3Chief Operating Officer Merrill Lynch Global Private Client – Italia Massimo FortuzziChief Operating OfficerMerrill Lynch Global Private Client – ItaliaCountry presenters must agree division of the presentation in advance, and alter names accordingly
5Key Findings – Market Sizing and Growth 2006 In 2006, 9.5 million people globally held more than US$1million in financial assets – an increase of 8.3% over the 2005 HNWI populationHNWI wealth gained 11.4% over 2005 to total US$37.2 trillionThe total population of Ultra-HNWIs, people with more than US$30million in Financial assets, now stands at 94,970 an 11.3% increase over 2005In 2006 GDP Growth and Market Capitalization worked in concert to fuel wealth creationEmerging markets registered strong advances - Singapore, India, Indonesia and Russia witnessed the highest growth in HNWI populationsHNWI financial wealth is expected to reach US$51.6 trillion by 2011, growing at an annual rate of 6.8%“Let us start by going through some of the key findings from this year’s market sizing data”Note in 1st bullet: HNWI population growth accelerated from 6.5% in 2005, to 8.3% in 2006
6The Global HNWI Population Grew 8. 3% in 2006 to 9. 5M, Up from 6 The Global HNWI Population Grew 8.3% in 2006 to 9.5M, Up from 6.5% Growth in 2005HNWI Financial Population by Region (Millions),8.2Million (1)8.8 Million (2)9.5MillionAnnual Growth %% Change Total HNWI PopulationAfrica12.5%Number of HNWIs Worldwide (in Millions)Middle East11.9%Latin America10.2%Asia-Pacific8.6%Europe6.4%Overall, the number of HNWIs increased by 8.3% to reach 9.5 million in 2006, an acceleration over the 6.5% growth in HNWI population seen in 2005:This is not surprising since 2006 global real GDP growth accelerated to 5.4%, up from 4.3% in 2005.“Let me take a minute to walk us through some of the drivers impacting HNWI regional growth rates”North America experienced a substantial increase in HNWI population growth, from 6.9% in 2005 to 9.2% in 2006:The acceleration came as real GDP and market capitalization both showed strong gains in 2006.In Europe, HNWI growth accelerated due to strong market capitalization gains on the back of strong corporate profits, IPO’s, and ongoing foreign investment. Additionally, strong real GDP and market capitalization growth in Eastern Europe helped boost Europe’s HNWI numbersIn Asia-Pacific, HNWI population growth accelerated from 7.3% in 2005 to 8.6% in 2006:Continued GDP growth and FDI combined with a growing confidence in the region produced strong gains.Strong IPO activity in China and Hong Kong helped drive market capitalization growth (130.6% performance in 2006 for China/Shanghai A shares)Regional growth was held-back to some degree by the relatively weaker performance of Japan’s economy.HNWI population growth accelerated in Latin America and the Middle East due to rising oil demand and corresponding commodity price growth in both regions.In regard to Africa, rising commodity prices and increased foreign investment from countries such as China have helped bolster real GDP growth and opened up the mining and exploration sectors, thereby aiding HNWI population growth.North America9.2%Note: (1) In 2004, number of Asia HNWIs (and thus Global HNWIs) was restated as a result of updated data made available. (2) Bahrain and Qatar added to model for years 2005 onward. As a result, number of HNWIs in 2005 is 8.8M instead of 8.7M as stated in WWR 2006.Source: Capgemini Lorenz curve analysis, 2007
7HNWI Wealth Grew by 11.4% in 2006, up from 8.5% in 2005, to Total $37.2 Trillion HNWI Financial Wealth by Region (Trillions),30.7Trillion (1)33.4 Trillion (2)37.2TrillionAnnual Growth %% Change Total HNWI Wealth 2005 – 2006Africa14.0%HNWI Financial Wealth ($USD Trillions)Middle East11.7%Latin America23.2%Asia-Pacific10.5%Europe7.8%Shifting to HNWI wealth, overall the growth-rate of HNWI wealth accelerated to 11.4% in 2006 over a rate of 8.5% in 2005:HNWI wealth at year-end 2006 totaled $37.2 trillion.As you might expect, many of the same economic drivers that affect HNWI population growth also apply to HNWI wealth creationOf additional note:North America maintained its position as having the largest number of HNWIs and accumulated wealthIn most regions of the world, HNWI wealth growth outpaced population growth, leading to a global concentration of wealth. However the Middle East was the notable exception with HNWI population growth outpacing wealth growth, thereby causing a dispersion of wealth among newly minted HNWIs“Now let us take a more detailed look at the drivers of HNWI population and wealth as mentioned earlier - real GDP and market capitalization growth”North America10.3%*note: (1) In 2004, HNWI wealth figures were restated as a result of updated data becoming available; (2) Bahrain and Qatar added to model for years 2005 onwardNote: All chart numbers are roundedSource: Capgemini Lorenz curve analysis, 2007
