External asset managers, family offices, and
online wealth managers have taken advantage of the disruption
caused by the financial crisis to challenge the position of the
globe’s top private banks, according to Boston Consulting Group’s
(BCG) new report.
The Battle to Regain Strength: Global
Wealth 2012 is BCG’s 12th annual review of the global wealth
management industry, and addresses the market’s current size,
offshore banking, leading institutions’ performance levels, the
emergence of alternative models, and key trends.
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“Traditional wealth managers should aim not
only to defend their turf but also to profit from evolving client
preferences by adapting their own business models—borrowing
different elements from those of unconventional competitors and
making sure that they keep their finger on the pulse of what their
clients want,” said report’s co-author Monish Kumar.
BCG reported that wealth managers’ asset bases
generally remained flat in 2011, compared with an 11% gain in
2010.
“The lack of growth was mainly attributable to
the deterioration in market values, which was not offset by net new
inflows. There was wide variation in how wealth managers fared
across regions and performance categories,” BCG said.
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By GlobalDataTotal private wealth rises 18.5% in
BRIC
BCG’s annual research calculated
that global private financial wealth grew 1.9% in 2012 to
$122.8trn – considerably weaker than in 2009 and 2010 due to
economic uncertainty and struggling equity markets in developed
economies.
Total private wealth increased by 18.5% in the
BRIC countries in 2011, however, North America (–0.9 percent),
Western Europe (–0.4 percent), and Japan (–2.0 percent) had
negative growth, according to the consultancy.
The ultra-high-net-worth (UHNW) segment wealth
rose 3.6% —compared with average growth of 1.7% across all other
segments – with the highest growth rate in the $100m-plus
category.
The number of millionaires rose by 175,000
globally as many households crossed the millionaire threshold in
developing countries, including China and India.
The total number of millionaire households
reached 12.6m by December 2011, and the US had the largest number
of millionaire households (5.1m), followed by Japan (1.6 m) and
China (1.4m), BCG said.
Singapore has highest
density of millionaires
Singapore has the highest density of
millionaire households in 2011 – more than 17% of all households
have private wealth of $1m or higher followed by Qatar (14.3%),
Kuwait (11.8%), and Switzerland (9.5%), BCG’s report
claimed.
The US had the largest number of UHNW (2,928)
and billionaire (363) households in 2011.
Switzerland had the highest number of UNHW
households, and Hong Kong was the leader in the number of
billionaires partly driven by billionaire families’ immigration,
the report stated.
Offshore wealth rose 2.7%
Offshore wealth rose 2.7% to $7.8trn in 2011
from the previous year, partly driven by a flight to safe havens by
investors in politically unstable countries and partly due to UHNW
families based in rapidly developing economies, the report
stated.
However, offshore wealth management industry
remains under intense and increasing pressure due to greater
regulatory scrutiny—particularly from tax authorities in the US and
Western Europe, BCG report claimed.
