Global Wealth Management: Competitive Dynamics 2018
The global private wealth market had a good 2017, and the top players of the sector benefited significantly as a result. While there was no change in the order of the world’s five largest private wealth managers, the Super League effectively gained market share among HNW investors, growing assets under management (AUM) at a faster pace than the overall wealth markets. Net inflows were the strongest since we began tracking and collectively, profits rose as cost-to-income ratios improved.
This report benchmarks the world’s leading wealth managers by managed client assets and financial performance. It covers the 36 most prominent institutions, including standalone private banks and wealth managers, as well as competitors that are part of larger universal financial groups. All international public wealth managers with over $100bn in private client AUM are featured in the report.
- Ranks competitors by private clients’ AUM.
- Looks at client assets booked in other than pure wealth management services, including brokerage.
- Analyzes historical growth, as well as perspectives for further development of AUM, both in terms of current asset base expansion and attracting new money.
- Compares the profitability of the covered competitors, examining sources of revenue and the largest components of the cost base.
- Examines how wealth management units that are folded into larger organizations contribute to the wider business of the competitor in question.
- Benchmark your AUM and financial performance against the biggest players in the industry.
- Understand the challenges in growing client assets in different geographies.
- Learn about your competitors’ strategies related to expanding client books.
- Find out how profitable the wealth management business is.
- Identify the industry’s best practices in managing operating costs and boosting revenues.
- Discover how wealth managers’ M&A activity affects their financial performance.
1.1. 2017 was a good year for the wealth management industry
1.2. Key findings
1.3. Critical success factors
2. BENCHMARKING WEALTH MANAGERS BY CLIENT AUM
2.1. Growth in Super League assets accelerated in 2017, riding a market expansion
2.1.1. The top wealth managers regained market share in 2017, outgrowing the market
2.2. Traditional Swiss and American banks remain the market leaders by AUM
2.2.1. The top private wealth managers remain unassailable barring large-scale consolidation
2.3. All of the big shifts among the top managers were due to exceptional growth in AUM
2.3.1. Most of the big moves were from wealth managers with modest private wealth books
2.3.2. Only three of the top wealth managers saw their AUM drop in 2017, an improvement on 2016
2.3.3. UK players saw big gains in their AUM as the result of reorganization
2.3.4. Acquisitions are still boosting the Singaporean banks up the rankings
2.4. There has been little change in the focus of the private banks
2.4.1. Leading wealth managers are still primarily operating in the HNW space
2.4.2. Citigold and HSBC Premier boast two of the most established mass affluent investor propositions, but other banks are keen on this segment too
2.4.3. Asian wealth managers are pursuing wealth management at all AUM levels but have not yet pushed robo-advice
2.4.4. Robo-advisors offer a way to access small-scale investors but require careful positioning
2.5. Net new money to the top wealth managers surged in 2017
2.5.1. Almost all Super League competitors saw positive growth in client inflows
2.5.2. Over half of the net inflows tracked were from BoA Merrill Lynch, UBS, and Morgan Stanley alone
2.5.3. There is a continued shift away from offshore, continuing recent trends first established in the global financial crisis
3. BENCHMARKING WEALTH MANAGERS BY FINANCIAL PERFORMANCE
3.1. Group performance improved but wealth divisions were stronger still
3.1.1. Group profits have bounced back from the 2016 slump
3.1.2. Super League competitors have been reshaping their business towards greater wealth management
3.2. The cost-to-revenue ratio edged down in 2017 after significant improvements in 2016
3.2.1. Improving ratios suggest only modest gains in efficiency at the world’s leading wealth managers
3.2.2. Cost-to-income ratios were flattered by a retreat from markets where players lack scale
4.1. Abbreviations and acronyms
4.2. Supplementary data
4.3.1. Wealth manager competitor data collection
4.3.2. Exchange rates
4.5. Further reading
Table 1: Private wealth management unit standard minimum account thresholds
Table 2: Robo-advisor offerings among selected wealth managers, November 2018
Table 3: Retail wealth management client asses of selected competitors, 2015-17 ($bn)
Table 4: Net new money from reporting Super League competitors, 2011-17 ($bn)
Table 5: US dollar exchange rates
The Global Private Wealth Market had a good 2017, and the top players of the sector benefited significantly as a result. While there was no change in the order of the world’s five largest private wealth managers, the Super League effectively gained market share among HNW investors, growing assets under management (AUM) at a faster pace than the overall wealth markets. Net inflows were the strongest since we began tracking and collectively, profits rose as cost-to-income ratios improved.
Key Findings from GlobalData’s latest report, Global Wealth Management: Competitive Dynamics 2018:
- UBS retains an almost insurmountable lead as the world’s largest private bank, and one of the few that continues to benefit from a geographically diverse footprint.
- The assets of 36 competitors tracked in our Super League grew by 13.6% collectively, leading to a recovery of market share not seen since 2014.
- Cost-to-income ratios improved as revenue surged, as opposed to operating costs declining, making further profit growth entirely contingent on maintaining elevated revenues. This is something that a cooling market, which is expected in 2019, will struggle to provide.
- Many European private banks grew wealth-related profits as they are finally reaping the benefits of their restructuring and de-risking, which had depressed profits in 2015 and 2016.
Critical Success Factors
Avoid UHNW investors unless willing to sacrifice margin − Wealth managers need to make a strategic decision as to whether they are willing to potentially sacrifice margins to pursue these giants.
Manage expectations for the scope of robo-advice – Almost all competitors are investing in robo-advice but such services need to be accepting of the much lower fees that can be charged, as well as the much smaller scale investors that will accept this basic level of service.
Scale in Asia Pacific markets – While previous years have seen a rush into the high-growth Asia Pacific region, all wealth managers need to assess whether their operations there are profitable or likely to be so in the near term.