Deloitte Global Wealth Management Centre Ranking 2015
Switzerland remains number 1 in international private wealth management
SINGAPORE, 9 February 2015 — Switzerland remains the world’s largest wealth management centre, but other locations are catching up rapidly. Deloitte in Switzerland has analysed the international client asset development of the worldwide leading private wealth management centres in its second Deloitte Wealth Management Centre Ranking.
The world’s leading international wealth management centre is still Switzerland, with USD 2.0 trillion assets under management at the end of 2014. This is a plus of 14% compared to 2008. Switzerland is therefore placed ahead of the UK (USD 1.7 trillion / +13%), the United States (USD 1.4 trillion / +28%) and Panama & Caribbean (USD 0.9 trillion / -47%). Fifth-placed Hong Kong’s relative growth of cross-border client assets overshadows all others with an increase of 146% (+USD 0.4 trillion) within the observational horizon. This increase was enough to overtake Singapore (place 6) in the current ranking, despite Singapore also logging in respectable growth (+25%). The global international wealth management market volume grew by 2.2% from 2008 to 2014, to a total of 9.2 trillion USD.
Leading wealth management centre, client origination mix remain stable
Daniel Kobler, Head of Banking Strategy Consulting at Deloitte in Switzerland, explains: “As the Deloitte analysis shows, Switzerland remains the world’s largest centre, but other locations are catching up rapidly – especially Hong Kong, the US and Singapore. The split between European and non-European clients remains stable in Switzerland, while outside Europe, the most important market regions remain the United States, Canada, Australia, New Zealand and Japan.”
Mohit Mehrotra, Global Wealth Management Group Leader adds, "Given how fragmented the market is, with the top 20 players holding less than 15% of the market, it will be very important for players in Asia to explore profitable business models that address not just the offshore but also the on-shore opportunities."
But new client assets and profit margins down
However, there are mixed feelings: The market volume growth is driven mainly by capital market performance, not net new client assets. Overall, international wealth management centres experienced an outflow of 23% client assets, while Switzerland lost 7% of assets. And there are further challenging news: The overall profit margin for Switzerland has decreased to an estimated level of 24 bps in 2014 (against 40 bps in 2008). Daniel Kobler comments: “Swiss providers face some challenges on both revenue realisation and sustainable cost management.”
Paths to value
Therefore, international market players in Switzerland face the challenge of restoring strong growth in their business and profitability by improving operational performance and attracting new client assets. In order to find their ‘path to value’ some strategic changes may be necessary. However, not all wealth management service providers need the same agenda for change. First, the current position in relation to operating profit and customer deposits growth needs to be assessed. Then, the strategic target and strategic measures to improve the corporate performance have to be defined. This could also mean to separate from unprofitable investment, increase the productivity of client funds or to take growth opportunities. The study shows that banks in Switzerland which are working in international wealth management have to focus on these challenges in order not to lose ground against their foreign competition.
About the Deloitte Wealth Management Centre Ranking 2015
For the second time, Deloitte in Switzerland has ranked the leading wealth management centres all around the world according to international assets under management and administration (AMA). On the basis of the Deloitte Wealth Management Centre Ranking 2013 report, international wealth management centres were defined as countries or jurisdictions specialised in and attracting a large number of international private clients. The core of our method is a proprietary Deloitte private banking database and analytics engine sourcing raw data and financial figures of third party data providers. Against this backdrop, the study measures the volume of private client assets at each centre in the years 2008-2014 (E) and the changes that have occurred in this period. The report also estimates the net new asset production per wealth management centre in the same period of time.
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