Super League competitors combined wealth management client AUM slowed its expansion in 2015, improving only by 0.9% over 2014. The reduced growth is reflective of wealth managers’ divesting activity, but also challenging market conditions. Nevertheless, the majority of competitors recorded positive (if lower than a year ago) new money flows, suggesting the return of clients’ confidence in their advisors’ skills. Looking forward, however, 2016 results will reveal whether HNW investors are indeed ready to trust the biggest players with their money.
At the end of 2015, client assets booked with the world’s 25 leading private wealth managers grew by 0.9%. The top three rankings remained unchanged, with Switzerland’s UBS leading the way, followed by the US players Bank of America (BoA) Merrill Lynch and Morgan Stanley. Although industry-wide growth was much weaker than a year ago, pushed down by challenging market conditions and exchange rate fluctuations, most competitors maintained positive new money flows.
Key points include:
• Combined private clients’ assets under management (AUM) held with Super League wealth managers stood at $8.6tn in 2015. More than half of these assets were booked with the largest four players.
• Net inflows in the Super League remained strong in 2015, although they decreased for the first time since 2012.
• Only half of the top wealth managers succeeded in growing their profits in 2015, though the vast majority stayed in the black.
• Growing costs and contracting margins remain the challenge for all major players, as the average cost/revenue ratio of the largest 25 wealth managers stood at an all-time high in 2015.
Critical success factors:
• Innovative investment products will be key to AUM growth – 2015 saw increased volatility in capital markets, which had a direct impact on wealth managers’ AUM figures. With unsteadiness continuing in 2016, clients are likely to seek alternatives to their current portfolios. Competitors that fail to provide attractive options will suffer from negative money flows.
• Seeking efficiencies is critical – Most competitors in 2015, even those that grew their profits, were struggling with growing costs. While some of these can be considered out of control and related to legacy legal investigations, wealth managers should look to improve efficiency where possible. This can be achieved through leveraging technology or streamlining processes.
• Existing locations cannot be neglected – The biggest players continued to divest from non-core locations in order to focus on growth markets, in many cases Asia Pacific.
However, consequently the competition will be fierce in this region and growing a presence in this market can prove costly. At the same time, smaller wealth managers have already started growing their market shares in other locations, potentially posing a threat to established players here.
The report “Wealth Management Super League 2016; Comparing the performance of the world's leading wealth managers” benchmarks the world’s leading wealth managers by managed client assets and financial performance. The report covers the 25 most prominent institutions, including standalone private banks and wealth managers, as well as competitors that are part of larger universal financial groups.
In particular, this report allows the following:
• 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, Charles Schwab, Citigroup, Citi Private Bank, Crédit Agricole, Credit Suisse, Deutsche Bank, 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.