World Wealth Report 200 2007 World Wealth Report

World Wealth Report 200

2007 World Wealth Report 2007, June 27 th Media Presentation

Massimo Fortuzzi Chief Operating Officer Merrill Lynch Global Private Client – Italia World Wealth Report 2007, June 27 th Media Presentation

Market Sizing and Growth World Wealth Report 2007, June 27 th Media Presentation

Key Findings – Market Sizing and Growth 2006 • In 2006, 9. 5 million people globally held more than US$1 million in financial assets – an increase of 8. 3% over the 2005 HNWI population • HNWI wealth gained 11. 4% over 2005 to total US$37. 2 trillion • The total population of Ultra-HNWIs, people with more than US$30 million in Financial assets, now stands at 94, 970 an 11. 3% increase over 2005 • In 2006 GDP Growth and Market Capitalization worked in concert to fuel wealth creation • Emerging markets registered strong advances - Singapore, India, Indonesia and Russia witnessed the highest growth in HNWI populations • HNWI financial wealth is expected to reach US$51. 6 trillion by 2011, growing at an annual rate of 6. 8% World Wealth Report 2007, June 27 th Media Presentation

The Global HNWI Population Grew 8. 3% in 2006 to 9. 5 M, Up from 6. 5% Growth in 2005 HNWI Financial Population by Region (Millions), 2004 -2006 8. 2 Million (1) 8. 8 Million (2) 9. 5 Million Annual Growth 2005 -2006 8. 3% % Change Total HNWI Population 2005 - 2006 Number of HNWIs Worldwide (in Millions) Africa 12. 5% Middle East 11. 9% Latin America 10. 2% Asia-Pacific 8. 6% Europe 6. 4% North America 9. 2% Note: (1) In 2004, number of Asia HNWIs (and thus Global HNWIs) was restated as a result of updated data made available. (2) Bahrain and Qatar added to model for years 2005 onward. As a result, number of HNWIs in 2005 is 8. 8 M instead of 8. 7 M as stated in WWR 2006. Source: Capgemini Lorenz curve analysis, 2007 World Wealth Report 2007, June 27 th Media Presentation

HNWI Wealth Grew by 11. 4% in 2006, up from 8. 5% in 2005, to Total $37. 2 Trillion HNWI Financial Wealth by Region (Trillions), 2004 -2006 30. 7 Trillion (1) 33. 4 Trillion (2) 37. 2 Trillion Annual Growth 2005 -2006 11. 4% % Change Total HNWI Wealth 2005 – 2006 HNWI Financial Wealth ($USD Trillions) Africa 14. 0% Middle East 11. 7% Latin America 23. 2% Asia-Pacific 10. 5% Europe 7. 8% North America 10. 3% *note: (1) In 2004, HNWI wealth figures were restated as a result of updated data becoming available; (2) Bahrain and Qatar added to model for years 2005 onward Note: All chart numbers are rounded Source: Capgemini Lorenz curve analysis, 2007 World Wealth Report 2007, June 27 th Media Presentation

Wealth Continued to Grow Increasingly Concentrated with The Richest 1% of HNWIs Controlling Over 35% of Total HNWI Wealth Global Number of Individuals per Wealth Band (k), 2006, and Growth (%), 2005 -2006 UHNWIs accounted for 1% of total HNWI population and held 35% of HNWI wealth ($13. 07 T) in 2006 Ultra High Net Worth “Mid-Tier Millionaire” + $30 m $5 - $30 m $1 m – $5 m Number of Individuals – 2006 2005 -2006 Growth (1) 95 k (1. 0%) 11. 3% 35. 1% ’ 05 -’ 06 85. 4 k (1. 0%) 10. 2% 33. 6% ’ 04 -’ 05 881. 7 k (9. 3%) 9. 4% 22. 7% ’ 05 -’ 06 803. 6 k (9. 2%) 8. 4% 23. 0% ’ 04 -’ 05 8515. 9 k (89. 7%) 8. 2% 42. 2% ’ 05 -’ 06 7853. 5 k (89. 8%) 6. 2% 43. 4% ’ 04 -’ 05 % Total Wealth Source: Capgemini Lorenz Curve Model; Capgemini World Wealth Report 2007 Note: (1) Figures from Bahrain and Qatar are not included in growth calculation as both countries were added in WWR 2007 and reflected in 2006 HNWI population and wealth figures only – effect on growth at global level is insignificant ; numbers do not add up to 100% due to rounding World Wealth Report 2007, June 27 th Media Presentation

