The survey by NPG Wealth Management and Scorpio Partnership found wealth managers expect life assurance products to rise to 20% of a client’s portfolio from 10% in the near future as incoming regulations reshape the market and push many other investment products out of favour.
The research indicated that the European life assurance market, which is currently made up of around €700bn (£507.4bn, $773.5bn) worth of investments, is undergoing a state of evolution with clients demanding greater portability and more tax efficient investment products for estate planning and liquidity management.
As a result the survey, based on the views of 50 wealth management and life insurance professionals, found that Ireland and Luxembourg were emerging as the most attractive jurisdictions for life assurance products.
According to the survey’s findings, Germany, France, Italy and the UK account for 70% of existing European life assurance volumes with Britain seen as the strongest market for future growth and likely to account for €1.5 bn of possible new business, which will largely come from the high net worth portion of the market.
In the global wealth sector, professionals surveyed said that less than one third of their high net worth clients have life assurance-linked investment solutions.
The interactions between the life provider and wealth manager in terms of product distribution is fast becoming the centre point of further growth for both sides, NPG said.
“Private banks and assurance providers must increase collaboration to fine tune internal processes and specialist knowledge in order to demonstrate the relevance of life assurance products to the end client,” Marc Stevens, chief executive of NPG Wealth Management said.
NPG also noted that clients investing in life assurance vehicles tended to have longer term relations with their private banks, up to four times as long as if they were in an unwrapped product
“Furthermore, the product arrangement fee can typically span between 3-6% of the total value of the premium cover, generating valuable fee income for wealth institutions,“ NPG said.
