are also

sizable German UHNWI populations in Munich (1,113 UHNWIs), Hamburg (843 UHNWIs),

Düsseldorf (524 UHNWIs), Berlin (464 UHNWIs) and Stuttgart (382 UHNWIs).

Among Germany’s top 10 cities, Munich and Essen were the top performing cities for UHNWIs

over the review period, with number of UHNWIs in each city increasing by 30% and 23%,

respectively.

The population of UHNWIs in Berlin and Stuttgart fared less well, with their number decreasing

over the review period by 16.5% and 13.2%, respectively. UHNWIs in Frankfurt also saw their

number decline over the review period, but by a less severe 6.2%.

EXECUTIVE SUMMARY



Private Banking – Well developed wealth management market

The wealth management sector in Germany is well developed and had AuM of US$1.1 trillion as

of year-end 2011. This is 28% of the total wealth of Germany’s HNWIs, a ratio that is well above

the global average of 20%. German HNWIs account for 57%, or US$630 billion, of the total AuM

of Germany’s wealth management sector, meaning that 16% of total German HNWI wealth is

managed by the German wealth management sector.

There are over 50 private banks and over 300 wealth managers currently operating in Germany.

The top ten private banks control 40% of the wealth management market in Germany and have

AuM of over US$440 billion.

Frankfurt is home to 115 wealth management head offices, followed by Munich with 75,

Hamburg with 28 and Berlin with 24.

Among top 10 cities for UHNWIs: Essen, Bonn, Hannover and Stuttgart have the lowest number

of wealth managers per UHNWI. These cities may therefore offer the greatest potential for the

wealth management sector going forward.

There are 112 multi-family offices with a presence in Germany. Sixty-one of these are German

based institutions, 38 are Swiss and six are British multi-family offices also operating in the

country. The remainder are based in Luxemburg and other offshore centers.

ABOUT WEALTHINSIGHT



3 About WealthInsight

WealthInsight provides detailed data and insightful analysis on the world's High Net Worth Individuals

(HNWI) and wealth sector. With decades of experience providing business information, WealthInsight

helps organizations to make informed decisions and win new business.

At WealthInsight's core is our proprietary HNWI Database of the world's wealthiest individuals. Around

this database we have built a number of valuable research based products and services that make

WealthInsight much more than just a rich contact list.

We work with and provide solutions for:

Wealth Managers

Private Banks

Family Offices

Technology Providers

Professional Services - Consultants, Accountants, Lawyers and Real Estate Professionals

Fund Managers, Hedge Fund Managers, Asset Managers, Venture Capitalists

Nonprofits and Educational Institutions

WealthInsight’s corporate headquarters are located in London, with offices in New York, San Francisco,

Sydney, Seoul and Hong Kong.

For more information on WealthInsight please visit www.wealthinsight.com

Reports

WealthInsight publishes high quality research reports focused on the wealth sector. The reports provide

comprehensive analysis of countries, regions and special topics.

With the High Net Worth Individual (HNWI) Database as the foundation for its primary research and

analysis, WealthInsight is able to obtain an unsurpassed level of granularity, insight and authority on

the HNWI universe in each of the countries and regions covered.

All reports are available as a part of the WealthInsight Intelligence Centre. Reports can also be

purchased on a subscription or one-off basis.

Every WealthInsight report is uniquely formulated for the region, country or topic covered. Some of the

key features of the reports include:

Market Sizing

Forecasting

Benchmarking

HNWI Asset Allocation

Behavioural Mapping

Family Offices

http://www.wealthinsight.com/

ABOUT WEALTHINSIGHT



Methodology

WealthInsight’s team of in-house analysts devise and collect data over a historical period of five years

and develop forecasts for a five year forecast period. All WealthInsight Wealth Reports are rigorously

sourced and created according to a comprehensive methodological process:

Internal Audit

Review of in-house databases to gather existing data:

Historic market databases and reports

High Net Worth Individual (HNWI) Database

Wealth management, private bank and family office database

Financial deals and news archive

Secondary Research

Collection of the latest market-specific data from a wide variety of industry sources:

Government statistics

Industry associations

Company filings

Broker reports

International organizations

Primary Research

Review of the latest wealth management and private banking industry trends

Surveys using panels compiled from across the wealth sector:

Wealth management and private banking professionals

Financial services experts

High net worth individuals

Expert Opinion

Collation of opinion taken from WealthInsight interviews of leading industry experts

Analysis of third-party opinion and forecasts:

Broker reports

Industry associations

Wealth management and private banking media

Official government sources

Leading academic research and commentary

Data Consolidation and Verification

Consolidation of data and opinion to create historical datasets

Creation of models to benchmark data across sectors, asset classes and geographies

Market Forecasts

Feed of forecast data into market models:

Macroeconomic indicators

Industry-specific drivers

ABOUT WEALTHINSIGHT



Analysis of the WealthInsight HNWI Database and Wealth sector company databases to

identify key trends:

Latest wealth trends

Key drivers of the wealth management industry

Report Writing

Analysis of market data

Discussion of company and industry trends and issues

Integration of survey results

Annual review of financial deals and wealth management trends

Standardization of market definitions using recognized industry classifications

Quality Control

Peer review

Senior-level QC

Random spot checks on data integrity

Benchmark checks across databases

Market data cross-checked for consistency with accumulated data from:

Internal databases

Company filings

ABOUT WEALTHINSIGHT



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