2007 World Wealth Report World Wealth Report.

Presentazione sul tema: "2007 World Wealth Report World Wealth Report."— Transcript della presentazione:

1

2 2007 World Wealth Report

3 Chief Operating Officer Merrill Lynch Global Private Client – Italia
Massimo Fortuzzi Chief Operating Officer Merrill Lynch Global Private Client – Italia Country presenters must agree division of the presentation in advance, and alter names accordingly

4 Market Sizing and Growth

5 Key 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 population HNWI wealth gained 11.4% over 2005 to total US$37.2 trillion The total population of Ultra-HNWIs, people with more than US$30million in Financial assets, now stands at 94,970 an 11.3% increase over 2005 In 2006 GDP Growth and Market Capitalization worked in concert to fuel wealth creation Emerging markets registered strong advances - Singapore, India, Indonesia and Russia witnessed the highest growth in HNWI populations HNWI 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

6 The 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 2005 HNWI Financial Population by Region (Millions), 8.2 Million (1) 8.8 Million (2) 9.5 Million Annual Growth % % Change Total HNWI Population Africa 12.5% Number of HNWIs Worldwide (in Millions) Middle East 11.9% Latin America 10.2% Asia-Pacific 8.6% Europe 6.4% 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 numbers In 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 America 9.2% 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

7 HNWI Wealth Grew by 11.4% in 2006, up from 8.5% in 2005, to Total $37.2 Trillion
HNWI Financial Wealth by Region (Trillions), 30.7 Trillion (1) 33.4 Trillion (2) 37.2 Trillion Annual Growth % % Change Total HNWI Wealth 2005 – 2006 Africa 14.0% HNWI Financial Wealth ($USD Trillions) Middle East 11.7% Latin America 23.2% Asia-Pacific 10.5% Europe 7.8% 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 creation Of additional note: North America maintained its position as having the largest number of HNWIs and accumulated wealth In 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 America 10.3% *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 onward Note: All chart numbers are rounded Source: Capgemini Lorenz curve analysis, 2007

8 Number of Individuals – 2006 “Mid-Tier Millionaire”
Wealth Continued to Grow Increasingly Concentrated with The Richest 1% of HNWIs Controlling Over 35% of Total HNWI Wealth Global 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 2006 Number of Individuals – 2006 Growth (1) % Total Wealth 95 k (1.0%) 11.3% 35.1% ’05-’06 Ultra High Net Worth + $30 m 85.4 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 m 803.6 k (9.2%) 8.4% 23.0% ’04-’05 k (89.7%) 8.2% 42.2% ’05-’06 $1 m – $5 m k (89.8%) 6.2% 43.4% ’04-’05 Source: Capgemini Lorenz Curve Model; Capgemini World Wealth Report 2007 Note: (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

9 The Global Economy Grew at 5
The Global Economy Grew at 5.4% in 2006, Led by Eastern Europe and Asia-Pacific Real 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 2006 Global 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 growth Regionally, GDP performance varied: Asia-Pacific GDP was led by 10.5% growth in China and 8.8% growth in India In the United States, real GDP growth remained relatively constant at 3.3% in 2006 — up from 3.2% in 2005 The 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 2005 Real 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 Europe Market capitalization growth rates were robust, supported by strong corporate profits, healthy IPO activity, and continued investment in technology Like many other developed nations, the possibility of a weakening dollar (strengthening Euro), inflationary pressures, and oil price risks impact EU-27 GDP growth Emerging markets continued to outperform other parts of the world, aiding wealth creation in those economies – many emerging economies benefited from surging oil and commodity prices The BRIC nations of Brazil, Russia, India and China remained strong economic players in the competitive global arena Transition: In addition to real GDP growth, market capitalization drives wealth creation. In 2006, these two economic drivers worked in concert to fuel wealth creation. World North America Western Europe Eastern Europe Asia Pacific Latin America Strong labor markets and rising real wages in Western Europe helped support private consumption and real GDP growth. Source: The Economist Intelligence Unit Forecasts,

