As growth prospects shift toward developing markets, wealth managers must grapple with greater client demands, tougher regulatory and margin pressures, and increasing business complexity, according to the new study by Boston Consulting Group (BCG).
The BCG study reveals that wealth managers need to face hurdles on numerous fronts that lower growth and profitability over the next five years.
Go deeper with GlobalData
BCG’s asset and wealth management segment leader, Brent Beardsley, said: "With the mature economies of the ‘old world’ and the developing economies of the ‘new world’ moving at different speeds, wealth managers in different regions are grappling with tough sets of problems. Diverse strategies will be required to succeed on either side of the divide."
Key trends
The study identifies several market-landscape trends, client trends, and business-economics trends such as shift in wealth creation and profit pools, decline of traditional value propositions and rise in costs and complexity brought on by regulation.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe study suggested that presence in high growth markets with HNW clients, industrialising operations, offering segment specific value propositions and embracing client centricity will allow wealth managers to ease the hurdles.
BCG coauthor and global leader of the wealth management, Daniel Kessler, said:
"All must find ways to gather new assets, generate new revenues, manage costs, maximise IT capability, comply with regulators, and find winning investment solutions that lead to deep and long-standing client relationships. The battle to maintain the momentum they have achieved, amid a very complex industry landscape, will continue to intensify."
Market sizing
According to the report, global private financial wealth grew by 7.8 % in 2012 to a total of US $135.5 trillion.
Wealth grew in the old-world regions of North America (7.8%), Western Europe (5.2 %), and Japan (2.4 %), due to the rebound in equity markets in most countries. In the new-world regions of Asia-Pacific wealth grew by ex Japan (13.8%), Eastern Europe (13.2 %), and Latin America (10.5 %), Middle East and Africa (MEA) (9.1%).
Millionaire households jump
The study also revealed that, the total number of millionaire households reached 13.8 million globally in 2012, or 0.9% of all households. The largest number of millionaire households exist in the US, followed by Japan, and China.
Offshore wealth also increased by 6.1% in 2012 to US$8.5 trillion, and it is projected to rise modestly over the next five years, reaching US$11.2 trillion by the end of 2017. All these factors create opportunities for wealth managers but also pose myriad problems.
Wealth manager benchmarking
To gauge the performance of wealth managers, BCG benchmarked the performance of more than 130 wealth-management institutions worldwide.
Globally, in 2012, wealth managers achieved 13% growth in assets under management (AuM) over the previous year with Asia-Pacific region accounting for the strongest growth (23%), followed by Latin America (18%) and EU onshore and offshore institutions, as well as North American banks, achieved AuM growth of around 10%.
In October 2012, BCG’s report, Capturing Growth in Adverse Times, identified five key challenges in the asset management industry. Information gathered from the report showed that despite the industry’s recent recovery in growth and profitability from the economic crisis, consistent growth has come to a halt.