8Number of Individuals – 2006 “Mid-Tier Millionaire” Wealth Continued to Grow Increasingly Concentrated with The Richest 1% of HNWIs Controlling Over 35% of Total HNWI WealthGlobal Number of Individuals per Wealth Band (k), 2006, and Growth (%),UHNWIs accounted for 1% of total HNWI population and held 35% of HNWI wealth ($13.07 T) in 2006Number of Individuals – 2006Growth (1)% TotalWealth95 k (1.0%)11.3%35.1%’05-’06Ultra High Net Worth+ $30 m85.4 k (1.0%)10.2%33.6%’04-’05“Mid-Tier Millionaire”881.7 k (9.3%)9.4%22.7%’05-’06$5 - $30 m803.6 k (9.2%)8.4%23.0%’04-’05k (89.7%)8.2%42.2%’05-’06$1 m – $5 mk (89.8%)6.2%43.4%’04-’05Source: Capgemini Lorenz Curve Model; Capgemini World Wealth Report 2007Note: (1) Figures from Bahrain and Qatar are not included in growth calculation as both countries were added in WWR 2007 and reflected in 2006 HNWI population and wealth figures only – effect on growth at global level is insignificant ; numbers do not add up to 100% due to rounding
9The Global Economy Grew at 5 The Global Economy Grew at 5.4% in 2006, Led by Eastern Europe and Asia-PacificReal GDP Growth Rates,%On this slide, we present real GDP growth in different markets around the world.Globally, real GDP continued to show a healthy growth in 2006Global real GDP grew 5.4% (up from 5.0% in 2005)Compared to 2005, 2006 showed higher growth rates, a sign that many of the major economies had stabilized and were ready for another round of growthRegionally, GDP performance varied:Asia-Pacific GDP was led by 10.5% growth in China and 8.8% growth in IndiaIn the United States, real GDP growth remained relatively constant at 3.3% in 2006 — up from 3.2% in 2005The European Union experienced its greatest growth since the year 2000 with EU-27 real GDP growth at 2.7% in 2006 up from 1.7% in 2005Real GDP growth was high in Eastern European countries as demand for exports from these countries increased in Western Europe which is a major trading partner of Eastern EuropeMarket capitalization growth rates were robust, supported by strong corporate profits, healthy IPO activity, and continued investment in technologyLike many other developed nations, the possibility of a weakening dollar (strengthening Euro), inflationary pressures, and oil price risks impact EU-27 GDP growthEmerging markets continued to outperform other parts of the world, aiding wealth creation in those economies – many emerging economies benefited from surging oil and commodity pricesThe BRIC nations of Brazil, Russia, India and China remained strong economic players in the competitive global arenaTransition: In addition to real GDP growth, market capitalization drives wealth creation. In 2006, these two economic drivers worked in concert to fuel wealth creation.WorldNorthAmericaWestern EuropeEastern EuropeAsia PacificLatinAmericaStrong labor markets and rising real wages in Western Europe helped support private consumption and real GDP growth.Source: The Economist Intelligence Unit Forecasts,
10Similar to GDP, Most Worldwide Market Capitalizations Experienced Accelerated Growth In 2006 Market Capitalization Growth Rates for Major Stock Exchanges by Region*,Market capitalization growth rates have risen significantly following their stabilization in 2005In 2006, market capitalization remained a strong driver of HNWI wealth growthEuropean markets performed well compared with prior years%%Market capitalization remained a strong driver of HNWI wealth growth, building on gains seen in 2005Europe led market capitalization growth with a 32.5% increase in 2006, while the Americas’ market capitalization grew by 16.4%Specifically, market capitalization in London and Germany grew at 24.1% and 34.1% respectively. The following factors contributed to this growth:Strong corporate profitsHealthy IPO activityInvestment in technologyChina (Shanghai/Shenzhen stock exchanges) experienced a particularly strong growth. Both exchanges taken together, grew at 220.6% in mainly due to strong IPO activitySource: “Focus”, World Federation of Exchanges, Jan 2007;
11HNWI Population Growth Emerging Economies Drove Growth and North America Remained Strong While Europe Picked Up PaceRegionHNWI Population GrowthWhy?Robust GDP growth – (US 3.3%, Canada 2.7%)Increase in savings rate as percentage of GDP in the USSolid gains in stock indices in US – (Dow Jones 16.3%, S&P 13.6%)North America9.2%GDP growth strong across all of EU % in 2006 up from 1.8% in 2005Solid stock market returns in Germany, FranceHigh stock market returns in economies such as Poland and Czech RepublicEurope6.4%Continued high savings rates – China 50.1%, South Korea 38.4%High, sustained, GDP growth - China 10.5%, India 8.8%Robust stock market performance in China and IndonesiaStrong increase in market capitalization in pockets – China 