Global Wealth Management: Competitive Dynamics

  • ID: 4436565
  • Report
  • Region: Global
  • 42 pages
  • GlobalData
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FEATURED COMPANIES

  • ABN Amro
  • BNY Mellon
  • Crédit Agricole
  • Goldman Sachs
  • Morgan Stanley
  • Royal Bank of Canada
  • MORE
Global Wealth Management: Competitive Dynamics

Summary

At the end of 2016, client assets managed by the world’s top private wealth managers had grown by about 6.1% to cross a record $10tn. While a welcome return to growth after 2015’s lackluster performance, the growth was fueled more by higher asset prices and the general appreciation of HNW assets rather than strong net new money. The leading wealth managers are still struggling to grow market share, highlighting the enduring competition from smaller boutiques and family offices.

Key findings included in this report:
  • Private wealth managers are continuing to face difficulties in growing net inflows, highlighting the competition from smaller players in the market.
  • Higher costs are resulting in higher assets under management (AUM) thresholds at the private wealth management arms of most competitors, constraining the size of the potential client base but helping to maintain margins.
  • Many top wealth managers have been prioritizing margins and profits, resulting in de-risking as fines and legal settlements remain one of the major costs incurred by the industry.
Many wealth managers are taking steps to purge their client books of risky business, particularly in the offshore sector or geographies with poor reputations. Many leading wealth managers have already started selling off businesses in such locations. The introduction of the Common Reporting Standard (CRS) and the automatic exchange of information has made this more important in 2017 and 2018.

Majority of the top wealth managers are pursuing low-touch robo-advisory offerings. It is clear that this will become a main wealth management channel for retail clients; all wealth managers need to have a robo-advice strategy that complements their existing premium brands.

The report "Global Wealth Management: Competitive Dynamics", benchmarks the world’s leading wealth managers by managed client assets and financial performance. It covers the 34 most prominent institutions, including standalone private banks and wealth managers, as well as competitors that are part of larger universal financial groups. All international wealth managers with over $100bn in private client AUM are featured in the report.

Specifically, this report:
  • Ranks the 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 folded into larger organizations contribute to the wider business of the competitor in question.
Companies mentioned in this report: ABN Amro, Bank of America Merrill Lynch, Barclays, BNP Paribas, BNY Mellon, Bank of China, Bank of Montreal, Charles Schwab, China Merchants Bank, Citigroup, Citi Private Bank, CréditAgricole, Credit Suisse, Deutsche Bank, DBS, EFG Financial, Goldman Sachs, HSBC, HSBC Private Bank, JP Morgan, Julius Baer, Morgan Stanley, Northern Trust, Pictet, Royal Bank of Canada, RBC, Royal Bank of Scotland, RBS, Santander, SociétéGénérale, Standard Chartered, UBS, US Trust, Vontobel, Wells Fargo

Scope
  • Private wealth managers are continuing to face difficulties in growing net inflows, highlighting the competition from smaller players in the market.
  • Higher costs are resulting in higher assets under management (AUM) thresholds at the private wealth management arms of most competitors, constraining the size of the potential client base but helping maintain margins.
  • Many top wealth managers have been prioritizing margins and profits, resulting in de-risking as fines and legal settlements remain one of the major costs incurred by the industry.
Reasons to buy
  • 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.
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FEATURED COMPANIES

  • ABN Amro
  • BNY Mellon
  • Crédit Agricole
  • Goldman Sachs
  • Morgan Stanley
  • Royal Bank of Canada
  • MORE
EXECUTIVE SUMMARY
1.1. AUM growth has revived, driven by higher HNW assets around the world
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 2016, riding a market expansion
2.1.1. The top wealth managers lost market share in 2016, but saw an uptick in growth
2.2. Swiss and US banks continue to dominate the ranks of the top five wealth managers by AUM
2.2.1. The stable top five accounted for almost $5.0tn in client assets
2.3. The biggest movers among the top wealth managers were mostly growing
2.3.1. The few big contractions were the result of disposals by HSBC and Deutsche Bank
2.3.2. OCBC acquires yet another European competitor’s Asian private bank
2.3.3. DBS has picked up the bulk of ANZ’s Asian assets, adding to its regional network
2.3.4. EFG’s acquisition of the distressed BSI has created a potentially strong new pure-play Swiss private wealth brand
2.3.5. RBC’s acquisition of City National has cemented its place as a major player in the US
2.3.6. Swiss and Asian banks fared the best in 2016, as the US cooled and Europe struggled
2.4. The wealth business has not been reshaped significantly…yet
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
2.4.3. Up-and-coming Asian wealth managers are alive to the mass affluent potential
2.4.4. Many leading wealth managers are strategically investing in fintechs, with robo-advisors shaping up to be a key battleground
2.5. Top AUA rankings are primarily a North American affair
2.5.1. The importance of the independent financial advisory networks in the US has resulted in their dominance of the AUA rankings
2.5.2. Assets under administration rebounded in 2016 after a weak 2015, reflecting a strong close to the equity markets
2.6. Net new money to the wealth management elite continued to decline in 2016
2.6.1. More than half of the top wealth managers saw a decline in inflows
2.6.2. Over half of the net inflows tracked were from UBS and Morgan Stanley alone
2.6.3. The CRS will see a shift of inflows from international divisions to domestic operations

