A loss of confidence among wealthy clients and a lack of
efficiency in banking business models has hit the global wealth
management industry. The good news is that there is $10 trillion in
high-net-worth bankable assets that haven't been tapped, according
to Scorpio Partnership's 2010 Global Private Banking study, which
was released Thursday.
"Capturing these assets is the real answer for industry
recovery," the study, which tracked 230 wealth management
The wealth management industry now has $16.5 trillion in assets
under management, up from $14.5 trillion in 2008. Yet Scorpio
reports that the real high-net-worth market opportunity is set at
$26 trillion, signaling that the global industry currently manages
63.5% of the real market.
Profitability has dropped by a median of 35% from 2008,
according to the study. And cost/income ratios have risen to an
average 78.2%, up from 72.4% in 2008. In addition, net new money
data shows a median inflow across all institutions of $900 million
for the 2009, a decline of 60% from 2008.
"The wealth management engine is still misfiring for many. On
the one hand the asset management machine is working and this is
shoring up numbers. While, for virtually all banks, in terms of
attracting new business it has been a case of Net No Money," said
Sebastian Dovey, managing partner, in a press release.
"Significantly, our global HNW data shows there are strong signs of
wealth creation even in these complex markets and yet new clients
are still holding back from opening accounts with the
Meanwhile, wealth is still concentrated among the top wealth
managers, with the top 10 now collectively managing $8.733 trillion
in high net worth assets, 64% of the total industry of fee-based
managed assets today.
Bank of America [BAC] is still the top wealth manager,
followed by UBS. Despite its well-known tax scandals last year, UBS
was a strong performer compared to its peers and seems relatively
healthy, Scorpio reported. Morgan Stanley moved up four slots after
buying the Smith Barney business from Citibank, followed by Wells
Fargo, Credit Suisse, JP Morgan and Royal Bank of Canada, a new
entry on the list. To be in the top 20 ranking by assets under
management a private bank must now have over $135 billion of assets
under fee-based management.
"The premier league of wealth managers have virtually all
benefited from strong asset management performance during the past
financial year with most in the top 20 posting double digit asset
growth," said Stephen Wall, director at Scorpio Partnership, in a
press release. "Banks outside the top 100 are starting to show
signs of prolonged suffering as net new money and real profits are