220.6%, Philippines 57.5%Asia-Pacific8.6%Latin AmericaStrong GDP growth – 10.4% in Venezuela, 8.2% in ArgentinaContinued strong market capitalization growth – Mexican Exchange – 45.7%, Sao Paulo SE – 49.6% aided by rising commodity prices10.2%This panel links HNWI population growth rates to various regional macroeconomic drivers such as GDP growth, savings and market capitalizationThe North American HNWI population returned to increased growth, with 9.2% growth in 2006, up from 6.9% in 2005In Europe, markets performed well in 2006 and real GDP growth was highest since the year 2000, catalyzing wealth formation.In Asia-Pacific, markets such as Singapore, India, Indonesia and Taiwan, all experienced double-digit HNWI growth in 2006In Latin America, Argentina, Brazil, Peru, Chile, and Venezuela all profited from the worldwide surge in oil prices, buttressing Latin American growth in 2006In the Middle East, relatively high oil prices helped bolster well-above-average real GDP growth:However, unfavorable market capitalization growth rates affected HNWI wealth growth, causing a dispersion of wealth in the region. HNWI population in the Middle East grew faster than HNWI wealthTransition: In summary, 2006’s economic drivers provided the impetus that fueled HNWI expansion – going forward, our projections take into account slowing worldwide growth.High GDP growth in the Middle EastHistorically high oil prices helped buoy real GDP growth in GCC nationsAfrican commodity exporting nations benefited from rising worldwide commodity and energy pricesMiddle East/AfricaME 11.9%Africa %
12HNWI Financial Wealth Forecast by Region, 2004-2011E (US$ Trillions) Looking Ahead, HNWI Wealth Is Projected to Total US$51.6 Trillion By 2011, Growing at a Rate of 6.8%HNWI Financial Wealth Forecast by Region, E (US$ Trillions)US$51.6 TAnnual Growth Rate, EUS$37.2 TGlobal6.8%US$33.4 TUS$30.7 TAfrica6.1%Middle East9.5%At 6.8% Global GrowthLatin America7.2%Asia-Pacific8.5%Europe4.3%North America7.0%Looking forward, world economic growth is expected to slow down in 2007 and coming years. Several factors contribute to this slowdown:First, economic health is cyclical in nature and we are coming off 4 years of healthy growthSecond, oil prices are pulling on the purse strings of oil-consuming nations throughout the world:Although many emerging economies are benefiting from elevated commodity prices, developed markets are still the economies that exert most pressure on the overall global economyThird, economists widely cite a gradual slowdown of larger, more mature economies, such as the US:This slowdown will have a significant ripple-effect on the entire Asia-Pacific region as many economies rely on a large export business to the US.And lastly, monetary policy has tightened during the past year and is expected to continue to some degree in coming years:Rising interest rates hinder investment by inflating the cost of moneyAs a result of these 4 factors, wealth growth is expected to slow down. We project HNWI wealth to grow at an annual average of 6.8% through 2011Note: All chart numbers are rounded.Source: Capgemini Lorenz curve analysis, 2007
13Asset Allocation“The second component of the World Wealth Report is a look at HNWI asset allocation behaviors”
14Key Findings – HNWI Asset Allocation HNWI allocations in 2006 varied from 2005:Allocations to real estate increased while allocations to alternative investments dippedGlobally, high returns in commercial real estate and REITs drove increased allocations to real estate:In 2006, real estate investments became more liquid and more transparent driven by the increase, globally, in legislation which allows for REIT-type investment structuresCertain alternative investments which capitalize on market volatility did not fare well during 2006, a year of relatively low volatilityHNWIs globally continued to diversify their holdings as they pulled funds away from North America and Asia-Pacific to Europe“Listed here are the key findings from our 2006 asset allocation analysis” The Asset Allocation is driven by the results of our annual Financial Advisor Survey. Here I will highlight the 4 key points which will be explained in further detail in the coming slides:HNWI allocations were varied significantly from 2005:Allocation to real estate investments increased at the expense of alternative investmentsHigh returns from commercial real estate and REITs drove investments in real estate:Global real estate investment (including direct real estate and REITs) totaled $900 billion in 2006 – the strongest-ever performance by global real estate marketsIn the past year, REIT structures were permitted in the UK and GermanyIn 2006 the FTSE EPRA/NAREIT Global Real Estate Index Series gained 42.35%Certain alternative investments which capitalize on market volatility did not fare well during 2006:The