All articles by PBI Editorial
PBI Editorial
Emerging nations drive wealth
The growth story of the high net worth individual (HNWI) will continue to play out for the foreseeable future despite the current slowdown in global markets, predicts the 2008 World Wealth Report (WWR), one of the major wealth industry benchmark surveys.Much of this growth, which last year saw HNW personal assets rise 9.4 percent to $40.7 trillion, is being driven by vibrant emerging markets a trend which helped offset slower wealth accumulation in the US and Western Europe.The year 2007 was a story of two halves, the report produced by Merrill Lynch and Capgemini notes, characterised by healthy global growth in the first six months of the year before a decoupling of mature and emerging economies began to be seen in the latter half.That meant that India, China and Brazil saw the highest HNWI population growth in 2007 on a country-by-country basis, with numbers rising by 22.7 percent to 123,000 HNWIs, 20.3 percent to 415,000 HNWIs and 19.1 percent to 143 HNWIs respectively.Regionally, the oil-rich Middle East (15.6 percent) and Latin America (12.2 percent) performed most strongly in terms of HNWI population growth, while the two regions also recording the highest increase in regional HNWI wealth, up 17.5 percent and 20.4 percent respectively.The WWR forecast that global HNWI wealth will increase to $59.1 trillion by 2012, rising by 7.7 percent a year.The upwards revision on previous predictions is backed by the belief that the current downturn will be relatively brief, but may also point to the way in which the HNWI is increasingly well-protected from market turmoil.This protection takes two forms, the report suggests
Capturing a leadership position
Swedbank, the Swedish institution, purchased 50 percent of Hansabanks shares in 1998 and bought out minority shareholders in 2005, but the branding implications for Hansabanks private banking division in the Baltic states are only now being realised. As of autumn 2008, the Swedbank brand will replace that of Hansabank Group in the Baltics, as part of an implementation process that is expected to conclude in autumn 2009. Hansabank head of private banking Hannes Oja told PBI, I really do not see a big influence arising from the new brand name, noting foreign capital has long had control of vast swathes of the Baltic banking sector. Swedbanks brand name has been increasingly visible in the Baltic states and in Russia it has been used for two years already. Oja does, however, foresee that the closer cooperation between the two banks will bring benefits. Most value-added to our customers and knowledge sharing for us can be expected from Swedbanks experience in Luxembourg, he comments. Indeed, Both Hansabank in the Baltics and Swedbank have a lot to learn from each other, Swedbank CEO Jan Liden said in May. The Baltics, like Luxembourg, have long benefited from high net worth individuals (HNWs) from neighbouring Russia looking to secure funds in more attractive jurisdictions.
Time for a change
US asset managers afraid to leave the safety of the herd are missing opportunities for international growth, according to a study by the New York management consulting firm Kasina, which recommends that US money managers globalise or risk being left behind. Senior executives from top 50 US asset managers were interviewed on how they plan to compete in the future; 45 percent of the money managers said that product development is priority one for the near term, followed by improved distribution The goals reflected the conservatism dominating the industry of late, and Kasinas study warns that such reticence could come back to haunt the overly cautious domestic players as conditions in the US market continue to tighten. Steven Miyao, Kasinas chief executive officer, said that in launching this research effort, his consultancy actively searched among firms for the big ideas that proactively addressed the challenges ahead but rarely found them
Punching above its weight
Rathbone Brothers, a wealth manager whose origins date back some 250 years to its Liverpool home, has emerged as one of the most successful of the UK wealth management independents Now, it has got its first foothold in Asia.Rathbone Brothers, looking for the right expansion moves to suit its history as a highly regarded discretionary wealth manager, has quietly built up an international trust network to cater for the complex needs of rich individuals and families The strategy has fallen into place with the purchase of Federal Trust (Singapore) by Rathbone Trust International, marking the first time an independent trust company has been acquired in Singapore.The transaction provides the firm with an excellent base on which to build its presence in Singapore, says Rathbone chairman Mark Powell
Wheeler-dealing at RBC Royal Bank
Acquisitions and hirings will be the order of the day.Nothing could be more illustrative of the increasing tempo of competition in private banking than the transfer to London of Michael Lagopoulos, RBC Royal Banks global head of international wealth management Canadas RBC has historically been a heavyweight of private banking with a wide international presence, but rivals say that it runs the danger of falling off the pace as the contest for clients keeps ratcheting up.Talking to PBI, Lagopoulos said he doesnt accept that assertion but concedes that private banking is getting ever tougher and RBC has to keep building in key wealth markets, particularly in fast-growing Asia
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Getting into top gear
Wachovia is moving aggressively to ramp up its financial planning services for clients with between $5 million and $50 million in investable assets, even as it also begins offering white-glove services and high-level financial planning further down the market to the mass affluent Charles Davis reports.Wachovia is on a roll, interviewing private bankers from all over the country as the bank, which has 240 private bankers, plans to hire nearly another 300 over the next three years to ensure it remains among the top-ranked wealth managers in the US.Hiring will be in high-growth markets, including Florida, Texas, California and New York Private bankers will work with 1,300 financial advisers in the investment services group of Wachovia Securities to serve the investment needs of affluent customers.In early June, shortly after announcing it was buying the St Louis brokerage firm A.G
More banks set Asia growth plans
Ambitious hiring plans threaten to drive salaries even higher as hundreds more advisers are sought.Among banks setting out assertive plans for growth in Asia-Pacific, Morgan Stanley is to launch private wealth management services in India next year, representing its first onshore wealth foothold in Asia.Leslie Menkes, managing director of the banks Singapore-based regional wealth division, said his firm plans to hire around 100 private bankers
Family values attracting more wealth
Thats a blow to private banks that also want the business of the ultra-wealthy client, but at least they can pick up useful outsourcing business.Ultra-high net worth individuals are increasingly opting for independent family offices and the more comprehensive wealth solutions that they provide, according to US consultancy Cerulli. Its research shows that the largest family office in the US is Bessemer Trust, which had $48.3 billion in assets under advisement (AuA) as of 2006, representing growth of 12.9 percent since 2005.Many offices have experienced a much faster rate of growth, however
The rich early arrivers
A new attempt is being made to segment the wealthy by a range of predictors into groups that include the up-and-comers, early arrivers, millionaires next door and the established wealthy.The initiative, by Phoenix Wealth Management, breaks down the wealth management market into four distinct segments by age and net worth major predictors of needs, concerns and behaviour
The lost decade for investments
Where do poor investors go next, as they shelter their devastated portfolios in safe havens like cash, government bonds and gold?Investment managers face a long haul in tempting investors back into equities, and away from the safe-haven positions built up in cash and government securities in recent months.US dollar and sterling-based private client investors experienced a disastrous third quarter, according to Asset Risk Consultants (ARC), a Guernsey-based research and consultancy based firm that produces a series of widely-followed Private Client Indices (PCI).All these indices, which reflect actual portfolio performance at firms that collaborate with ARC in the production of the indices, recorded big falls during the quarter.The ARC US Dollar Cautious PCI, which has a target relative risk of between 0 and 40 percent of world equity markets, fell by the 4.8 percent during the quarter.The ARC US Dollar Balanced Asset (target relative risk 40 percent to 60 percent of world equity markets), Steady Growth (target relative risk 60 percent to 80 percent of world equity markets) and Equity Risk (target relative risk of 80 percent to 110 percent of world equity markets) PCIs fell by 7.9 percent, 10.4 percent and 13.0 percent respectively.Sterling-based investors fared slightly better during the quarter