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Wealth Management Competitive Dynamics, 2021 Update – Review of Wealth Managers by AUM, Financial Performance, Innovative and Competitive Trends

This report benchmarks the world’s leading wealth managers by managing client assets and financial performance. It covers the 47 most prominent institutions, including standalone private banks and wealth managers as well as competitors that are part of larger universal financial groups. All international public wealth managers with over $100 billion in private client assets under management are featured in the report.

The wealth management market’s top players endured the difficulties of the pandemic well, recovering most of the assets under management (AUM) lost to early market disruption and ultimately growing overall client assets. Positive net inflows and continued growth in revenue – even as the pandemic continues to grind on – means the industry has not suffered anywhere near the same level of disruption as it did during the global financial crisis. While profits dipped, private wealth management remains a bright spot for banking and is well placed to grow into recovery.

What are the market dynamics in the wealth management sector?

Private wealth management client assets ended 2020 at an all-time high. Inflows to the largest wealth managers outpaced growth in overall HNW wealth in 2020. Asset management consolidation is reshaping the industry and resulting in more top wealth managers adding to their asset management divisions. Moreover, COVID-19 has already faded from the strategies of the top wealth managers. Wealth management’s top players endured the difficulties of the pandemic well, recovering most of the assets under management (AUM), lost to early market disruption, and ultimately growing overall client assets.

After a year of the COVID-19 pandemic, the world’s leading wealth managers have more than recovered from the stock market panic that wiped out trillions of dollars of wealth. Client assets were up almost across the board, with many wealth managers smashing records for net inflows and total AUM by year-end. Merger and acquisition activity was more muted outside of a couple of mega retail brokerage deals in the US, making the 2020 performance one of the most organic recorded in recent years.

Leading wealth manager AUM recovered by the end of 2020: The top 10 wealth managers benefitted as the pandemic wore on. There was a distinct flight to the big wealth management brands over the first year of the pandemic. The large losses of February and March 2020 chalked up in investment portfolios the world overdrove investors towards established brands. Average AUM per wealth manager surged in our rankings as the big got bigger still. The Asia Pacific was a standout region during the pandemic. Moreover, continued positive net new money boosted the top banks amid the crisis, and net new money increased at several key competitors.

The top end of the private wealth market saw key shifts: Deutsche Bank dropped out of the top 10 largest private wealth managers. As the biggest brand in the business, UBS was a key beneficiary of the general flight to quality and saw the strongest growth in its Global Wealth Management AUM in 2020. Morgan Stanley finally eclipsed Bank of America to secure the second spot. Credit Suisse was one of few players to see a decline in AUM. Raymond James’ AUM surged in 2020, bringing it back into the top 10.

Half-year figures suggest the industry is growing strongly: The largest wealth managers are on track for an impressive recovery. The early effects of the pandemic upon the wealth industry were certainly traumatic for any portfolio with exposure to stock markets. However, this was relatively quickly alleviated and there was a strong finish to 2020. The focus remains on the top tiers of wealth, with minimum AUMs on the rise. Moreover, accredited investors are the mainstay of the private wealth market.

How was the financial performance of the wealth managers?

As expected, profits fell at a majority of the banks in our rankings, resulting in a decline of more than 4% in profits and a deterioration in the cost/income ratio. While hardly welcome, the impact of the pandemic on the financial performance and profitability of the world’s largest wealth managers was relatively minor. The private wealth management industry entered the COVID-19 pandemic in very good form. The top players tracked by GlobalData had steadily grown profits in recent years, even if the cost/income ratio had not materially improved since 2016.

COVID-19 trimmed profits marginally. Although profits dipped in 2020, the pandemic response of many wealth managers was to increasingly digitize their processes and client interactions. These digital improvements mean advisor efficiency was permanently improved, which will stand wealth managers in good stead in more normal operating conditions. For example, RBC Wealth Management has a multiyear technology transformation program in the process. This includes a 2021 investment in a new platform for its wealth division that will modernize its advisor tools and workflows as well as improve advisor productivity.