Volatility Index (VIX), which tracks market volatility, hovered around 11% for the majority of the year with a mid-year spike to 22%. Overall, well below the 15-year average of 19%.HNWIs continued to diversify their holdings internationally as they pulled funds away from North America to Europe:European markets fared well in 2006 and HNWIs moved their assets to capitalize on the strength of the euro and the opportunity for growth in emerging markets in Eastern EuropeEuropeans, North Americans, Latin Americans and those in Asia Pacific increased investments in EuropeGoing forward, Financial Advisors surveyed project that HNWIs will continue to decrease investments in North America and increase investments to Europe and Asia-Pacific to 2008Source: Capgemini Analysis.
15Breakdown of Financial Assets of HNWIs, 2004 to 2008F (%) In 2006, HNWIs Allocations to Real Estate Increased As Alternative Investments DippedBreakdown of Financial Assets of HNWIs, 2004 to 2008F (%)100%100%100%100%This trended data provides a perspective on how HNWIs reallocate their portfolios based on market conditions:After the tumultuous years of 2001 and 2002 and a market recovery in 2003, 2004 was a “hold-and-see” year for HNWIs. They focused on diversifying their portfolios and adopting more conservative asset allocationsIn 2005, HNWIs adopted a slightly more aggressive strategy than in 2004: increasing their allocations to equities and alternative investments.In 2006, HNWIs took advantage of the global real estate market and reallocated their investments to reflect the higher returns garnered by commercial real estate and REITs. Thus, HNWIs increased their allocations to this investment class by 8%:Global real estate investment (including direct real estate and REITs) totaled $900 billion in 2006 – the strongest-ever performance by global real estate marketsAdditionally another strong performance of global stock markets drew a further increase in HNWIs’ allocation to equities in 2006Looking forward to year-end 2008, HNWIs are likely to shift their allocations toward alternative investments after realizing profits from their real estate investmentsThis section is repetitive to what is in the notes to the summary slide, but if it is not covered in the summary slide, then it should come here.High returns from commercial real estate and REITs drove investments in real estate:REIT structures were allowed for in the UK and GermanyIn 2006 the FTSE EPRA/NAREIT Global Real Estate Index Series gained 42.35%Certain alternative investments which capitalize on market volatility did not fare well during 2006:The Volatility Index (VIX) which tracks market volatility hovered around 11% for the majority of the year with a mid-year spike to 22%, overall, well below the 15-year average of 19%.* Includes: Structured products, hedge funds, derivatives, foreign currency, commodities, private equity/venture capital** Includes: Commercial Real Estate, REITs, and Other Investment PropertiesSource: Capgemini/Merrill Lynch Financial Advisor Surveys, March 2006, March 2007
16Breakdown of Financial Assets of HNWIs by Region, 2006 (%) Asia-Pacific and Latin America Lead the Real Estate Trend with Allocations of 29% and 25% RespectivelyBreakdown of Financial Assets of HNWIs by Region, 2006 (%)100%100%100%100%100%100%Moving from a global breakdown of HNWIs assets, this slide breaks down asset allocations by investors in each region.Allocation variations emerge when comparing the different regions:In line with trended data, investors in North America allocate the largest percentage to equities (41%), 10 percentage points above the global averageInvestors in Asia-Pacific allocate the largest percentage to real estate (29%). Due to the instability of emerging and developing markets, it follows that Asian investors seek tangible investment vehiclesInvestors in Asia-Pacific also allocate more to cash/deposits than HNWIs globallyFinally, Europeans and Middle-Easterners exhibit strikingly similar investing strategies, with the most balanced portfolio allocations compared to other regions* Includes: Structured products, hedge funds, derivatives, foreign currency, commodities, private equity/venture capital** Includes: Commercial Real Estate, REITs, and Other Investment PropertiesSource: Capgemini/Merrill Lynch Financial Advisor Surveys, March 2006, March 2007