The Global Economy Grew at 5. 4% in 2006, Led by Eastern Europe and Asia. Pacific Real GDP Growth Rates, 2005 -2006 % World North America Western Europe Eastern Europe Asia Pacific Latin America Strong labor markets and rising real wages in Western Europe helped support private consumption and real GDP growth. Source: The Economist Intelligence Unit Forecasts, 2006 -2007 World Wealth Report 2007, June 27 th Media Presentation

Similar to GDP, Most Worldwide Market Capitalizations Experienced Accelerated Growth In 2006 Market Capitalization Growth Rates for Major Stock Exchanges by Region*, 2001 -2006 • Market capitalization growth rates have risen significantly following their stabilization in 2005 –In 2006, market capitalization remained a strong driver of HNWI wealth growth % % • European markets performed well compared with prior years Source: “Focus”, World Federation of Exchanges, Jan 2007; World Wealth Report 2007, June 27 th Media Presentation

Emerging Economies Drove Growth and North America Remained Strong While Europe Picked Up Pace Region HNWI Population Growth Why? • Robust GDP growth – (US 3. 3%, Canada 2. 7%) North America 9. 2% • Increase in savings rate as percentage of GDP in the US • Solid gains in stock indices in US – (Dow Jones 16. 3%, S&P 13. 6%) • GDP growth strong across all of EU-27 - 2. 7% in 2006 up from 1. 8% in 2005 Europe 6. 4% • Solid stock market returns in Germany, France • High stock market returns in economies such as Poland Czech Republic • Continued high savings rates – China 50. 1%, South Korea 38. 4% • High, sustained, GDP growth - China 10. 5%, India 8. 8% Asia. Pacific Latin America Middle East/Africa 8. 6% • Robust stock market performance in China and Indonesia • Strong increase in market capitalization in pockets – China 220. 6%, Philippines 57. 5% • Strong GDP growth – 10. 4% in Venezuela, 8. 2% in Argentina 10. 2% • Continued strong market capitalization growth – Mexican Exchange – 45. 7%, Sao Paulo SE – 49. 6% aided by rising commodity prices ME 11. 9% • High GDP growth in the Middle East • Historically high oil prices helped buoy real GDP growth in GCC nations • African commodity exporting nations benefited from rising worldwide commodity and energy prices Africa 12. 5% World Wealth Report 2007, June 27 th Media Presentation

Total US$51. 6 Trillion By 2011, Growing at a Rate of 6. 8% HNWI Financial Wealth Forecast by Region, 2004 -2011 E (US$ Trillions) US$37. 2 T US$30. 7 T US$33. 4 T At 6. 8% Glob al Grow th US$51. 6 T Annual Growth Rate, 2006 -2011 E Global 6. 8% Africa 6. 1% Middle East 9. 5% Latin America 7. 2% Asia-Pacific 8. 5% Europe 4. 3% North America 7. 0% Note: All chart numbers are rounded. Source: Capgemini Lorenz curve analysis, 2007 World Wealth Report 2007, June 27 th Media Presentation

Asset Allocation World Wealth Report 2007, June 27 th Media Presentation

Key Findings – HNWI Asset Allocation • HNWI allocations in 2006 varied from 2005: – Allocations to real estate increased while allocations to alternative investments dipped • Globally, high returns in commercial real estate and REITs drove increased allocations to real estate: – In 2006, real estate investments became more liquid and more transparent driven by the increase, globally, in legislation which allows for REIT-type investment structures • Certain alternative investments which capitalize on market volatility did not fare well during 2006, a year of relatively low volatility • HNWIs globally continued to diversify their holdings as they pulled funds away from North America and Asia-Pacific to Europe Source: Capgemini Analysis. World Wealth Report 2007, June 27 th Media Presentation

