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Record levels of HNWIs drive growth

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By Christopher Blampied – The challenges and uncertainty we faced during the financial crisis and the economic downturn are slowly being replaced with cautious optimism. An atmosphere of improved trust and confidence pervades the wealth industry, albeit tentatively, and this is certainly the case in Jersey.

For the first time in recent years, we are seeing an irrefutable, positive outlook in the wealth management market, driven primarily by new, record levels of global High-Net-Worth Individuals (HNWIs). The World Wealth Report, which was released in June and produced by RBC Wealth Management in partnership with Capgemini, showed that one million people joined the HNWI population in 2012 – an increase of 9.2% on the previous year – and that this segment is forecast to grow by 6.5% on average each year until 2015.

This phenomenon was predominantly driven by North America, where the HNWI population grew fastest (11.5%) compared with other regions. The continent reclaimed its position as the region with the highest number of HNWIs, having been overtaken by Asia-Pacific the previous year.

However, it is interesting to consider that these record levels of wealth have been achieved despite a more cautious approach to investing. There was, and remains, a focus on wealth preservation amongst wealthy investors globally. The World Wealth Report showed that nearly 33% of HNWIs have placed an emphasis on preserving their wealth, with a preference for cash or deposit asset investments, compared with the 26% who tried to grow their wealth using various instruments.

Investments aside (and even more encouragingly), there is also a measurable improvement in the level of trust and confidence when it comes to how HNWIs perceive their wealth managers. 61% of global HNWIs surveyed in the report said they have a “high degree of trust” in the firms they work with. Improved asset stability and clearer communication have been key facets in rebuilding the foundations of trust, as wealth managers steer their HNWIs to safer ground.

For over 50 years Jersey has been attracting deposits and investments from private clients and institutions across the world. The banking industry is both significant and growing – we currently have 42 licenced banks, with total deposits of GBP155 billion.

Although Jersey has not been immune to the recent financial pressures, the robust nature of its public finances, the high quality of regulation and a conservative banking model has placed the island in good stead to face any headwinds and continue on its growth trajectory. For instance, on-island deposits have increased by 4.3% in the last two quarters and continue to rise, indicating a sustainable improvement in this sector.

Investors and HNWIs now value security more than ever before, and whether they are using trusted advisors in New York or London, we believe it will become commonplace for clients to seek out Jersey as the most suitable offshore centre for this new mood of growth, tempered with prudence.

We have a strong value proposition in Jersey and a government that has shown its clear intention to invest in the development of the island’s finance industry through the funding of detailed global research, the commitment of resources to Jersey Finance Limited and the opening of new offices around the globe.

At RBC Wealth Management, we are certainly seeing the benefits of this improved environment, with new enquiries and increased investor activity across the board. 

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