17From 2005 to 2006, HNWIs Increased their Investments to Europe Geographic Breakdown of HNWI Investment,2005 to 2008F (%)100%100%100%Moving from a breakdown of HNWIs’ asset allocation by region, this slide breaks down HNWIs’ international allocations by geography.In 2006, HNWIs around the world continued to diversify their holdings internationally, a trend that has been building steadily in recent yearsHNWIs continued to move funds out of North America (by 1 percentage point)HNWIs also moved funds out of Asia-Pacific (by 2 percentage points) in favor of investments in Europe which increased by 3 percentage pointsEuropean markets fared well in 2006: Stocks in this part of the world enjoyed healthy growth in 2006 and GDP growth in the EU-27 was up 2.7% for the year, compared with 1.8% growth in 2005.Britain’s blue-chip FTSE 100 was up 10.7% in 2006; Germany’s DAX index of 30 blue-chip stocks rose 22%; and the French CAC 40 index climbed 17.5%.While North America remains the most popular region for investment, foreign investors’ interest in this part of the world has decreased in recent yearsLatin Americans were the only investors to increase their investments in North AmericaLooking forward, HNWIs are projected to continue to diversify internationally as investments decline in North America, in favor of increased allocations to Europe, Asia-Pacific, and the Middle East*: weighted based on the net financial wealth of that region and aggregated to create a weighted global allocation*: In 2005 investments to Africa were less than 0.4%Source: Capgemini/Merrill Lynch Financial Advisor Surveys, April 2006, March 2007
18Vice President Financial Services Responsabile Wealth Management Mauro MasciarelliVice President Financial ServicesResponsabile Wealth ManagementCapgemini - ItaliaDiscuss in advance any transfer of speaker and who does the introduction
19SpotlightThe third and final section of each year’s World Wealth Report is the spotlight. This section looks at key trends within the wealth management industry.
20DRAFT Speaker notes ---under revision as of June 15th 2007--- Spotlight Key Findings: Dynamic, Client-Needs Based Service Models are EmergingLeading firms take a new approach to client serviceNeeds-Based approaches provide the most appropriate products and services and unlock potential value for clientsWealth management firms have adopted a needs-based approach to client segmentationSeveral factors beyond client assets under management affect the optimal product and service bundling needed for any single clientAdvisor practice models and servicing approaches can be customized based upon client and firm needsOptimizes the life time value of advisor/client relationshipsLeading firms provide wealth management advisors with more advanced toolsA sophisticated technology platform supports delivery to ensure long-term relationships with HNW clientsSources of wealthGlobalization of spending approachesLife eventsDemographicsInvestment goalsFinancial behavior and involvementDRAFT Speaker notes ---under revision as of June 15thThis year, our spotlight focuses on wealth management practice models.Currently, multiple practice models support HNWI wealth management needs – including Brokerages, investment managers and wealth plannersUnder these practice models, client assets are considered to be a good indicator of their wealth management needs. As a result, clients are assigned to one of the existing practice models based on the assets they bring to the firm.Often, models strictly based on AUM place clients into pre-conceived service channels that may not completely satisfy clientsThis year our research showed that, contrary to current belief, client needs are not similar within the same wealth band. Each client is unique and there are significant differences in wealth management needs even within the same wealth band.Factors such as sources of wealth, life events, spending goals etc. affect each client’s needsRecognizing these differences in client needs, leading firms are beginning to take more criteria into consideration when assigning clients to practice modelsThese segmentation criteria may include age, source of wealth, communication preferences etc.However, despite efforts in this direction, the servicing approach tends to be static – that is, current practice models are not able to predict client needs and provide for them in anticipationBased on our research this year, we have four major recommendations for creating client needs-based and dynamic servicing models:Firstly, segmentation must be based on criteria beyond merely AuM. Wealth management firms must gather more information about their clients before assigning them to practice models.Secondly, products and services must be selected based on client needs as determined by the information gathering processThirdly, an appropriate service approach must be selected for servicing each client in the context of life-time client value to the firmFinally, there must be a continuous feed back loop to re-evaluate client needs and provide for their needs in anticipationTogether these four success factors will result in enhanced client satisfaction and a richer bond between the client and wealth management firm“I will focus on these four critical success factors in the next few slides, and what it will take to achieve them.”
