Mumbai: With the explosion in ultra rich households, wealth managers face huge challenges in cost effective management of their clients. Wealth managers globally had another year of excellent growth in 2013, with assets under management (AUM) rising by 11 per cent, according to a Boston Consulting Group study Riding a Wave of Growth: Global Wealth 2014 released on Tuesday.
“This performance, which followed AUM growth of 13 per cent in 2012, was driven mainly by asset appreciation owing to rising equity markets. Yet despite a sizable growth in AUM, profit margins remained largely flat as wealth managers continued to grapple with rising costs, notably those related to regulatory compliance,” the report said.
Global private financial wealth grew by 14.6 per cent in 2013 to reach a total of $152 trillion compared to 2012, while global wealth grew by 8.7 per cent. The key drivers, for the second consecutive year, were the performance of equity markets and the creation of new wealth in rapidly developing economies (RDEs).
India lagged behind China in the number of dollar millionaires at 175,000 households while China’s millionaire households increased from 1.5 million in 2012 to 2.4 million in 2013. Geographically, the US had the highest number of millionaire households (7.1 million), as well as the highest number of new millionaires (1.1 million) out of the total number of 16.3 million millionaire households on 2013.
The BCG report suggests that wealth managers need to take action on multiple fronts if they hope to gain market share and increase profits over the next few years, particularly in adopting digital communication.
