The latest BCG global wealth report identifies profit, tech and asset trends in advisor space.
The latest annual global wealth report from the Boston Consulting Group confirms what many suspect: Western countries continue to mature in terms of wealth generation; Asia is growing fast and catching up.
In an interview with Wealth Professional Anna Zakrewski, one of the lead authors of the report, described 2013 as a “boom” year. “It was definitely stronger than 2012. Asia Pacific had growth over 30%. North American is still the largest region with $52 trillion. But what is interesting...of $19 trillion in new wealth in 2013, 14 trillion of that existing that grew as a result of equity, but five trillion of that new wealth was created in China and emerging markets,” said Zakrewski.
In terms of growth, Asia-Pacific posted the strongest growth, followed by Eastern Europe, North America, the Middle East, Africa, and Latin America. Asia-Pacific will overtake Western Europe as the second-wealthiest region in 2014, North America as the wealthiest in 2018. Global private wealth is projected to post a compound annual growth rate of 5.4 percent over the next five years to reach an estimated $198.2 trillion by the end of 2018.
Also in the report: The number of millionaire households increased to 16.3 million in 2013, up from 13.7 million in 2012. Millionaire households now make up 1.1 percent of all households globally. The U.S. still has the highest number of millionaire households (7.1 million), and the highest number of new millionaires (1.1 million). But in China the number of millionaire households rose from 1.5 million in 2012 to 2.4 million in 2013. The number of millionaire households in Japan fell from 1.5 million to 1.2 million as the fell yen against the dollar.
As any advisor knows high net-worth clients are where the money is: Millionaire households held over $63 trillion or 41% of global private wealth in 2013. The report also points out that Canada’s share of North American wealth has been dropping, falling from 8.3% to 7.9% in the latest year of the survey. Nevertheless Canada remains in 7th place in the number of high net worth households, with 384,000. Assets under management by wealth managers rose by 11 percent. According to the report, “Despite sizable growth in assets under management, profit margins remained largely flat as wealth managers continued to grapple with rising costs, notably those related to regulatory compliance.”
According to Zakrewski, profits in the advisory have compressed from 30 basis points pre-reccession to 20 basis points on assets, “wealth management is still a good business to be in. Twenty basis points in profit is still nice, is still a really good business to be in. There are negatives but things are on a positive upswing.”
Zakrewski said one of the big trends in the industry this year will be increasing the digital offerings of advisors at big banks. “It’s a hot topic in wealth management…building the relationship between manager and client. Face to face is still important, but this is going to be fully integrated in the digital space. Banks especially are pushing digital on the advisory side as a way of building the relationship managed and the client.” The leaders in the space are building analysis simulators, making advisors available on chat, while allowing expert interaction (with say a CFO), all on the client’s tablet. “These are the things the client demands. And it’s reached the banks. This is not about replacing face-to-face, but a mix between the two. It is enhancing the relationship between the client management and the client. It’s about enabling the client. It’s the next generation in wealth management. That’s a big trend that we see,” says Zakrewski.
In an interview with Wealth Professional Anna Zakrewski, one of the lead authors of the report, described 2013 as a “boom” year. “It was definitely stronger than 2012. Asia Pacific had growth over 30%. North American is still the largest region with $52 trillion. But what is interesting...of $19 trillion in new wealth in 2013, 14 trillion of that existing that grew as a result of equity, but five trillion of that new wealth was created in China and emerging markets,” said Zakrewski.
In terms of growth, Asia-Pacific posted the strongest growth, followed by Eastern Europe, North America, the Middle East, Africa, and Latin America. Asia-Pacific will overtake Western Europe as the second-wealthiest region in 2014, North America as the wealthiest in 2018. Global private wealth is projected to post a compound annual growth rate of 5.4 percent over the next five years to reach an estimated $198.2 trillion by the end of 2018.
Also in the report: The number of millionaire households increased to 16.3 million in 2013, up from 13.7 million in 2012. Millionaire households now make up 1.1 percent of all households globally. The U.S. still has the highest number of millionaire households (7.1 million), and the highest number of new millionaires (1.1 million). But in China the number of millionaire households rose from 1.5 million in 2012 to 2.4 million in 2013. The number of millionaire households in Japan fell from 1.5 million to 1.2 million as the fell yen against the dollar.
As any advisor knows high net-worth clients are where the money is: Millionaire households held over $63 trillion or 41% of global private wealth in 2013. The report also points out that Canada’s share of North American wealth has been dropping, falling from 8.3% to 7.9% in the latest year of the survey. Nevertheless Canada remains in 7th place in the number of high net worth households, with 384,000. Assets under management by wealth managers rose by 11 percent. According to the report, “Despite sizable growth in assets under management, profit margins remained largely flat as wealth managers continued to grapple with rising costs, notably those related to regulatory compliance.”
According to Zakrewski, profits in the advisory have compressed from 30 basis points pre-reccession to 20 basis points on assets, “wealth management is still a good business to be in. Twenty basis points in profit is still nice, is still a really good business to be in. There are negatives but things are on a positive upswing.”
Zakrewski said one of the big trends in the industry this year will be increasing the digital offerings of advisors at big banks. “It’s a hot topic in wealth management…building the relationship between manager and client. Face to face is still important, but this is going to be fully integrated in the digital space. Banks especially are pushing digital on the advisory side as a way of building the relationship managed and the client.” The leaders in the space are building analysis simulators, making advisors available on chat, while allowing expert interaction (with say a CFO), all on the client’s tablet. “These are the things the client demands. And it’s reached the banks. This is not about replacing face-to-face, but a mix between the two. It is enhancing the relationship between the client management and the client. It’s about enabling the client. It’s the next generation in wealth management. That’s a big trend that we see,” says Zakrewski.
