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Although discretionary asset management can be considered the most traditional form of wealth management, the uptake of such services varies across different markets. HNW investors in developed countries have longstanding relationships with their private bankers, and trust their ability to successfully manage investments.
As with much of the terminology in wealth management, ""discretionary"" asset management, portfolio management, and mandates can cover a wide range of services and investments depending on the country. According to GlobalData discretionary asset management covers any investment portfolio or portion thereof whereby the investment manager has control over buy-and-sell decisions on securities and other investment products in the portfolio, after evaluating the client’s investment preferences, risk tolerance, and goals.
Discretionary mandates are just one of the options of investment management services that HNW investors can choose from. While a share of millionaires’ assets remains outside any wealth managers’ platforms, on average it is no more than a tenth of the total portfolio.
Globally, 51.9% of HNW wealth is placed in discretionary mandates. Generally discretionary mandates appear to be more accessible to clients than advisory services, as many competitors (including UBS Wealth Management and JP Morgan Private Bank and their UK propositions) have set higher minimum investment thresholds for advised portfolios.
Only a third of HNW investors’ portfolios in Asia Pacific are managed under discretionary mandates.
The wealthiest individuals in the region tend to place much importance on diversification when it comes to using different products and services for their investments. The opposite situation can be observed in North America. Here millionaires have long-established relationships with their financial advisors, which transfers to higher trust and concentration of wealth with their main wealth managers.
GlobalData’s report ""Discretionary Asset Management: HNW Demand and Drivers"" report draws on 2016 Global Wealth Managers Survey to analyze HNW investors' preferences and attitudes towards discretionary asset management services across the globe. It sizes the market for discretionary mandates and examines key drivers behind wealthy individuals choosing such services. The competitive landscape is also analyzed.
Specifically, the report:
- Estimates the value of HNW assets invested via discretionary mandates
- Compares HNW individuals' willingness to use discretionary services in different countries
- Identifies target client groups for discretionary asset managers
- Compares drivers for discretionary mandates between countries and regions
- Examines the client targeting strategies of discretionary portfolio managers
- Explores robo-advisors' potential to disrupt traditional discretionary asset management business