Timetric Wealth Reports
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Private Banking and Wealth Management Models - No Magic Bullet
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- Competitive structure
- Margin
- Return on equity
- Offshore private banking
- Custodians
- Outsourcers
- Trust banks
- UBS
- Credit Suisse
- HSBC Private Bank
- Goldman Sachs
- Julius Baer
- EFG International
- Standard Chartered Bank
- C. Hoare & Co
- Raymond James Investment Services
- Iveagh Private Investment House
- AL Wealth Partners
Synopsis
- The wealth management and private sector business models are fragmented, and a popular view has been that consolidation in these markets is inevitable
- This assumption is flawed - use this report to find out where the market is really heading
- This VRL report gauges the potential for growth in emerging markets like Asia and Latin America
- Case studies including UBS, Credit Suisse and Julius Baer give an in-depth understanding of the diverse business models in these sectors
Details
- Product code: VR0812MR
- Published: Dec. 1, 2010
- 56 pages
- Single-user: $3800
- Site License: $7600
- Enterprise License: $11400
- Terms & Conditions
Executive summary
Private banking and wealth management is currently one of the most promising segments of the global financial services sector. It is already very profitable, both in absolute terms and relative to other market segments, especially on a risk-adjusted basis. Moreover, its future prospects look very bright with growth forecast to exceed global economic growth over the short to medium term. None the less it is sometimes difficult to discern these sentiments in the reports on the sector routinely produced by the big consulting firms and other experts, especially in the wake of the near collapse of the global financial system in 2008. The private banking and wealth management sector may not yet be facing a crisis. But the prospect of increased client disaffection, a more onerous regulatory regime and ongoing uncertainties about the outlook for asset prices, could pose considerable problems in the years ahead with both margins and profits coming under increasing pressure. It will certainly cause a re-evaluation of private banking and wealth management business models with the prospect of consolidation to come.
Scope
- This VRL report embraces the structure and size of the private banking and wealth management models based around banks and fiduciary institutions, broker-dealers (stockbrokers) and investment management firms
- It looks at the various business models employed, and looks at the role held by various organisations in the value chain, such as trust banks, offshore private banks and custodians
- It examines the returns generated and offers a perspective on likely future profitability
- A number of case studies are examined in detail, covering both large international institutions as well as a number of boutique operations
Key highlights
• Wealth market penetration is nowhere near saturation level even in the developed economies of North America and Europe
• Pricing and performance appear to play relatively muted roles in determining competitive advantage, especially in the HNWI segments
• Few firms advertise their investment management credentials, even when performance is very good
• Although the sector is populated by a large, and possibly expanding number of firms, each firm often seems to act as a quasi-monopolist, especially when it comes to price setting, taking full advantage of its positional advantages, such as size and quality of its sales force, market presence and "brand" to generate revenues and profits
Reasons to buy
- Examine the characteristics of the private banking and wealth management sectors
- Study the decline in value chain disaggregation
- Gauge the potential for future consolidation
- Basic wealth management models and their profit potential
- Contrast the success of small independents in this sector with that of the large integrated institutions
Table of contents
Executive Summary
Chapter 1: Sizing the Market
1.1 The global wealth management market
1.2 Definitional differences
1.3 The geography of wealth
Chapter 2: Competition Issues
2.1 Significant latent demand
2.2 Low levels of competition
2.3 Monopolistic competition
2.4 Market penetration
2.5 A global estimate
2.6 Consolidation
2.7 Market concentration in the UK
2.8 Market concentration in Switzerland
2.9 Margin and return on equity
2.10 Non-price competition
2.11Conclusion
Chapter 3: Size and Integrated Business Models
3.1 Size, scale and competitive structure
3.2 Scale
3.3 Scope and synergy
3.4 Quantitative evidence
3.5 Scale effects
3.6 Scope effects
3.7 Cautionary tales
3.8 Anecdotal evidence
3.9 Conclusion
Chapter 4: Wealth Management Business Models
4.1 A basic classification
4.2 Not mutually exclusive
4.3 Exclusions
4.4 Bank and Custodial Institutions
4.5.1 Private banks and private banking
4.5.2 Joint stock banks
4.5.3Trust banks
4.5.4Offshore private banking
4.5.5Integrated banks
4.5.6Custodians and Outsourcers
4.5.7Broker Dealers (Stockbrokers)
4.5.8Investment Managers
4.5.9 Conclusion
Chapter 5: Business Model Margins and Returns
5.1 Introduction
5.2 Buoyant returns
5.3 Revenue sources
5.4 A UK perspective
5.5 Future trends
Chapter 6: Case Studies
6.1 UBS: The Pros and Cons of Size, Scope and Integration
6.2 Credit Suisse: Integration Works
6.3 HSBC Private Bank: Creating a Consolidated Private Banking Platform.
6.4 Goldman Sachs: Generating Synergies.
6.5 Julius Baer: A Transformational Acquisition
6.6 EFG International: The Pivotal Role of Relationship Managers
6.7 Standard Chartered Bank: Exploiting the Potential of Emerging Markets
6.8 C. Hoare & Co.: Onwards and Upwards at the UK's Oldest Bank
6.9 Raymond James Investment Services: Using Core Capabilities to Help Wealth Management Firms Grow
6.10 Iveagh Private Investment House: A Family Office Targets New Markets
6.11 AL Wealth Partners: Breaking the Mould in Singapore
List of tables
Table 1.1: Owners of Wealth Above $100,000 by country of origin
Table 1.2: US Dollar Millionaires by country of residence
Table 1.3: Number of Millionaire Households (thousands)
Table 1.4: Proportion of millionaire households by market
Table 1.5: Compound Average Growth Rates (excluding currency effects), by region (%)
Table 1.6: Wealth Management Revenue Pool, 2009
Table 1.7: Private Banks Ranked by AUM, 2008
Table 2.1: Market share of Global Private Banks
Table 2.2: Swiss Private Banks, 2008
Table 2.3: Return on Equity and Gross Margins, 2008
Table 2.4: Return on Equity and Gross Margins, 2007
Table 5.1: Return on Assets (RoA) By Business Model (basis points) 2009
Table 5.2: European Offshore Institutions: Weighted RoAs by Client Size
Table 5.3: Revenue Split By Business Model 2009 (basis points)
Table 5.4: UK Wealth Managers Revenue Sources By Business Model 2009
List of figures
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