10 Similar 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 2005 In 2006, market capitalization remained a strong driver of HNWI wealth growth European markets performed well compared with prior years % % Market capitalization remained a strong driver of HNWI wealth growth, building on gains seen in 2005 Europe 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 profits Healthy IPO activity Investment in technology China (Shanghai/Shenzhen stock exchanges) experienced a particularly strong growth. Both exchanges taken together, grew at 220.6% in mainly due to strong IPO activity Source: “Focus”, World Federation of Exchanges, Jan 2007;

11 HNWI Population Growth
Emerging Economies Drove Growth and North America Remained Strong While Europe Picked Up Pace Region HNWI Population Growth Why? Robust GDP growth – (US 3.3%, Canada 2.7%) Increase in savings rate as percentage of GDP in the US Solid gains in stock indices in US – (Dow Jones 16.3%, S&P 13.6%) North America 9.2% GDP growth strong across all of EU % in 2006 up from 1.8% in 2005 Solid stock market returns in Germany, France High stock market returns in economies such as Poland and Czech Republic Europe 6.4% 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 Indonesia Strong increase in market capitalization in pockets – China 220.6%, Philippines 57.5% Asia-Pacific 8.6% Latin America Strong GDP growth – 10.4% in Venezuela, 8.2% in Argentina Continued strong market capitalization growth – Mexican Exchange – 45.7%, Sao Paulo SE – 49.6% aided by rising commodity prices 10.2% This panel links HNWI population growth rates to various regional macroeconomic drivers such as GDP growth, savings and market capitalization The North American HNWI population returned to increased growth, with 9.2% growth in 2006, up from 6.9% in 2005 In 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 2006 In Latin America, Argentina, Brazil, Peru, Chile, and Venezuela all profited from the worldwide surge in oil prices, buttressing Latin American growth in 2006 In 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 wealth Transition: 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 East Historically high oil prices helped buoy real GDP growth in GCC nations African commodity exporting nations benefited from rising worldwide commodity and energy prices Middle East/Africa ME 11.9% Africa %

12 HNWI 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 T Annual Growth Rate, E US$37.2 T Global 6.8% US$33.4 T US$30.7 T Africa 6.1% Middle East 9.5% At 6.8% Global Growth Latin America 7.2% Asia-Pacific 8.5% Europe 4.3% North America 7.0% 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 growth Second, 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 economy Third, 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 money As 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 2011 Note: All chart numbers are rounded. Source: Capgemini Lorenz curve analysis, 2007

13 Asset Allocation “The second component of the World Wealth Report is a look at HNWI asset allocation behaviors”

14 Key Findings – HNWI Asset Allocation
HNWI allocations in 2006 varied from 2005: Allocations to real estate increased while allocations to alternative investments dipped Globally, 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 structures Certain alternative investments which capitalize on market volatility did not fare well during 2006, a year of relatively low volatility HNWIs 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 investments High 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 markets In the past year, REIT structures were permitted in the UK and Germany In 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 Europe Europeans, North Americans, Latin Americans and those in Asia Pacific increased investments in Europe Going forward, Financial Advisors surveyed project that HNWIs will continue to decrease investments in North America and increase investments to Europe and Asia-Pacific to 2008 Source: Capgemini Analysis.

15 Breakdown of Financial Assets of HNWIs, 2004 to 2008F (%)
In 2006, HNWIs Allocations to Real Estate Increased As Alternative Investments Dipped Breakdown 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 allocations In 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 markets Additionally another strong performance of global stock markets drew a further increase in HNWIs’ allocation to equities in 2006 Looking forward to year-end 2008, HNWIs are likely to shift their allocations toward alternative investments after realizing profits from their real estate investments This 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 Germany In 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 Properties Source: Capgemini/Merrill Lynch Financial Advisor Surveys, March 2006, March 2007

16 Breakdown of Financial Assets of HNWIs by Region, 2006 (%)
Asia-Pacific and Latin America Lead the Real Estate Trend with Allocations of 29% and 25% Respectively Breakdown 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 average Investors 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 vehicles Investors in Asia-Pacific also allocate more to cash/deposits than HNWIs globally Finally, 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 Properties Source: Capgemini/Merrill Lynch Financial Advisor Surveys, March 2006, March 2007

