This is marketing research on the wealth management industry and can include information on the background, market structure, definitions, competitors, trends and developments of the wealth management industry and is related to other topics such as finance, mutual funds, alternative investments and asset management.

Table of Contents

[edit] Background

Wealth management is a term for services of high net worth individuals that includes private banking, investment advice and management, tax planning, financial planning and asset management. Banks, investment firms, insurance companies and other financial services firms realized that a personalized and broad set of consultancy, advisory and management for individuals with high net worth could make profitable economic sense.

The customers are segmented as follows:

• Mass affluent

the largest segment of affluent people. Depending on who defines it, it means individuals with USD 100,000 to USD 1 million of liquid financial assets.

• HNWI

high net worth individuals with liquid financial assets of more than a million USD.

• Very high net worth individuals

those with investable assets in the range of USD 5 to 50 million

• Ultra high net worth individuals

those worth more than US 30 million (excluding the primary residence).

Wealth management has emphasis on financial advice and is concerned with gathering, maintaining, preserving, enhancing and transferring wealth. Asset management is a key feature too.

Typical products provided by wealth management companies would include:

• Brokerage
• Core banking type products
• Lending products such as margin lending, credit cards, mortgages and private jet finance
• Insurance and protection products, such as property and health insurance, life assurance and pensions.
• Asset management in its broadest sense: discretionary and advisory, financial and non-financial assets (such as real estate, commodities, wine and art), conventional, structured and alternative investments.
• Advice in all shapes and forms: asset allocation, wealth structuring, tax and trusts, various types of planning (financial, inheritance, pensions, philanthropic), family-dispute arbitration – even psychotherapy to children suffering from ‘affluenza’.

A wide range of concierge-type services, including yacht broking, art storage, real estate location, and hotel, restaurant and theatre booking.

[edit] Market Structure

According to the Cap Gemini World Wealth report for 2006, HNWI wealth grew at an average annual rate of 8% in the decade from 1996 to 2005. Total wealth expanded from US $16.6 trillion in 1996 to US $33.3 trillion by the end of 2005.

A snapshot of HNWI sector gains by the end of 2005 included the following highlights:

• 8.7 million individuals, globally, held more than US$ 1 million each, indicating an increase of 6.5% over 2004.
• Wealth totals US $33.3 trillion, a 8.5% gain over that of 2004.
• Wealth generation was driven by GDP gains and continued growth in market capitalization.
• Emerging markets had strongest advances in market capitalization, aiding wealth creations in the regions of Latin America, Eastern Europe and APAC countries.
• South Korea, India, Russia and South Africa witnessed the highest growth of HNWI populations.

Total HNWI wealth is estimated to grow to US $44.6 trillion by the year 2010, growing at about 6% annually. The category of HNWI individuals, which totaled 8.7 million in 2005, includes 85,400 UHNWI. This segment of the HNWI population grew by 10.2% over the 2004 numbers.

Geographically, the share of that 44.6% market consisted of the following:

Region	                  HNI wealth (trillions US$)	     Change (%)

Europe	                               11.2	                3.7
North America	                       14.5	                7.4
Asia Pacific	                       10.6	                6.7
Latin America	                        5.5	                5.9
Middle east	                        1.8	                8.0
Africa	                                1.0             	5.2

Top 10 wealth managers with Assets under Management (AuM) in billion Euros in 2003 are as follows:


Wealth Manager	                                    AuM (billions of Euro)

UBS Wealth Management   	                              858.8
Credit Suisse Pvt. Banking	                              329.2
Merrill Lynch Global Private wealth management	              183.8
Deutsche Bank Pvt. Wealth Management	                      162.0
Citigroup Pvt. Bank	                                      158.6
Barclays Private clients	                              155.3
HSBC Pvt. Banking Holdings	                              137.5
JP Morgan Pvt. Banking	                                      112.2
Morgan Stanley Pvt. Wealth Management	                      105.2
ABN-AMRO Pvt. Clients	                                      102.0

[edit] Industry Definitions

• GDP

Gross domestic product. The total value of products and services created by a country.

• AuM: Assets under management

BRIC: Brazil, Russia, India and China are collectively called so. They are grouped together as high growth economies.

[edit] Market Metrics

The following table details the growth of HNWI wealth over a period of the last decade and the corresponding growth in the ranks of HNWI’s. The wealth numbers are in trillions of US dollars while the HNWI population numbers are in millions.

 HNWIGlobal	   96	97	98	 99	 00	 01   02      03     04     05	CAGR(%)

Wealth	          16.6	19.1   21.6	25.5	27     26.2   26.7   28.5    30.7   33.3   8.0
Number	           4.5	5.2     5.9	 7	 7.2    7.1    7.3    7.7     8.2    8.7   7.6

HNWI population by regions was as follows in 2005. Growth CAGR over the earlier year was 6.5%

Region	                     HNI population (millions)	                 Change (%)

Europe	                                 2.8	                            4.5
North America	                         2.9	                            6.9
Asia Pacific	                         2.4	                            7.3
Latin America	                         0.3	                            9.7
Middle East	                         0.3	                            9.8
Africa	                                 0.1	                           11.7

Geographic wealth distribution was as follows in 2005:

Region	                     HNI wealth (trillions US$)	                Change (%)

Europe	                                 9.4	                           4.9
North America	                        10.2	                           9.4
Asia Pacific	                         7.6	                           8.0
Latin America	                         4.2	                          11.8
Middle East	                         1.2	                          19.7
Africa	                                 0.8	                          14.5

Top wealth management companies were positioned as follows by the end of year 2004.


Wealth Management Firm	             Market share

UBS	                                2.9
Merrill Lynch	                        2.6
Citigroup	                        2.4
Credit Suisse	                        1.6
Charles Schwab	                        1.0
Wachovia	                        1.0
Bank of America, Pvt. Bank	        0.7
Fidelity	                        0.7
J P Morgan, Pvt. Bank	                0.6
HSBC	                                0.6

Investment patterns in 2005 and those forecast for 2007 are indicated below:

Investment sector	    2005 (% of total investments)	     2007 (% of total investments)

Equities	                        30	                                     31
Fixed income	                        21	                                     21
Cash/deposits	                        13	                                     11
Real estate	                        16	                                     15
Alternative investments	                20	                                     22

Total	                               100	                                    100

Alternative investments include structured products, hedge funds, managed funds, foreign 
currency, commodities (including precious metals), private equity and investments of 
passion (fine art & collectables).

[edit] Trends and Recent Developments

The fastest growing region for wealth management is Asia Pacific. BRIC countries also are showing very fast economic growth.

Most of these new high net worth individuals will have created their wealth through entrepreneurial activity and will seek services that reflect their greater familiarity with more complex financing options coupled with relatively strong protection elements including insurance.

[edit] Sources

UBS

Goldman Sachs

Cap Gemini

Merrill Lynch

Boston Consulting Group

[edit] Next Steps

If you have any type of market research question or request, contact us and ResearchBuy will help you find a report or the right market research expertise to get the answers you need.