Global Wealth Management Industry Hits Its Stride

by Carla Johnson, Investors Offshore.com

22 June 2006

A recent study has shown that the global wealth management industry registered substantial growth in assets under management last year, which expanded by 18% in base currency terms.

According to the latest Private Banking Benchmark study by leading consultancy Scorpio Partnership, this asset growth has resulted from last year's healthy markets and surging net new money inflows. This also helped to propel a strong pre-tax profit increase of 24.6% for the industry.

“Following some painful lessons in the recent past, the wealth management industry has hit its stride," observed Sebastian Dovey, managing partner of Scorpio Partnership.

"The market leaders are demonstrating a sustained concentration on efficiency and profitability. Critically, they appear to also be achieving a more global proposition that resonates with the rapidly growing first generation new wealth holders. Net new asset flows are reflecting this," he noted.

In terms of assets under management (AUM), the so-called 'trillion-dollar club' has now expanded to three members, the study found. UBS retained top spot with an 8.75% increase in AUM in US dollar terms to $1.319 trillion. Citigroup, with $1.31 trillion in AUM, and Merrill Lynch, with $1.1 trillion, followed in second and third places. In base currency terms, UBS also led the way in AUM growth among the top 10 banks, rising 25.3%.

For banks targeting clients with $1 million, Morgan Stanley this year ranks second to UBS, having restructured its Global Wealth Management division.

In the $10 million plus client target category, including ultra-HNW clients and family offices, the top five firms providing data manage over $1.2 trillion in fee-based assets. These include: UBS, JP Morgan, Citigroup Private Bank, Northern Trust and Bessemer Trust Company.

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