One might have expected that profits would drop across the board at the top wealth managers, but 2020 was a year of improving margins for a significant minority of the 47 wealth managers or wealth management divisions tracked by GlobalData. 17 of the wealth divisions increased their profitability, most of which also had a solid 2019. The Swiss banks in particular recorded strong improvements. This was led by Julius Baer, which added the largest amount to its profit line in 2020 as it earned more revenue off its client AUM while its cost line barely changed overall. J. Safra Sarasin Bank, another pure-play Swiss bank, saw the greatest improvement percentage-wise, with a dramatic reduction in its reserving for losses improving its bottom line.

What are the key trends in the wealth management sector?

Looking over the quarterly and annual filings of the almost 50 banking groups that make up GlobalData’s Wealth Management Competitor Analytics, several important themes and trends become apparent. ESG has risen to be the dominant issue among the leading wealth managers. For most banks, this would be simply a matter of ensuring lending is not going to problematic companies and that the bank’s own carbon footprint, governance, and policies are in line with common corporate standards. However, for wealth managers, there is also a business opportunity to be captured by helping channel capital into ESG investment products. This opportunity – more than even the pandemic – is dominating the strategy documents of the leading wealth managers.

ESG dominates competitive positioning: ESG products and services have quickly become part of standard offerings. More than 60% of private wealth managers are actively promoting ESG. The bar for ESG services is growing increasingly high among private wealth managers. The leading robo-advisors in the US – the most innovative and mature robo-advice market – have already developed ESG-focused options, while other regions are seeing similar launches. For example, Nutmeg launched an ESG offering in the UK in November 2020. Whereas simple ESG funds and avoiding “sin” stocks may have sufficed in previous years, today’s HNW investors are demanding more.

Regulatory issues are becoming more pressing around data: When reviewing wealth manager rankings at the mid-year 2021 update, regulations and compliance was the category with the single greatest declining scores among banks of the wealth competitors (as well as some of the lowest scores relative to bank or finance companies in other categories). The top 10 of our rankings by AUM have the lowest scores among all tracked competitors, with dedicated wealth managers such as the Swiss banks and firms that are primarily wealth or investment managers having the lowest scores of those in our assessment.

What are the leading companies in the wealth management sector?

Leading companies in the wealth management sector include ABN AMRO, Bank of America Merrill Lynch, Barclays, BNP Paribas, BNY Mellon, Bank of China, Bank of Montreal, Charles Schwab, China Merchants Bank, Citigroup, and Citi Private Bank.

Wealth management sector, by key players

Wealth management sector, by key players

To know more about key players, download a free report sample

Market report scope

Outlook Year 2021
Leading Companies ABN AMRO, Bank of America Merrill Lynch, Barclays, BNP Paribas, BNY Mellon, Bank of China, Bank of Montreal, Charles Schwab, China Merchants Bank, Citigroup, and Citi Private Bank.

This report provides an in-depth analysis of the following. It provides:

  • Private wealth management client assets ended 2020 at an all-time high.
  • Asset management consolidation is reshaping the industry and resulting in more top wealth managers adding to their asset management divisions.
  • Profits were hit by the COVID-19 pandemic, but less so than other parts of banking.

Reasons to Buy

  • Benchmark your AUM and financial performance against the biggest players in the industry.
  • Understand the challenges in growing client assets in different geographies.
  • Learn about your competitors’ strategies related to expanding client books.
  • Find out how profitable the wealth management industry is.
  • Identify the industry’s best practices in managing operating costs and boosting revenues.
  • Discover how wealth managers’ M&A activity affects their financial performance.

