Global Wealth Managers - Competitive Dynamics 2020

1. EXECUTIVE SUMMARY
1.1. Leading wealth managers entered the COVID-19 crisis in great shape
1.2. Key findings
1.3. Critical success factors

2. BENCHMARKING WEALTH MANAGERS BY CLIENT AUM
2.1. Client assets ended 2019 at an all-time high, before crashing in March
2.1.1. The top wealth managers gained back market share as markets propelled portfolios forward
2.1.2. Continued positive net new money in the first half of 2020 positions top banks well in the crisis
2.2. Neither the buoyant 2019 results nor the pandemic appear able to shift the top rankings
2.2.1. The largest wealth managers retained their grip in fair and foul industry conditions
2.2.2. After key investment management acquisitions, M&A has fallen away from strategy discussions
2.2.3. Notable M&A in 2019 was few and far between for the largest wealth managers
2.3. The pandemic is less of an issue for big brands than the overall market
2.3.1. In H2 2020, the top private wealth managers are beating the market

3. BENCHMARKING WEALTH MANAGERS BY FINANCIAL PERFORMANCE
3.1. 2019 represented a peak in profitability for major wealth managers
3.1.1. Wealth managers entered the COVID-19 crisis and recession on a profit high
3.1.2. Revenue was the big driver behind the sunnier profit total for most wealth managers
3.2. Group performance was weak, making wealth a lone bright spot
3.2.1. Group profits were marginally down after a couple of years of growth
3.2.2. Wealth management divisions’ relatively stable 2020 revenue will likely see growth in share of group income

4. COMPETITIVE TRENDS
4.1. Sustainable investing is increasingly a priority for major wealth managers
4.1.1. ESG and SRI capabilities are now a point of differentiation and competition
4.1.2. Wealth managers have been building up sustainable investing for some time
4.1.3. Asia, previously skeptical, is increasingly embracing the trend
4.2. Thresholds for private wealth are likely to rise after the recession
4.2.1. Leading wealth managers are still primarily operating in the HNW space
4.2.2. Retail and mass affluent wealth is still a minority,but its proportion is increasing
4.2.3. Family office support is growing in the wealth divisions of the largest private banks
4.3. Next-gen programs are endeavoring to limit churn with holistic wealth management
4.3.1. The growth opportunity and threat of wealth transfer have focused attention on the next gen
4.3.2. Wealth managers have to adapt to a new generation of HNW clients
4.3.3. Revamped and new next-gen programs are increasingly becoming an important service among top players
4.4. Regulatory issues and digital transformation have both been heavily disrupted by the pandemic
4.4.1. Digital transformation, a long-term issue for wealth, was refocused onto remote working
4.4.2. Regulatory issues are a constant worry for wealth managers,but market turmoil causes a spike

5. APPENDIX
5.1. Supplemental data
5.2. Abbreviations and acronyms
5.3. Secondary sources
5.4. Further reading

List of Tables
Table 1: Private wealth management unit standard minimum account thresholds
Table 2: Robo-advisor offerings among selected wealth managers, August 2020
Table 3: Net new money from reporting wealth management competitors, 2012-19 ($bn)

List of Figures
Figure 1: Leading players won back market share in 2019, accounting for just over a third of HNW wealth
Figure 2: Almost all changes in client assets in 2019 were due to market effects and net inflows
Figure 3: Inflows were up in 2019 but were still down from the all-time high seen in 2017
Figure 4: All of the top 10 saw growth in 2019, but Goldman Sachs grew by almost a quarter
Figure 5: M&A is increasingly off the board for the majors as they focus on the next gen and digital
Figure 6: Wealth managers will pick up market share as a result of the recession
Figure 7: COVID-19 is expected to knock back the impressive gains in profitability made by the industry in 2019
Figure 8: Wealth profits surged at Goldman Sachs, but much of this was due to changes in reporting lines
Figure 9: A promising 2019 will give way to a poor 2020 as revenue drops significantly in the recession
Figure 10: Shifts in business mix were mostly the result of other divisions, with only a few banks reporting large swings
Figure 11: After lagging the market in 2018, group profits surged at European and Swiss wealth managers
Figure 12: Some of the largest declines in profits were from groups that had posted exceptionally high 2018 numbers
Figure 13: Overall, shifts towards more wealth in the group business mix have been modest in recent years
Figure 14: The majority of global wealth managers offer SRI solutions to their private wealth management clients
Figure 15: Average retail assets represent 42.8% of total individual AUM at leading wealth managers
Figure 16: SRI, social media, and young investor events are all secondary to investing in a solid digital strategy
Figure 17: Vanguard’s hybrid robo-advice service is the only robo to gain scale
Figure 18: Regulation has been fading as a worry, but the pandemic is on track to cause a spike in regulatory disputes