Wealth management
Financial assets influenced by financial crisis
Due to losses in the share and bond market caused by the financial market crisis, financial assets of private households in Germany amounted to € 4.53 billion in 2008, some 0.5 % lower than in the previous year. Germans once again displayed a strong tendency to save last year. With the savings rate at 11 % of disposable income, people in Germany are more willing to save than most other Europeans. Only the French save more in Europe, with a savings rate of 13.1 %.
60 % of savings were held as savings deposits, demand deposits, fixed-term deposits and cash. Only around 9 % is invested in shares. In the course of the financial market crisis, the desire for security among German savers was again clearly evident, as investors largely moved away from investment in securities. Over the course of 2008, the German Mutual Fund Association (BVI Bundesverband Investment and Asset Management) recorded a significant withdrawal of funds across most classes of funds and in autumn even deemed it necessary to point out to investors the high degree of bankruptcy protection among funds. At the end of 2008, the fund assets of mutual funds in Germany came to € 576 billion and were therefore at a significantly lower level than on December 31, 2007, when some € 731 billion was invested in mutual funds. Significant withdrawals of funds were noted, in particular in money market, fixed income and mutual equity funds due to the uncertainty among investors. In return, time deposits such as fixed-term deposits saw an extraordinary inflow of funds.
Inflow in/outflow from mutual funds in Germany 2008 (in € billion)
Investment behaviour largely unaffected by withholding tax
Last year, the comprehensive shifting of securities portfolios anticipated by many experts prior to the introduction of withholding tax on January 1, 2009, did not take place. In its “Wealth Barometer 2008”, the “Deutsche Sparkassen- und Giroverband” association found that only 26 % of those questioned were willing to consider investment in the context of withholding tax. Most savers were not influenced by withholding tax in their investment behaviour.
The number of private individuals with net financial assets of more than US$ 1 million (excluding real estate assets) once again saw a sharp increase last year. The 2008 edition of the “World Wealth Report”, published annually by the investment bank Merrill Lynch in cooperation with the corporate consultants Capgemini, records an increase in the net financial assets of wealthy private clients to US$ 40.7 trillion. In Germany the number of wealthy private individuals increased by 3.5 % to 826,000 persons (previous year: 798,000).
The Boston Consulting Group estimates the German market for wealth management at around € 4.8 trillion. As such, Germany has the second largest market volume for wealth management in Europe after Great Britain. Wealthy private investors, the so-called “high net worth individuals”, are therefore being intensively canvassed by the financial services sector.
Summary: wealth management with long-term prospects
MLP is well positioned in the wealth management business segment, not least due to its renowned subsidiary Feri Finance AG. However, within the scope of the world-wide financial market crisis in 2008 virtually all forms of investment have suffered value losses. This also made investors cautious with regard to new investments. Overall, this led to lower commission earnings. In the long-term view, however, our independent and holistic consulting philosophy in combination with the recognised expertise of Feri in wealth management offers good growth prospects.