Contact Information: Contact: Eric Gregoire + 1 617-854-4570
Global Wealth Climbs 7.5 Percent in 2006, Nearing $100 Trillion
In Fast-Growth Markets Such as the Middle East, Wealth Managers Must Pursue Opportunities Carefully Amid Intensifying Local Competition, BCG Study Finds
| Source: The Boston Consulting Group
ZURICH, SWITZERLAND--(Marketwire - October 4, 2007) - Global wealth grew by 7.5 percent in
2006 to reach $97.9 trillion, measured in local currencies. This increase
marked the fifth consecutive year of expanding wealth, according to a new
study by The Boston Consulting Group (BCG).
Despite the industry's sustained growth and strong performance, wealth
managers still have plenty of room to grow profitably. But as they pursue
opportunities in rapidly developing regions such as Asia-Pacific, Latin
America, and the Middle East, they face a host of challenges that require
careful planning, the report cautions.
"Tapping Human Assets to Sustain Growth: Global Wealth 2007" -- BCG's
seventh annual global-wealth report -- is based on a comprehensive market
study of wealth in 62 countries (representing more than 96 percent of
global GDP) and a benchmarking survey of 111 wealth managers who oversaw
almost $10 trillion in client assets and liabilities. Among the findings:
Global Market Sizing. Wealth remained concentrated in certain regions.
North America (the United States and Canada) and Europe again had the
deepest pools of wealth, at $36.2 trillion and $33.0 trillion,
respectively. "Together, these countries accounted for 27 percent of all
households and 71 percent of global wealth," said Christian de Juniac,
coauthor of the report and a BCG senior partner. The next-largest wealth
markets were Japan and the rest of Asia-Pacific, with $11.9 trillion and
$10.6 trillion in assets under management (AuM), respectively. The smallest
markets were Latin America, with $3.4 trillion in AuM, and the Middle East
and Africa, with $2.9 trillion in AuM.
China and Brazil had the highest compound annual growth rates in AuM from
2001 to 2006, followed by four countries of Central and Eastern Europe:
Hungary, Poland, Slovakia, and the Czech Republic. China's wealth market is
expected to outpace all others over the next five years, with a projected
growth rate of 17.4 percent per year, well above the global rate of 5.6
percent.
The number of millionaire households grew by 14.0 percent in 2006, to 9.6
million. "These were the richest 0.7 percent of households, and they owned
$33.2 trillion -- or about one-third -- of global wealth," said Bruce
Holley, another of the report's authors and a BCG partner. "North America
was home to nearly half of all millionaire households, Europe had about
one-quarter, and Asia-Pacific accounted for about one-fifth."
The United States had, by far, the highest number of millionaire
households, followed by Japan, the United Kingdom, and Germany. Remarkably,
China ranked fifth, ahead of major European economies such as France and
Italy.
The Middle East. The countries of the Cooperation Council for the Arab
States of the Gulf -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the
United Arab Emirates -- represent an attractive, high-profile wealth
market. The average AuM of the region's wealthy households (more than
$100,000 in AuM) was close to $1 million in 2006, compared with the global
average of less than $400,000. At the same time, however, this market is
challenging and highly competitive.
"Intensified competition has led to range of issues," de Juniac said,
"including margin pressure, eroding prices, product commoditization, and a
tightening market for talent. Foreign players must contend with
increasingly competitive Islamic banks, whose products not only comply with
shari'a, or Islamic law, but also -- in many cases -- mirror both the
performance and variety of conventional offerings."
Performance Benchmarking. Wealth managers in BCG's benchmarking survey had
a median pretax profit margin of 34.7 percent, and fewer than 5 percent of
participants reported a loss. The survey uncovered broad patterns of
profitability across regions and business models. The median pretax margin
of North American brokers, for example, was less than one-third that of
European offshore players.
"Despite these patterns," said Holley, "we also found that strong
performance transcended a player's region and business model. What mattered
more were players' efforts to manage the most important drivers of
performance, such as the growth of new assets, the productivity of
relationship managers (RMs), and the cost base."
Tapping Human Assets. Although a wide range of factors contribute to a
wealth manager's performance, the most decisive factor is often its human
assets. "Human assets can have a particularly strong impact on organic
growth, a chronically underappreciated lever for performance," de Juniac
said.
The report found wide variations in performance among RMs catering to the
same markets and regions, which suggests that most players have tremendous
potential to grow by getting more from their people. The report details
proven actions that will allow wealth managers to do this. The actions are
grouped around three themes: improving sales force productivity,
reinvigorating and broadening the role of the team leader, and managing and
developing human assets.
To receive a copy of "Tapping Human Assets to Sustain Growth: Global Wealth
2007," or to schedule an interview with one of the authors -- Victor Aerni,
Christian de Juniac, Bruce Holley, and Tjun Tang -- please contact Eric
Gregoire at + 1 617-854-4570 or gregoire.eric@bcg.com.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm
and the world's leading advisor on business strategy. We partner with
clients in all sectors and regions to identify their highest-value
opportunities, address their most critical challenges, and transform their
businesses. Our customized approach combines deep insight into the dynamics
of companies and markets with close collaboration at all levels of the
client organization. This ensures that our clients achieve sustainable
competitive advantage, build more capable organizations, and secure lasting
results. Founded in 1963, BCG is a private company with 66 offices in 38
countries. For more information, please visit www.bcg.com.