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Wealth management industry rebounding but still on a tightrope

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Assets under management at banks surged by a median of 17 per cent to recover ground from the previous year, according to Scorpio Partnership’s Global Private Banking KPI Benchmark 2010.

The global wealth industry now manages USD16.5trn in high-net-worth assets, compared to USD14.5trn last year.

However, the health of the industry is far from good. The industry key performance indicator of profitability has dropped by a median of 35 per cent. The cost:income ratios have risen to an average 78.2 per cent, continuing a worrying trend from the previous year (72.4 per cent) when most banks faced a decline in efficiency.

Net new money data this year highlights a median inflow across all institutions of USD900m for the financial year 2009, a decline of 60 per cent from last year’s data.

Sebastian Dovey, managing partner at Scorpio, says: “The wealth management engine is still misfiring for many. On the one hand the asset management machine is working and this is shoring up numbers. While, for virtually all banks, in terms of attracting new business it has been a case of net no money. Significantly our global HNW data shows there are strong signs of wealth creation even in these complex markets and yet new clients are still holding back from opening accounts with the industry.”

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