Wealth management super league 2008

Published by: Datamonitor

Published: Jan. 26, 2009 - 287 Pages

Table of Contents

Overview

Catalyst

Summary

Methodology

Executive Summary

The wealth management industry has been buffeted by 2008's economic turbulence

UBS remains the largest wealth manager for now

UBS: battling to remain the number one wealth manager

Credit Suisse is not as big as UBS,but it scores well against a number of key measures

Morgan Stanley's wealth management service has achieved better results than the rest of the bank

Bank of America: gearing up for the big swallow of Merrill Lynch

Citigroup has performed well in the good times,but is being tested at the moment

STRATEGIC OPPORTUNITIES FOR WEALTH MANAGERS IN CHALLENGING TIMES

Table of Contents

Table of figures

Table of tables

MARKET LANDSCAPE: TURBULENT TIMES IN THE WEALTH MANAGEMENT INDUSTRY

There have been significant changes among the top global wealth managers

Assets under management of the super league has grown since 2005 but by widely varying rates

Santander has seen phenomenal growth in its AUM as a result of organic growth and acquisitions

HSBC and Citigroup have also seen strong growth over the last three years,although far below that of Santander

The wealth management super league has experienced mixed fortunes in financial performance over 2007 and 2008

In terms of AUM,UBS is in a league all of its own,but its growth rate between 2005 and 2008 was weaker than most others

HSBC has seen the greatest assets under management compound annual growth in 2007,but growth stagnated in 2008e

The smaller wealth managers achieve better cost-income ratios than the bigger players

UBS has not fared well in terms of its cost-income ratio in 2007 and 2008

Revenues have declined,costs have risen and profitability has fallen for most wealth managers over 2008

Citigroup managed to contain its costs better than others over 2008

The scale of UBS appears to have little effect on the bank's overall efficiency

Bank of America Premier Investments' profitability fell by nearly two thirds between 2007 and 2008

HSBC enjoyed a small rise in profitability in 2008

Client relationship productivity measures differ markedly across the super league

Credit Suisse leads the way in terms of AUM per client relationship manager,although UBS International and Switzerland is not far behind

Credit Suisse also has the highest revenue and profit per client relationship manager

UBS topped the league in terms of how much new business their RMs brought in on average during 2007

CASE STUDIES: PROFILES OF THE TOP FIVE WEALTH MANAGERS

UBS: battling to remain the number one wealth manager

Financial turmoil in 2008 saw large withdrawals from the wealth management division of UBS and ultimately the break-up of the universal bank model

The UBS model covers the full gamut of a personal wealth management service

UBS Wealth Management has an aggressive attitude towards growth,particularly in the APAC region

UBS will have to battle to restore its reputation as the number one bank

Credit Suisse: still forging ahead with its expansion plans

Credit Suisse is not as big as UBS,but it scores well against a number of key measures

Credit Suisse is following a well-rounded strategy to achieve its goal of becoming the premier global private bank

Credit Suisse remains committed to the integrated banking model

Credit Suisse private banking has weathered the global storm comparatively well,and the bank remains committed to its growth

Morgan Stanley's wealth management service has achieved better results than the rest of the bank,but not without cost

Morgan Stanley Global Wealth Management Group reported flat profits

Morgan Stanley is focusing on growing wealth management

Bank of America: gearing up for the big swallow of Merrill Lynch

BofA has yet to show its hand for the combined wealth management business

There are real concerns about the risk of culture clashes as a result of the combination

Citigroup has performed well in the good times,but is being tested at the moment

Citigroup had a number of good years leading up to 2008

Citigroup has been growing a global empire

Citigroup Global Wealth Management was tested by market conditions during 2008

The year has seen the departure of the head of Citigroup's Global Wealth Management

Being part of Citigroup has been a good and bad thing for Global Wealth Management

STRATEGIC OPPORTUNITIES FOR WEALTH MANAGERS IN CHALLENGING TIMES

There are several ways for wealth managers to profit in this new environment

Customer retention is of critical importance to wealth managers in a downturn

Wealth managers need to offer an improved quality of service to their existing clientele

