Regulation and reputation are the keys to unlocking a multi-billion dollar wealth management opportunity
Five super-growth sectors worth $250b to build Australia’s ‘lucky country’
15 October 2013: As one of the five super-growth industry sectors worth an extra $250 billion to the national economy over the next 20 years, wealth management will be a super enabler for Australia’s future prosperity, according to a new report from Deloitte.
The report, entitled Positioning for prosperity? Catching the next wave is the third edition of the firm’s Building the Lucky Country series, which focuses on business imperatives for a prosperous Australia.
Commenting on the research Deloitte wealth management leader, Neil Brown said: “Three billion people in Asia will join the middle class by 2030. By 2050 the region will account for more than half the world’s financial assets.
“This combination of the world getting older and Asia’s wealth growing, offers Australia the perfect opportunity to trade on the probity of its wealth management sector. The reputation and robustness of our regulatory system, together with our domestic success in building the fourth largest superannuation asset pool in the world, are attractive propositions to the growing Asian middle classes.
“As the Johnston report changes begin to kick in and unwind some of the hurdles to Australia’s aspiration to be a significant financial services centre for the region, the industry is positioning to win a new round of customers.
“In September 2013, the first four of the Asia Passport signatories agreed to pilot X-border fund cooperation. With Australia, New Zealand, Singapore and South Korea on board, the opportunity to generate capital inflows into Australia within the next few years becomes achievable.”
Brown explained that Australia’s industry has honed its asset management skills and built technologies that appeal to investors. He said: “Combined with strong regulation and a relatively stable policy framework focused on wealth accumulation, you can see why Australia has a shot at being a global competitor in the business of managing people’s money and becoming a more significant global financial centre.”
Current, next and future waves
Central to the Deloitte report is a Positioning for prosperity map, which assesses where the next waves of prosperity are most likely to come from by plotting expected average global GDP growth rates over the next 20 years against the level of Australian competitive advantage for each sector.
The five sectors which offer both high growth rates and Australian advantage are:
- Agribusiness: Global population growth of 60 million per year will increase food demand, with Asia’s growing middle classes set to boost their protein intake.
- Gas: Rapid growth in emerging economies has polluted the air in the major cities to our north. That will underwrite demand for gas, a cleaner and greener alternative.
- Tourism: This sector is set to double in size in the next 20 years, with Asia’s expanding middle classes fuelling the growth.
- International education: Foreign students are already our fourth biggest export earner; with India and China likely to drive great growth in demand in the sector.
- Wealth management: Three billion people in Asia will join the middle class by 2030 and by 2050 the region will account for more than half the world’s financial assets.
These next export waves are the most important growth priorities for Australia. Deloitte Access Economics partners Ric Simes and Professor Ian Harper explained: “Mining will continue as a major driver of Australia’s prosperity over the next two decades and beyond. But the reality is that we need new growth drivers. We need another wave – or several – to create more diversified growth.
“The five super growth sectors and health are all expected to grow at rates at least 10% faster than global GDP as a whole - 3.4% p.a. - over the next 10 or 20 years.”
Deloitte’s Positioning for Prosperity map also features 14 other major sectors whose contribution to the nation’s prosperity will continue to be vital. These include big, domestically-focused industries such as banking, health, construction, business and property services, transport and logistics, public administration and manufacturing, among others.
According to Harper and Simes these sectors all have the potential to generate substantial pockets of export business. “Some of these mainstay industries have served as stable incubators for their high-growth sector offspring. Agribusiness has emerged from farming, wealth management from financial services and banking; and international education from education as a whole.”
Deloitte is confident that the opportunities for Australian businesses and families are just as great now as they were at the start of the mining boom. “Our future growth will be more diversified than the past decade and we will have to work harder to maintain the quality of life we have come to expect,” Harper and Simes said. “The opportunities are there to generate exceptional and lasting sources of future wealth for all Australians.”
NB: See our media releases and research at www.deloitte.com.au
Last Updated: Tuesday, 15 October 2013
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/au/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence.
About Deloitte Australia
In Australia, the member firm is the Australian partnership of Deloitte Touche Tohmatsu. As one of Australia’s leading professional services firms, and winner of both the Australian Financial Review/CFO Audit Firm of the Year and Accounting Firm of the Year awards 2013, Deloitte Touche Tohmatsu and its affiliates provide audit, tax, consulting, and financial advisory services through approximately 6,000 people across the country. Focused on the creation of value and growth, and known as an employer of choice for innovative human resources programs, we are dedicated to helping our clients and our people excel. Formore information, please visit Deloitte’s web site at www.deloitte.com.au.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
© 2014 Deloitte Touche Tohmatsu