In 2006, HNWIs Allocations to Real Estate Increased As Alternative Investments Dipped Breakdown of Financial Assets of HNWIs, 2004 to 2008 F (%) 100% * Includes: Structured products, hedge funds, derivatives, foreign currency, commodities, private equity/venture capital ** Includes: Commercial Real Estate, REITs, and Other Investment Properties Source: Capgemini/Merrill Lynch Financial Advisor Surveys, March 2006, March 2007 World Wealth Report 2007, June 27 th Media Presentation

Asia-Pacific and Latin America Lead the Real Estate Trend with Allocations of 29% and 25% Respectively Breakdown of Financial Assets of HNWIs by Region, 2006 (%) 100% 100% * Includes: Structured products, hedge funds, derivatives, foreign currency, commodities, private equity/venture capital ** Includes: Commercial Real Estate, REITs, and Other Investment Properties Source: Capgemini/Merrill Lynch Financial Advisor Surveys, March 2006, March 2007 World Wealth Report 2007, June 27 th Media Presentation

From 2005 to 2006, HNWIs Increased their Investments to Europe Geographic Breakdown of HNWI Investment, 2005 to 2008 F (%) 100% *: weighted based on the net financial wealth of that region and aggregated to create a weighted global allocation *: In 2005 investments to Africa were less than 0. 4% Source: Capgemini/Merrill Lynch Financial Advisor Surveys, April 2006, March 2007 World Wealth Report 2007, June 27 th Media Presentation

Mauro Masciarelli Vice President Financial Services Responsabile Wealth Management Capgemini - Italia World Wealth Report 2007, June 27 th Media Presentation

Spotlight World Wealth Report 2007, June 27 th Media Presentation

Spotlight Key Findings: Dynamic, Client-Needs Based Service Models are Emerging • Leading firms take a new approach to client service – Needs-Based approaches provide the most appropriate products and services and unlock potential value for clients • Wealth management firms have adopted a needs-based approach to client segmentation – Several factors beyond client assets under management affect the optimal product and service bundling needed for any single client • Sources of wealth • Globalization of spending approaches • Life events • Demographics • Investment goals • Financial behavior and involvement • Advisor practice models and servicing approaches can be customized based upon client and firm needs – Optimizes the life time value of advisor/client relationships • Leading firms provide wealth management advisors with more advanced tools – A sophisticated technology platform supports delivery to ensure long-term relationships with HNW clients World Wealth Report 2007, June 27 th Media Presentation

We Recommend Four Critical Success Factors for a Needs-Based and Dynamic Service Model Wealth management firms need to reconfigure the process for understanding their clients, and provide the right service model. World Wealth Report 2007, June 27 th Media Presentation

A Needs-Based Approach Requires a Continuous Reevaluation of Client Needs Traditional Approach Needs-Based Approach Client Needs Determination and Segmentation • Clients segmented by: • Assets under management • Risk Profile • Other demographic characteristics • Client needs are not proactively reviewed prior to firm strategy determination • Clients segmented by criteria beyond AUM and demographics: • Current and future investment objectives • Behavioral characteristics • Aspirational models • External interests • Preferred communication style/desired level of interaction • Client needs determined based on product, service, and investment criteria • Needs drive firm strategy and service offering Product & Service Alignment • Strategy and product offers determined prior to analysis of client needs • Marketing primarily based on AUM and risk profile • Clients offered products based on wealth band • Firm looks at book of business, and existing and target clients to assess its own core competencies and offerings • Clients offered products on a needs-based approach. Expected client life-time value drives level of service Practice Model & Service Approach Determination § Clients placed into practice model based on AUM • Practice model and service approach tailored to client needs • Multiple delivery channels and practice models used as necessary § Service approach driven by practice model § Once clients are assigned to a model, service Service Review approach is static unless significant changes in AUM occur • Ongoing reviews to uncover opportunities for products, services, and investments based on behavioral dynamics, valuation analytics, and other criteria World Wealth Report 2007, June 27 th Media Presentation

