Only 10% of the world’s top 40 wealth managers
publish performance data for their discretionary accounts and only
22% offer specific public information about their fees.

Research from MyPrivateBanking found that in
comparison to mutual funds, which are required to be transparent on
a range of performance measures, there is very little public
disclosure by private banks and wealth managers on the performance
of discretionary accounts.

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Mutual funds are required to disclose
performance measures including fees, total expense ratio and the
benchmark index.

 

Transparency crucial to cracking Asia
preference for advisory mandates

Discretionary management, although an
established method of wealth management in developed markets, has
been slow to catch on in faster growing markets like Asia and
India.

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Increasing fee and performance transparency
among private banks and wealth managers could help this management
model take hold in these fast growing regions where clients have
traditional preferred advisory mandates.

One of the banks to be highlighted in the
report as having a transparent fee disclosure was Deutsche Bank,
which publishes a comprehensive list of wealth management fees.

The report found Standard Chartered’s monthly
updated portfolio review on various wealth management mandates was
a good example of transparency in this category.

 

Non-transparent wealth management
fees:

  • 35% of analysed banks and wealth managers
    discuss the costs and fees of wealth management in general
    terms;
  • 22% give some quantitative information about
    fees, and
  • Less than a fifth of wealth managers
    worldwide offer precise, quantitative information on various wealth
    management fees

 Lack of performance
data:

  • About 13% of analysed private banks discuss the topic of their
    performance in general terms;
  • 10% offer some quantitative data on their discretionary
    accounts’ performance, and
  • Only 8% offer a 3-year track record (or longer) on the
    performance of their discretionary accounts