21DRAFT Speaker notes ---under revision as of June 15th 2007--- We Recommend Four Critical Success Factors for a Needs-Based and Dynamic Service ModelDRAFT Speaker notes ---under revision as of June 15thThis slide lays out the four critical success factors as I outlined in the previous slide.As you can see in the diagram on the left, we propose a continuous feed-back process to ensure that client needs are continuously re-evaluated and anticipated in advanceThis feed-back loop is the foundation of a dynamic service modelThe process starts with an in-depth assessment of client needs based on factors like source of wealth and communication preferences, as well as the traditional AUMClearly, this process of understanding client needs will require detailed information gatheringSecond, we recommend that firms select appropriate products and services based on these client needsThese products and services may go beyond standard product array for wealth bandsClearly, some client needs may go beyond the firm’s strategy. In such cases, the firm may decline such additional businessNext, the firm must determine an appropriate service approach based on client needs, and also the client’s life-time value to the firmClearly, the service approach will vary for each unique clientSome “do-it-yourselfers” may need minimal direction and may choose to conduct most of their business online, while others may need a team of advisorsFinally, there must be a process of continuous re-evaluation of client needsThis will close the loop and ensure that client needs are anticipated and provided for in advanceWe expect that taken together, these four steps will ensure that client expectations are exceeded and a closer relationship develops between clients and financial service providers.Clearly, this approach is different from existing client service approaches.Wealth management firms need to reconfigure the process for understanding their clients, and provide the right service model.
22A Needs-Based Approach Requires a Continuous Reevaluation of Client Needs Traditional ApproachNeeds-Based ApproachClient Needs Determination and SegmentationClients segmented by:Assets under managementRisk ProfileOther demographic characteristicsClient needs are not proactively reviewed prior to firm strategy determinationClients segmented by criteria beyond AUM and demographics:Current and future investment objectivesBehavioral characteristicsAspirational modelsExternal interestsPreferred communication style/desired level of interactionClient needs determined based on product, service, and investment criteriaNeeds drive firm strategy and service offeringProduct & Service AlignmentStrategy and product offers determined prior to analysis of client needsMarketing primarily based on AUM and risk profileClients offered products based on wealth bandFirm looks at book of business, and existing and target clients to assess its own core competencies and offeringsClients offered products on a needs-based approach. Expected client life-time value drives level of serviceDRAFT Speaker notes ---under revision as of June 15thThis slide lays out how our proposed client service approach differs from the existing approaches.To start with, we are proposing that client segmentation go beyond current AUM based segmentation approaches. Financial service providers should also consider behavioral approaches and client aspirations, for example.Secondly, we propose that clients be offered products and services based on their needs – rather than wealth band aloneThirdly, we propose that a service approach be tailored for each individual client based on client needs but also the client life-time value to the firmFinally, we propose that this service approach not be static – but ever chanigng along with client needsFor this, financial service firms must conduct a continuous review of client needs and must anticipate client needs in advance, based on their behavioral characteristics and preferencesClearly, this will require a very sophisticated information gathering infrastructure. In the next slide I will lay out how this infrastructure would function.Practice Model & Service Approach DeterminationClients placed into practice model based on AUMService approach driven by practice modelPractice model and service approach tailored to client needsMultiple delivery channels and practice models used as necessaryService ReviewOnce clients are assigned to a model, service approach is static unless significant changes in AUM occurOngoing reviews to uncover opportunities for products, services, and investments based on behavioral dynamics, valuation analytics, and other criteria