17 From 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 years HNWIs 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 points European 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 years Latin Americans were the only investors to increase their investments in North America Looking 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

18 Vice President Financial Services Responsabile Wealth Management
Mauro Masciarelli Vice President Financial Services Responsabile Wealth Management Capgemini - Italia Discuss in advance any transfer of speaker and who does the introduction

19 Spotlight The 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.

20 DRAFT Speaker notes ---under revision as of June 15th 2007---
Spotlight Key Findings: Dynamic, Client-Needs Based Service Models are Emerging Leading firms take a new approach to client service Needs-Based approaches provide the most appropriate products and services and unlock potential value for clients Wealth management firms have adopted a needs-based approach to client segmentation Several factors beyond client assets under management affect the optimal product and service bundling needed for any single client Advisor practice models and servicing approaches can be customized based upon client and firm needs Optimizes the life time value of advisor/client relationships Leading firms provide wealth management advisors with more advanced tools A sophisticated technology platform supports delivery to ensure long-term relationships with HNW clients Sources of wealth Globalization of spending approaches Life events Demographics Investment goals Financial behavior and involvement DRAFT Speaker notes ---under revision as of June 15th This year, our spotlight focuses on wealth management practice models. Currently, multiple practice models support HNWI wealth management needs – including Brokerages, investment managers and wealth planners Under 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 clients This 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 needs Recognizing these differences in client needs, leading firms are beginning to take more criteria into consideration when assigning clients to practice models These 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 anticipation Based 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 process Thirdly, an appropriate service approach must be selected for servicing each client in the context of life-time client value to the firm Finally, there must be a continuous feed back loop to re-evaluate client needs and provide for their needs in anticipation Together 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.”

21 DRAFT Speaker notes ---under revision as of June 15th 2007---
We Recommend Four Critical Success Factors for a Needs-Based and Dynamic Service Model DRAFT Speaker notes ---under revision as of June 15th This 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 advance This feed-back loop is the foundation of a dynamic service model The 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 AUM Clearly, this process of understanding client needs will require detailed information gathering Second, we recommend that firms select appropriate products and services based on these client needs These products and services may go beyond standard product array for wealth bands Clearly, some client needs may go beyond the firm’s strategy. In such cases, the firm may decline such additional business Next, the firm must determine an appropriate service approach based on client needs, and also the client’s life-time value to the firm Clearly, the service approach will vary for each unique client Some “do-it-yourselfers” may need minimal direction and may choose to conduct most of their business online, while others may need a team of advisors Finally, there must be a process of continuous re-evaluation of client needs This will close the loop and ensure that client needs are anticipated and provided for in advance We 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.

22 A Needs-Based Approach Requires a Continuous Reevaluation of Client Needs
Traditional Approach Needs-Based Approach Client Needs Determination and Segmentation Clients segmented by: Assets under management Risk Profile Other demographic characteristics Client needs are not proactively reviewed prior to firm strategy determination Clients segmented by criteria beyond AUM and demographics: Current and future investment objectives Behavioral characteristics Aspirational models External interests Preferred communication style/desired level of interaction Client needs determined based on product, service, and investment criteria Needs drive firm strategy and service offering Product & Service Alignment Strategy and product offers determined prior to analysis of client needs Marketing primarily based on AUM and risk profile Clients offered products based on wealth band Firm looks at book of business, and existing and target clients to assess its own core competencies and offerings Clients offered products on a needs-based approach. Expected client life-time value drives level of service DRAFT Speaker notes ---under revision as of June 15th This 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 alone Thirdly, 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 firm Finally, we propose that this service approach not be static – but ever chanigng along with client needs For 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 preferences Clearly, 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 Determination Clients placed into practice model based on AUM Service approach driven by practice model Practice model and service approach tailored to client needs Multiple delivery channels and practice models used as necessary Service Review Once clients are assigned to a model, service approach is static unless significant changes in AUM occur Ongoing reviews to uncover opportunities for products, services, and investments based on behavioral dynamics, valuation analytics, and other criteria