Key Players

ABN AMRO

Bank of America Merrill Lynch

Barclays

BNP Paribas

BNY Mellon

Bank of China

Bank of Montreal

Charles Schwab

China Merchants Bank

Citigroup

Citi Private Bank

Crédit Agricole

Credit Suisse

Deutsche Bank

DBS

EFG International

Goldman Sachs

HSBC

HSBC Private Bank

J.P. Morgan

Julius Baer

Morgan Stanley

Northern Trust

Pictet

Royal Bank of Canada

Royal Bank of Scotland

Santander

Société Générale

Standard Chartered

UBS

US Trust

Vontobel

Wells Fargo

OCBC

Bank of Singapore

DBS

UBP

Raymond James

St. James’s Place

Investec

Bank Cantonale Vaudoise

Rothschild & Co

Nordea

Table of Contents

Table of Contents

1. Executive Summary

1.1 Leading wealth managers weathered the pandemic well

1.2 Key findings

1.3 Critical success factors

2. Wealth Managers by AUM

2.1 Leading wealth manager AUM recovered by the end of 2020

2.2 The top end of the private wealth market saw key shifts

2.3 Half-year figures suggest the industry is growing strongly

3. Financial Performance

3.1 Profits were down in 2020, but nothing like the global financial crisis

3.2 Group performance was heavily impacted by the pandemic

4. Competitive Trends

4.1 GlobalData’s Company Filing Analytics: top trends

4.2 ESG dominates competitive positioning

4.3 Regulatory issues are becoming more pressing around data

4.4 Robo-advice and digital platforms

4.5 Mass affluent individuals are growing more attractive to leading private wealth managers

5. Appendix

5.1 Supplementary data

5.2 Abbreviations and acronyms

5.3 Secondary sources

5.4 Further reading

About GlobalData

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List of Tables

List of Tables

Table 1: Published client AUM for the top 15 private wealth managers, 2020-H1 2021

Table 2: Private wealth management minimum thresholds

Table 3: Notable asset management acquisitions, 2020-21

Table 4: Selected Citibank share among mass affluent individuals in divestment markets, 2020

Table 5: Net new money from reporting wealth management competitors ($bn), 2015-20

List of Figures

List of Figures

Figure 1: In 2020, consolidation and growth were the hallmarks of the private wealth management market

Figure 2: Inflows were up in 2020 despite a challenging start to the year

Figure 3: Charles Schwab’s acquisition of TD Ameritrade boosted its inflows to almost a third of total AUM

Figure 4: The performances of the top 10 were starkly divided .

Figure 5: Profits fell in 2020, but the impact of the pandemic on the cost/revenue ratio was muted .

Figure 6: Growth in profits was strongest among Swiss private banks

Figure 7: Revenue growth was sluggish in 2020, while costs grew in line with past trends

Figure 8: Wealth revenue growth was driven by higher trading volumes .

Figure 9: Wealth FTEs fell in 2020, which helped keep costs contained

Figure 10: Good control over operating costs failed to prevent a collapse in banking profits .

Figure 11: Diversified banking groups suffered the most due to the pandemic, with non-wealth lines dragging down profit

Figure 12: The majority of top players that recorded increased profits in 2020 were Swiss banks

Figure 13: Overall there was a shift towards wealth, but few players saw notable changes in 2020 .

Figure 14: ESG figures ever more prominently in the strategies of the top international wealth managers

Figure 15: No economy has been immune to COVID-19, but several key Asian economies have performed well .

Figure 16: North American HNW investors expect wealth managers to suggest impactful companies to invest in .

Figure 17: North America continues to lead the way in ESG investment management

Figure 18: Demand for ESG investments is rising strongly among Asia Pacific’s HNW investors .

Figure 19: Major wealth managers fare poorly in terms of regulatory compliance

Figure 20: Even among HNW individuals, channel preferences are shifting towards digital .

Figure 21: Mass affluent investors will see their wealth grow by 6.4% in 2021 to just over $78tn

Figure 22: Client AUM is finely balanced between retail and HNW clients

Frequently Asked Questions

Leading companies in the wealth management sector include ABN AMRO, Bank of America Merrill Lynch, Barclays, BNP Paribas, BNY Mellon, Bank of China, Bank of Montreal, Charles Schwab, China Merchants Bank, Citigroup, and Citi Private Bank.

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