23DRAFT Speaker notes ---under revision as of June 15th 2007--- A Technology Framework for Information Gathering Is Critical to Anticipating Client NeedsDRAFT Speaker notes ---under revision as of June 15thThis slide describes an architectural blueprint for a wealth management platform supporting client-aligned service deliveryThe diagram shows a service oriented architecture, indicating how different service types are layered. This provides the base support needed by an agile businessIn order to support delivery of services closely aligned to client needs the architecture needs to support creation of targeted services by combining base service definitions with service rules and policiesThis is shown in the Information Services layer – practice rules and service rules determine how services are deliveredThese rules depend on rich client and advisor profile information, the combination of a service template and client/firm rules and policies via a sophisticated business rules engine delivers the service aligned to a client segment.This model propagates through the architecture allowing operational, client & produce and administration services to be tailoredThe RHS governance aspect shows those governance services required to create and maintain practice and service rules and policiesIn summary, it is certainly possible for financial services firms to develop client needs-based and dynamic service models that will anticipate and provide for client needs in advance.Other industries have already adopted such models. For example, the Ritz Carlton, an industry leader in the hoteling industry, closely monitors client preferences during each stay and then provides those preferences in advance of the next stay.Financial service providers have also already started taking steps in this direction and a few models already exist...(transition to next slide)Service-oriented architectures support improved business agilityDetailed and dynamic client information is key to anticipating client needsBusiness rules need to be adjusted to move from static to dynamic service modelsBusiness intelligence dashboards allow firms to continuously monitor client satisfaction and retention
24DRAFT Speaker notes ---under revision as of June 15th 2007--- Industry Leaders Have Already Started Developing Needs-Based Service ModelsCreation of Non Resident Indian Wealth Management TeamsSupport of Sharia Investing in the Middle EastGlobalization of European Wealth Management PracticesDRAFT Speaker notes ---under revision as of June 15th...Here are a few examples of how wealth management industry leaders, globally, have adapted and begun to provide for specific client needs that go beyond the wealth band aloneNon-resident Indian or NRI Wealth Management teams are one example – leading financial service providers have identified the special needs of the NRI segment, and begun to provide special services for this segment.Many international private banks have created practice models and advisor teams that specialize in servicing NRI’sFirms closely monitor changes in this community to continuously refine and enhance their NRI practices with what they learn more about their client base and as the NRI community maturesIn the Middle East, industry leaders have developed Sharia compliant products and services.A deeper understanding of Sharia law and the impact on client service modelsIncreased acceptance of Sharia-compliant products among the Islamic population in recent yearsDevelopment of Dubai and other cities as regional financial hubsAnd in Europe, an increasingly global diaspora has prompted service providers to provide more diverse servicesAdvisors are becoming more global in their outlook as they increasingly support families who live in more than one country – and conduct banking activities in multiple geographiesIn the United Kingdom, some advisors report a breakdown of 25% local clients versus 75% clients from Emerging Europe, the Middle East and India
26Italia – Analisi economica 2006 ISTANTANEE NAZIONALI – ITALIAItalia – Analisi economica 2006Numero degli HNWI in Italia (migliaia),DriversCrescita (05-06)3,8%Crescita del PIL reale del 1.7 nel 2006 (aggiornato a maggio ad 1,9% - fonte: Relazione Annuale Banca d’Italia), partendo da una crescita dello 0,1% nel 2005Guidata dalla crescita nel consumo privatoInflazione bassa, che riflette l’alleggerimento dei prezzi del petrolioOstacoliIl deficit del bilancio è aumentato al 4,4% (Fonte Eurostat) del PIL nel 2006:Esso dovrebbe abbassarsi al 2,1% (fonte: Commissione UE) nel 2007 e al 2,2% (fonte: Commissione UE) nel 2008Deficit del bilancio/previsione Commissione UE sul PIL: inferiore al 3% nel 2007Il deficit delle partite correnti è aumentato al 1,8% del PILLe finanze pubbliche sono in miglioramentoLa crescita economica rimane indietro rispetto alla media dell’area dell’euro, ma è previsto un miglioramentoN. diHNWI (000)Fonte: Analisi della curva di Lorenz da parte di Capgemini, dati di base da fonti molteplici, compreso MSCI; Analisi Capgemini, 2006; Eurostat; Previsioni della Commissione Europea (Reuters, il 7 Maggio 2007), Relazione della Banca d’Italia del 31 maggio 2007.
