Wealth managers and private banks are anticipating unprecedented growth over the next three years, according to the latest findings from PricewaterhouseCoopers 2007 Global Private Banking/Wealth Management Survey, with chief executives predicting that, on average, their assets under management will increase at a staggering rate of 30% per annum.
The survey, which captured the views of senior executives of 265 organisations within the global private banking and wealth management industry, highlighted that markets in Asia Pacific and Eastern Europe are expanding the fastest, as organisations rush to service the new wealth creators in these regions. In Asia Pacific, CEOs expect their organisations’ assets under management to grow at an annual rate of 34%. CEOs’ plans for growth include entry into these lucrative markets, including by acquisition. Almost 90% of CEOs feel that there will be at least some, if not significant, consolidation in the industry and more than 50% of CEOs plan to open operations in new countries over the next two years to access new clients.
The survey reveals a period of exceptional opportunities for wealth managers. Buoyed by rising global wealth, wealth managers everywhere are anticipating extremely high rates of profitable growth that have not been seen during probably at any other time. The survey highlights that this is a time when strategic choices have to be made by chief executives and finite resources have to be focused on serving existing clients as well as supporting highly ambitious growth plans.
PricewaterhouseCoopers latest findings also revealed a real commitment among wealth managers to increase ‘share of wallet’, compared to previous surveys. Share of wallet has emerged as the new key performance indicator, globally as well as in emerging economies like India, as wealth managers seek to become trusted advisers and gain new clients. Currently under 50% of wealth managers hold more than 40% of their clients’ investable wealth but over the next three years this proportion is estimated to increase dramatically to almost 80% of wealth managers holding over 40% of a client’s wealth.
WEALTH MANAGEMENT SECTOR SET FOR RECORD GROWTH LEVELS/ … 3
Jairaj Purandare, Executive Director, PricewaterhouseCoopers India, commented:
“The greater the share of wallet the more institutionalised the client becomes, leading to increased loyalty and making it more difficult for the client to leave. But more fundamentally this is an excellent source of new assets, revenue and increased profitability.”
The key to wealth managers achieving their aggressive growth targets is their ability to recruit and retain quality client relationship managers (CRMs) but there are not enough quality people to
support the market’s anticipated growth. Only 26% of CEOs claim to be very confident that they will be able to recruit enough CRMs over the next three years to support their growth plans and just 17% rate CRMs as having very high ability to manage the needs of their clients.
Jairaj Purandare commented:
“Wealth managers in India need to get serious about human resources and talent management must be on the main board’s agenda. Retaining and recruiting new CRMs is critical to success. Improving CRMs’ skills and capabilities is essential for meeting clients’ needs.”
Compared with PricewaterhouseCoopers 2005 survey, there has been a quantum shift in the importance placed on IT efficiency to support the increased effectiveness of CRMs and the impact of branding to attract new clients. Wealth managers are investing heavily in both areas as they rapidly become a battlefield for differentiation and profitability. However, the survey suggests that more work needs to be done, with nearly 30% of chief operating officers admitting that not all their current IT systems are fit for purpose. The sums involved will be substantial and will put a strain upon profitability unless anticipated growth targets are realised.
ENDS
Notes to Editor:
Since its inception in 1993, PricewaterhouseCoopers Global Private Banking/Wealth Management Survey has highlighted key global market trends and analysis, and looked at the differences between the ways in which wealth managers provide services to private clients. This year’s survey, conducted in February and March 2007, captured the views of more than 265 organisations, including chief executives, heads of business, finance directors and risk officers from 43 countries. Furthermore, reflecting the growing importance of systems and people issues to private banks and wealth managers, PricewaterhouseCoopers extended the survey this year to include questions to be completed by chief operating officers, HR managers and client-facing relationship managers.
About PricewaterhouseCoopers:
PricewaterhouseCoopers Pvt. Ltd. (www.pwc.com/india) provides industry - focused tax and advisory services to build public trust and enhance value for its clients and their stakeholders. PwC professionals work collaboratively using connected thinking to develop fresh perspectives and practical advice.
Complementing our depth of industry expertise and breadth of skills is our sound knowledge of the local business environment in India. PricewaterhouseCoopers is committed to working with our clients to deliver the solutions that help them take on the challenges of the ever-changing business environment.
PwC has offices in Bangalore, Bhubaneshwar, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi and Pune.
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