23 DRAFT Speaker notes ---under revision as of June 15th 2007---
A Technology Framework for Information Gathering Is Critical to Anticipating Client Needs DRAFT Speaker notes ---under revision as of June 15th This slide describes an architectural blueprint for a wealth management platform supporting client-aligned service delivery The diagram shows a service oriented architecture, indicating how different service types are layered. This provides the base support needed by an agile business In 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 policies This is shown in the Information Services layer – practice rules and service rules determine how services are delivered These 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 tailored The RHS governance aspect shows those governance services required to create and maintain practice and service rules and policies In 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 agility Detailed and dynamic client information is key to anticipating client needs Business rules need to be adjusted to move from static to dynamic service models Business intelligence dashboards allow firms to continuously monitor client satisfaction and retention

24 DRAFT Speaker notes ---under revision as of June 15th 2007---
Industry Leaders Have Already Started Developing Needs-Based Service Models Creation of Non Resident Indian Wealth Management Teams Support of Sharia Investing in the Middle East Globalization of European Wealth Management Practices DRAFT 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 alone Non-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’s Firms 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 matures In the Middle East, industry leaders have developed Sharia compliant products and services. A deeper understanding of Sharia law and the impact on client service models Increased acceptance of Sharia-compliant products among the Islamic population in recent years Development of Dubai and other cities as regional financial hubs And in Europe, an increasingly global diaspora has prompted service providers to provide more diverse services Advisors 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 geographies In the United Kingdom, some advisors report a breakdown of 25% local clients versus 75% clients from Emerging Europe, the Middle East and India

25 2007 World Wealth Report Economic Review – Italy
Merrill Lynch & Capgemini March 2007

26 Italia – Analisi economica 2006
ISTANTANEE NAZIONALI – ITALIA Italia – Analisi economica 2006 Numero degli HNWI in Italia (migliaia), Drivers Crescita (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 2005 Guidata dalla crescita nel consumo privato Inflazione bassa, che riflette l’alleggerimento dei prezzi del petrolio Ostacoli Il 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 2008 Deficit del bilancio/previsione Commissione UE sul PIL: inferiore al 3% nel 2007 Il deficit delle partite correnti è aumentato al 1,8% del PIL Le finanze pubbliche sono in miglioramento La crescita economica rimane indietro rispetto alla media dell’area dell’euro, ma è previsto un miglioramento N. di HNWI (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.

27 Italia – Analisi economica 2006
ISTANTANEE NAZIONALI – ITALIA Italia – Analisi economica 2006 Drivers chiave della ricchezza e della crescita degli HNWI Driver Eventi 2006 Drivers 2006 Impatto sul Modello Previsione 2007 Crescita del PIL e risparmio crescita del PIL reale del 1,7% Incremento dallo 0,1% del PIL reale nel 2005 Risparmi al 20,7% del PIL Si 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 secondo Il consumo privato è aumentato del 2% nel 2006, dopo periodi di stagnazione per buona parte del 2004 e del 2005 Si 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 importazioni Il 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 2004 Il numero ed il valore delle IPO (Offerta Pubblica di Vendita) nel 2006 è stato il più alto dal 2000 La crescita MIB è stata del 19%, e ha raggiunto un massimo di 30,949 il 18 Dicembre La Borsa Italiana ha raggiunto e superato i massimi registrati nel Gennaio del 2001 Politica Fiscale Nonostante 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 aziendali Il bilancio 2007 presentato al parlamento si è focalizzato sull’aumento delle entrate piuttosto che sui tagli alla spesa per ridurre il deficit del bilancio Il 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.

28 Italia – Analisi economica 2006
ISTANTANEE NAZIONALI – ITALIA Italia – Analisi economica 2006 Drivers chiave della ricchezza e della crescita degli HNWI Driver Drivers 2006 Impatto sul Modello Previsione 2007 Politica Monetaria La 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 termini La forza del tasso di cambio dell’euro dovrebbe evitare il bisogno di ulteriori rialzi nel 2007/08 Si 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 2008 Altri Fattori Il bilancio 2007 si propone di lanciare la crescita economica e ridurre il deficit del bilancio Le 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 UE Una 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 bassi Sia 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

29 Questions & Answers