27Italia – Analisi economica 2006 ISTANTANEE NAZIONALI – ITALIAItalia – Analisi economica 2006Drivers chiave della ricchezza e della crescita degli HNWIDriverEventi 2006Drivers 2006Impatto sul ModelloPrevisione 2007Crescita del PILe risparmiocrescita del PIL reale del 1,7%Incremento dallo 0,1% del PIL reale nel 2005Risparmi al 20,7% del PILSi prevede che il PIL sarà confermato al 1,7% nel 2006 (aggiornato a maggio ad 1,9% - fonte: Relazione Annuale Banca d’Italia), al 1,9% nel 2007 (fonte:Commissione UE), prima di ridursi ad un valore previsto del 1,7% (fonte:Commissione UE) nel 2008:La crescita per quadrimestre è rallentata allo 0,3% nel terzo quadrimestre, se confrontata con lo 0,8% nel primo e lo 0,5% nel secondoIl consumo privato è aumentato del 2% nel 2006, dopo periodi di stagnazione per buona parte del 2004 e del 2005Si stima che il rapporto debito/PIL subirà un aumento al 107,1% nel 2006 e scenderà a 106,9% nel 2007 (fonte IMF)Si stima che il deficit delle partite correnti subirà un aumento del PIL fino al 1,8% nel 2006 da 1,6% nel 2005, situazione che riflette i prezzi del petrolio più elevati e le aumentate importazioniIl risparmio aumenterà nel 2007 poichè le spese ricorrenti si ridurranno dello 0,7% del PIL sia nel 2007 sia nel 2008: la previsione dell’Italia è favorevole poichè il bilancio italiano del 2007 implica aumenti delle entrate e tagli alla spesa (fonte IMF).Capitalizzazione di mercato+28,6% nel 2006+1,1% nel 2005+42,9% nel 2004Il numero ed il valore delle IPO (Offerta Pubblica di Vendita) nel 2006 è stato il più alto dal 2000La crescita MIB è stata del 19%, e ha raggiunto un massimo di 30,949 il 18 DicembreLa Borsa Italiana ha raggiunto e superato i massimi registrati nel Gennaio del 2001Politica FiscaleNonostante una crescita più forte e correzioni sostanziali al bilancio all’inizio del 2006, il deficit del PIL è cresciuto dal 4,1% (fonte: Conti Econ. Naz. ISTAT 2006) nel 2005 fino a quasi 4,4% (fonte ISTAT) nel 2006; ciò è dovuto in parte a:L’ordinanza della Corte Europea di Giustizia richiede al governo di ripagare circa €16 mld di trattenute di imposta sul valore aggiunto (IVA) sulle auto aziendaliIl bilancio 2007 presentato al parlamento si è focalizzato sull’aumento delle entrate piuttosto che sui tagli alla spesa per ridurre il deficit del bilancioIl deficit è orientato verso il ribasso, ma il PIL si aggirerà attorno al 2,3% (fonte ISTAT)La spesa pubblica è aumentata del 2,3% (fonte IMF), ma il bilancio 2007 comprende diverse iniziative di contenimento della spesa.Fonte: Relazioni nazionali EIU, ; Analisi Capgemini, 2007; World Federation of Exchanges 2005; ISTAT, Conti economici nazionali, 03/01/06, “Documento di Programmazione Economica-Finanziaria”, Governo Italiano, ; Commissione Europea ; Relazione IMF 2007 sull’Italia, Relazione della Banca d’Italia del 31 maggio 2007.
28Italia – Analisi economica 2006 ISTANTANEE NAZIONALI – ITALIAItalia – Analisi economica 2006Drivers chiave della ricchezza e della crescita degli HNWIDriverDrivers 2006Impatto sul ModelloPrevisione 2007Politica MonetariaLa Banca Centrale Europea (BCE) ha aumentato il suo principale tasso di riferimento di 1,25 punti percentuali negli ultimi 12 mesi per portare il tasso al 3,25% in Ottobre 2006, sono attesi ulteriori rialzi:In Dicembre la BCE ha alzato il suo tasso chiave di rifinanziamento al 3,5%È possibile almeno un ulteriore tasso di aumento prima che il ciclo di inasprimento monetario terminiLa forza del tasso di cambio dell’euro dovrebbe evitare il bisogno di ulteriori rialzi nel 2007/08Si prevede che l’inflazione si riduca leggermente da un valore stimato del 2,1% nel 2006 ad un valore appena inferiore al 2% nel 2007 e 2008Altri FattoriIl bilancio 2007 si propone di lanciare la crescita economica e ridurre il deficit del bilancioLe riforme attuate dal 1997 per liberalizzare i contratti di impiego hanno ridotto la disoccupazione, ma il mercato del lavoro italiano rimane uno dei più rigidi nella UEUna recente riforma sulle imposte del reddito personale si propone di circoscrivere la spaccatura tra i ricchi e i poveri aumentando le imposte sui redditi più elevati e riducendole su quelli più bassiSia Standard & Poor’s che Fitch Ratings hanno ridotto il rating del debito pubblico italiano di un punto dopo l’annuncio del bilancio:Entrambi hanno rilevato l’inadeguatezza a ridurre il deficit e i timori che le imposte ostacoleranno la crescita economica (agenzia di Rating Moody’s Italia, aggiornato al 7 maggio 2007: conferma Aa2, previsione stabile).Fonte: Relazioni nazionali EIU, ; Analisi Capgemini, 2007