A Technology Framework for Information Gathering Is Critical to Anticipating Client Needs • Service-oriented architectures support improved business agility • Detailed and dynamic client information is key to anticipating client needs • Business rules need to be adjusted to move from static to dynamic service models • Business intelligence dashboards allow firms to continuously monitor client satisfaction and retention World Wealth Report 2007, June 27 th Media Presentation

Industry Leaders Have Already Started Developing Needs-Based Service Models • Creation of Non Resident Indian Wealth Management Teams • Support of Sharia Investing in the Middle East • Globalization of European Wealth Management Practices World Wealth Report 2007, June 27 th Media Presentation

2007 World Wealth Report Economic Review – Italy Merrill Lynch & Capgemini March 2007 World Wealth Report 2007, June 27 th Media Presentation

ISTANTANEE NAZIONALI – ITALIA Italia – Analisi economica 2006 Numero degli HNWI in Italia (migliaia), 2005 -2006 Crescita (05 -06) 3, 8% Drivers • Crescita del PIL reale del 1. 7 nel 2006 (aggiornato a maggio ad 1, 9% fonte: Relazione Annuale Banca d’Italia), partendo da una crescita dello 0, 1% nel 2005 • Guidata dalla crescita nel consumo privato • Inflazione bassa, che riflette l’alleggerimento dei prezzi del petrolio Ostacoli N. di HNWI (000) Il deficit del bilancio è aumentato al 4, 4% (Fonte Eurostat) del PIL nel 2006: Esso dovrebbe abbassarsi al 2, 1% (fonte: Commissione UE) nel 2007 e al 2, 2% (fonte: Commissione UE) nel 2008 Deficit del bilancio/previsione Commissione UE sul PIL: inferiore al 3% nel 2007 Il deficit delle partite correnti è aumentato al 1, 8% del PIL Le finanze pubbliche sono in miglioramento La crescita economica rimane indietro rispetto alla media dell’area dell’euro, ma è previsto un miglioramento Fonte: Analisi della curva di Lorenz da parte di Capgemini, dati di base da fonti molteplici, compreso MSCI; Analisi Capgemini, 2006; Eurostat; Previsioni della Commissione Europea (Reuters, il 7 Maggio 2007), Relazione della Banca d’Italia del 31 maggio 2007. World Wealth Report 2007, June 27 th Media Presentation