3. BENCHMARKING WEALTH MANAGERS BY FINANCIAL PERFORMANCE
3.1. Group performance was ok, wealth performance was better
3.1.1. Once again wealth divisional profits are holding up better than group
3.1.2. Most wealth management divisions reported profits in 2016
3.2. The cost-to-revenue ratio declined dramatically in 2016 but there is little expectation that this can hold
3.2.1. Improving ratios suggest only modest gains in efficiency at the world’s leading wealth managers
3.2.2. Divestment and litigation were key drivers of improving cost ratios

4. APPENDIX
4.1. Abbreviations and acronyms
4.2. Supplementary data
4.3. Methodology
4.3.1. Wealth manager competitor data collection
4.3.2. Exchange rates
4.4. Bibliography
4.5. Further reading

List of Tables
Table 1: Top wealth managers’ published private clients AUM ($bn), 2015-16
Table 2: Private wealth management unit standard minimum thresholds, 2016
Table 3: Robo-advisor offerings among selected wealth managers, November 2017
Table 4: Top global wealth managers’ AUA ($bn), 2015-16
Table 5: Super League wealth managers’ net new money ($bn), 2010-16
Table 6: Retail wealth management client asses of selected competitors, 2014-16 ($bn)
Table 7: US dollar exchange rates used in Global Wealth Management: Competitive Dynamics

List of Figures
Figure 1: The top wealth managers saw a bounce in AUM, almost matching the wider market acceleration
Figure 2: Growth was highly uneven among the top private wealth managers but almost entirely reliant on organic drivers
Figure 3: Exceptional growth rates were powered by acquisitions rather than organic growth
Figure 4: OCBC’s Bank of Singapore has been effective at growing acquired assets, with the Barclays acquisition being of a similar size if not scale to its formative 2009 acquisition
Figure 5: BSI’s acquisition brings EFG International’s AUM into the ranks of the top wealth managers, even after attrition
Figure 6: RBC now has more client AUM in the US than in its home market of Canada
Figure 7: Asian wealth managers typically leverage their massive retail banks, and so have large retail client books
Figure 8: OCBC has three programs for investors of varied wealth, capturing the maximum retail wealth possible
Figure 9: AUA surged among most of the largest custody operations globally, bouncing back from a poor 2015
Figure 10: The trend in net inflows has been depressed in recent years as key competitors have suffered negative publicity
Figure 11: Swiss and US banks were the gainers in 2016
Figure 12: 11 of the groups tracked saw a change in their group profits of over a fifth
Figure 13: Other than pure-play wealth managers, few Super League competitors saw wealth increase its share of group profits
Figure 14: Wealth divisions were almost uniformly profitable, but the direction of travel is far more varied
Figure 15: Costs to revenue have been declining only grudgingly
Figure 16: In aggregate the top wealth managers have not been effective at controlling costs
Figure 17: Ratios were steady for most, but exceptional charges caused large shifts among European competitors in particular
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  • ABN Amro
  • Bank of America Merrill Lynch
  • Barclays
  • BNP Paribas
  • BNY Mellon
  • Bank of China
  • Bank of Montreal
  • Charles Schwab
  • China Merchants Bank
  • Citigroup
  • Citi Private Bank
  • Crédit Agricole
  • Credit Suisse
  • Deutsche Bank
  • DBS
  • EFG Financial
  • Goldman Sachs
  • HSBC
  • HSBC Private Bank
  • JP Morgan
  • Julius Baer
  • Morgan Stanley
  • Northern Trust
  • Pictet
  • Royal Bank of Canada
  • RBC
  • Royal Bank of Scotland
  • RBS
  • Santander
  • Société Générale
  • Standard Chartered
  • UBS
  • US Trust
  • Vontobel
  • Wells Fargo
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