Fintech firms will see strong gains but traditional wealth firms continue to lead
North America will maintain is leading position in the global wealth management industry, as double-digit growth expands the market.
According to a new report from Allied Market Research, the industry will grow to US$4.43 trillion by 2030, with CAGR of 10.7%. This compares to $1.25 trillion in 2020 and the research considers growth from 2021-2030.
North America accounted for more than half of the global wealth management market in 2020 and is expected to hold its lead through the next five years due to the number of high-net-worth individuals and the competitive marketplace. However, Asia-Pacific is expected to see a CAGR of 12.7%.
Traditional wealth managers, who held a two-thirds share of the market in 2020, are also expected to maintain their led to the end of the decade, although competition from fintechs will grow with a CAGR of 16.8% during the 2021-2030 period as the industry creates solid business plans and builds credible relationships with banks, customers, and investors.
However, the growth of fintech does not appear to mean a weakening of the importance of human advisors. Human advisory had three quarters of market share in 2020 and this is expected to endure thanks to the ability to serve a changing client base in a variety of demographics and offer fluidity in the approach while managing wealth.
Robo-advisors will grow at a higher rate from 2021-2030 though with a CAGR of 26.4% and this is attributed to factors such as the ease of account set-up, low fees, and portfolio management capabilities.
The report highlights how the global wealth management industry is driven by rapid demand for alternative investments including private equity, commodities, hedge funds, REITs, and intellectual property. But it is challenged by regulations, pricing transparency and high fees.