Wealth managers need to work to lift the brand,image and reputation of the firm for its existing customers

Increasing share of wallet opportunities will enhance the institution's market position in a downturn and therefore strengthen its position for recovery

Leverage CRM systems to identify opportunities for cross-selling products

'Accentuate the positive,eliminate the negative': wealth managers should assist clients to prepare for the eventual recovery

Customer acquisition opportunities in a downturn need to revolve around boosting the company profile

Actively recruit good relationship managers from competitors

Leverage CRM systems to identify new wealth management clients

The media can be used to raise the public profiles of both individuals and the financial institution

APPENDIX

Definitions

Definitions

Bank of America

Citigroup

Credit Suisse Private Banking

HSBC Private Banking Holdings

Morgan Stanley Private Wealth Management

Smith Barney Private Client Group

UBS Wealth Management

Methodology

Further reading

Bibliography

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: UBS leads the super league as a global enterprise in terms of AUM,2005-08e

Table 2: Assets under management growth and current size for top ten wealth managers,ranked by level of AUM

Table 3: Cost-income ratios of wealth management firms,2005-08e

Table 4: Operating expenses for the five biggest global wealth managers by AUM,2005-08e

Table 5: Operating revenues for the five biggest global wealth managers by AUM,2003-08e

Table 6: Profit before tax for wealth management firms,2005-08e

Table 7: AUM per client relationship manager ($ million per RM),2007

Table 8: Revenue and profit per client relationship manager ($ million per RM),2007

Table 9: Net inflows per client relationship manager,($ million per RM),2007

Table 10: Citigroup has enjoyed strong growth internationally,albeit from a small base

Table 11: Citigroup Global Wealth Management has been tested recently

Table 12: Percentage of wealth managers citing various key influences on successful client retention

Table 13: Percentage of wealth managers citing various key influences on clients' selection of providers

Table 14: Percentage of wealth managers citing various key influences on increasing clients' share of wallet

Table 15: Percentage of wealth managers citing following key staff as one of the major reasons for clients leaving a wealth management service

List of Figures

Figure 1: UBS had the greatest AUM and one of the largest falls in absolute growth over 2008,while HSBC stands out as having the highest growth between 2005 and 2008,compounded annually

Figure 2: UBS leads the super league as a global enterprise in terms of AUM,2008e

Figure 3: UBS had the greatest AUM and one of the largest estimated falls in absolute growth over 2008,while HSBC stands out as having the highest estimated growth between 2005-08,compounded annually

Figure 4: HSBC promotes the comprehensiveness of its range of services to wealthy clients

Figure 5: UBS's estimated cost-income ratio for 2008 was over 100% in its US operation

Figure 6: Operating expenses for the five biggest global wealth managers by AUM,2005-08e

Figure 7: Operating revenues for the five biggest global wealth managers by AUM,2003-08e

Figure 8: 2008 brought strong reversals in profit before tax for wealth management firms

Figure 9: Credit Suisse has the most AUM per client relationship manager ($ million per RM),2007

Figure 10: Credit Suisse has the highest revenue and profit per client relationship manager ($ million per RM),2007

Figure 11: UBS RMs had the highest new wealth management business productivity in 2007

Figure 12: Credit Suisse's strategy addresses the key value drivers in the wealth management business

Figure 13: Credit Suisse has been active around the world

Figure 14: Asia is now a material contributor to Citigroup's Global Wealth Management

Figure 15: Key drivers of successful customer retention according to European and APAC wealth managers

Figure 16: Key influences on clients' selection of providers according to European and APAC wealth managers

Figure 17: Key influences on increasing share of wallet according to European and APAC wealth managers

Figure 18: Wealth managers citing Following key staff to other organizations as one of the most likely reasons for clients to leave a wealth management service

Abstract

• Organizational scale in the private wealth management market, covering the major European and US wealth management firms.
• Key financial performance indicators of the top five wealth managers over the last three years.
• Strategic opportunities for wealth managers in an economic downturn.

• Quantitatively assess your performance through 2008 against the world's largest wealth managers.
• Understand the strategic development of the five largest super league players.
• Gain insight into strategic opportunities for wealth managers in challenging times.

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