ISTANTANEE NAZIONALI – ITALIA Italia – Analisi economica 2006 Drivers chiave della ricchezza e della crescita degli HNWI Driver Eventi 2006 Impatto sul Modello Drivers 2006 Previsione 2007 Si prevede che il PIL sarà confermato al 1, 7% nel 2006 (aggiornato a maggio ad 1, 9% - fonte: Relazione Annuale Banca d’Italia), al 1, 9% nel 2007 (fonte: Commissione UE), prima di ridursi ad un valore previsto del 1, 7% (fonte: Commissione UE) nel 2008: La crescita per quadrimestre è rallentata allo 0, 3% nel terzo quadrimestre, se confrontata con lo 0, 8% nel primo e lo 0, 5% nel secondo Il consumo privato è aumentato del 2% nel 2006, dopo periodi di stagnazione per buona parte del 2004 e del 2005 crescita del PIL reale del 1, 7% Crescita del PIL e risparmio Incremento dallo 0, 1% del PIL reale nel 2005 Risparmi al 20, 7% del PIL Si stima che il rapporto debito/PIL subirà un aumento al 107, 1% nel 2006 e scenderà a 106, 9% nel 2007 (fonte IMF) Si stima che il deficit delle partite correnti subirà un aumento del PIL fino al 1, 8% nel 2006 da 1, 6% nel 2005, situazione che riflette i prezzi del petrolio più elevati e le aumentate importazioni Il risparmio aumenterà nel 2007 poichè le spese ricorrenti si ridurranno dello 0, 7% del PIL sia nel 2007 sia nel 2008: la previsione dell’Italia è favorevole poichè il bilancio italiano del 2007 implica aumenti delle entrate e tagli alla spesa (fonte IMF). Capitalizzazione di mercato +28, 6% nel 2006 +1, 1% nel 2005 +42, 9% nel 2004 Il numero ed il valore delle IPO (Offerta Pubblica di Vendita) nel 2006 è stato il più alto dal 2000 La crescita MIB è stata del 19%, e ha raggiunto un massimo di 30, 949 il 18 Dicembre La Borsa Italiana ha raggiunto e superato i massimi registrati nel Gennaio del 2001 Nonostante una crescita più forte e correzioni sostanziali al bilancio all’inizio del 2006, il deficit del PIL è cresciuto dal 4, 1% (fonte: Conti Econ. Naz. ISTAT 2006) nel 2005 fino a quasi 4, 4% (fonte ISTAT) nel 2006; ciò è dovuto in parte a: Politica Fiscale L’ordinanza della Corte Europea di Giustizia richiede al governo di ripagare circa € 16 mld di trattenute di imposta sul valore aggiunto (IVA) sulle auto aziendali Il bilancio 2007 presentato al parlamento si è focalizzato sull’aumento delle entrate piuttosto che sui tagli alla spesa per ridurre il deficit del bilancio Il deficit è orientato verso il ribasso, ma il PIL si aggirerà attorno al 2, 3% (fonte ISTAT) La spesa pubblica è aumentata del 2, 3% (fonte IMF), ma il bilancio 2007 comprende diverse iniziative di contenimento della spesa. Fonte: Relazioni nazionali EIU, 2006 -2007; Analisi Capgemini, 2007; World Federation of Exchanges 2005; ISTAT, Conti economici nazionali, 03/01/06, “Documento di Programmazione Economica-Finanziaria”, Governo Italiano, 2006 -2009; Commissione Europea ; Relazione IMF 2007 sull’Italia, Relazione della Banca d’Italia del 31 maggio 2007. World Wealth Report 2007, June 27 th Media Presentation

ISTANTANEE NAZIONALI – ITALIA Italia – Analisi economica 2006 Drivers chiave della ricchezza e della crescita degli HNWI Driver Impatto sul Modello Drivers 2006 Previsione 2007 La Banca Centrale Europea (BCE) ha aumentato il suo principale tasso di riferimento di 1, 25 punti percentuali negli ultimi 12 mesi per portare il tasso al 3, 25% in Ottobre 2006, sono attesi ulteriori rialzi: Politica Monetaria In Dicembre la BCE ha alzato il suo tasso chiave di rifinanziamento al 3, 5% È possibile almeno un ulteriore tasso di aumento prima che il ciclo di inasprimento monetario termini La forza del tasso di cambio dell’euro dovrebbe evitare il bisogno di ulteriori rialzi nel 2007/08 Si prevede che l’inflazione si riduca leggermente da un valore stimato del 2, 1% nel 2006 ad un valore appena inferiore al 2% nel 2007 e 2008 Il bilancio 2007 si propone di lanciare la crescita economica e ridurre il deficit del bilancio Le riforme attuate dal 1997 per liberalizzare i contratti di impiego hanno ridotto la disoccupazione, ma il mercato del lavoro italiano rimane uno dei più rigidi nella UE Una recente riforma sulle imposte del reddito personale si propone di circoscrivere la spaccatura tra i ricchi e i poveri aumentando le imposte sui redditi più elevati e riducendole su quelli più bassi Sia Standard & Poor’s che Fitch Ratings hanno ridotto il rating del debito pubblico italiano di un punto dopo l’annuncio del bilancio: Altri Fattori Fonte: Entrambi hanno rilevato l’inadeguatezza a ridurre il deficit e i timori che le imposte ostacoleranno la crescita economica (agenzia di Rating Moody’s Italia, aggiornato al 7 maggio 2007: conferma Aa 2, previsione stabile). Relazioni nazionali EIU, 2006 -2007; Analisi Capgemini, 2007 World Wealth Report 2007, June 27 th Media Presentation

Questions & Answers World Wealth Report 2007, June 27 th Media Presentation