Wealth Management Market Definition
The wealth management market consists of sales of wealth management services by entities (organizations, sole traders and partnerships) that plan, advise on and manage various kinds of assets belonging to high net worth and ultra-high net worth individuals, corporations, and government and non-government institutions. The market includes establishments that offer financial and investment advice, retirement planning and legal or estate planning.
Wealth management is an investment advisory service that addresses the needs of clients. Wealth management services provide their clients with a comprehensive service to sustain and grow their wealth. It provides comprehensive research-based advisory along with convenient and personalized investment execution.
Wealth Management Market Size
The global wealth management market reached a value of nearly $486.78 billion in 2019, having increased at a compound annual growth rate (CAGR) of 6.6% since 2015. The market is expected to decline from $486.78 billion in 2019 to $446.73 billion in 2020 at a rate of -8.2%. The decline is mainly due to lockdown and social distancing norms imposed by various countries and economic slowdown across countries owing to the COVID-19 outbreak and the measures to contain it. The market is then expected to recover and grow at a CAGR of 9.4% from 2021 ad reach $584.99 billion in 2023.
Growth in the historic period resulted from growth in the number of high net worth individuals, digitization, and economic growth. Factors that negatively affected growth in the historic period were rise in cyber risk, stringent regulations, and pressure on fees.
Going forward, increasing retiree population, increasing wealth of high net worth individuals, and rising demand for alternative investments will drive the growth. Factors that could hinder the growth of the wealth management market in the future include COVID-19, Fintech firms, wide range of services offered by asset managers, and passive investments.
Wealth Management Market Drivers
The Key drivers of the wealth management market include:
Rising Demand For Alternative Investments– Going forward, increasing demand for alternative investments is expected to drive the market for wealth management. There has been an increasing preference for alternative investments among the high net worth individuals and ultra-high net worth individuals. Alternative investments are financial assets, which do not fall into the category of conventional financial assets, such as stocks, bonds, and cash. Examples of alternative investments include hedge funds, private equity, commodities, mineral rights, real estate investment trusts (REITs), art and antiquities, intellectual property, and derivatives (futures, options, and swaps), among others. Investors are increasingly becoming interested in alternative investments owing to several benefits offered such as diversification, reduction in portfolio risk, availability in private markets, low correlation with other assets, less regulation, and relatively higher returns. For example, infrastructure assets are expected to increase from $0.8 trillion in 2017 to $3.4 trillion by 2025. Private equity is expected to increase from $5.3 trillion in 2017 to $10.2 trillion in 2025. Investors are increasingly seeking wealth management services to invest in alternative assets. This will drive the market for wealth management in the forecast period.
Wealth Management Market Restraints
The key restraints on the wealth management market include:
Fintech Firms– Going forward, rising demand for services provided by Fintech firms is expected to limit the market for wealth management. Fintech firms use technology and innovation to provide financial services through internet-based platforms. Companies in this market provide end-to-end process financial services and solutions to automate financial processes over the Internet. FinTech companies cover various services, ranging from those offering more traditional banking services such as payment services and fund transfers, to those that are technologically focused offering services that enhance the processes in the major financial markets. There has been increasing demand for Fintech services owing to factors such as an increased focus on technology and their accessibility to more of the population, given lower investment requirements. The Fintech market is expected to grow at a CAGR of 9.2% to nearly $158,014.3 million during 2019-2023. Growth of Fintech services might in turn limit the growth of the market for human advisory wealth management services, thereby restraining the market for wealth management services.
Wealth Management Market Trends
Major trends influencing the Wealth Management market include:
Artificial Intelligence In Wealth Management
Wealth Management firms are integrating artificial intelligence, machine learning and data analytics applications to provide hybrid services. Artificial Intelligence refer to intelligent machines that work and react like humans. AI helps to deliver insights to complex client questions in real time through its virtual conversational interface between business and clients. AI enabled applications such as natural language generation (NLG) is closing the gap between data analysis and investment decisions providing real-time insights in automated trading strategies. For instance, according to a survey in 2018, by Forbes, 34% of wealth management companies have currently deployed AI within their firms and around 99% plan on deploying AI within the next 3 years. Companies such as Wells Fargo and Bank of America have already deployed AI services to better serve clients. Wells Fargo has initiated an AI-driven application on Facebook Messenger to personally address their customer queries.
Focus On Hybrid Wealth Management Services
Wealth management firms are increasingly offering hybrid services including standardized and personalized advices to their clients globally. The need for standardization and personalization of advice mainly arises due to growing demand for consistent and robust solutions among consumers. In this regard, wealth management firms are producing computer-driven analysis to offer standardized advisory services, while also maintaining granularity in their offerings with bespoke solutions
Opportunities And Recommendations In The Wealth Management Market
Opportunities – The top opportunities in the wealth management market segmented by type will arise in the fixed income segment, which will gain $56.7 billion of global annual sales by 2023. The top opportunities in the wealth management market segmented by type of advisor will arise in the human advisory segment, which will gain $87.62 billion of global annual sales by 2023. The top opportunities in the wealth management market segmented by enterprise size will arise in the large enterprises segment, which will gain $56.07 billion of global annual sales by 2023. The top opportunities in the wealth management market segmented by type of wealth manager will arise in the full service wealth managers segment, which will gain $33.36 billion of global annual sales by 2023.
Recommendations – To take advantage of these opportunities, The Business Research Company recommends the wealth management companies to investing in deploying more AI applications for faster customer response, investing in cyber security technologies to enhance security capabilities, using robo advice to reduce the costs, investing in big data solutions to improve client acquisition and retention rates, offering hybrid services to increase service offerings, offering personalized services, and adapt to the changing demographics to drive revenues. Player-adopted strategies in the wealth management market include expanding businesses through partnerships and collaborations, investing in technology with a focus on superior client experience, and collaborating through business lines and improving operational excellence. Amidst the unprecedented outbreak of corona virus, governments across the world are advising people to stay indoors and practice social distancing, to reduce the spread of the pandemic. This has halted the economic activity, and decreased short-term potential growth opportunities for the wealth management industry.
Wealth Management Market Segmentation
The wealth management market is segmented by type of asset class, by advisory mode, by type of wealth manager, by enterprise size, by type of client, by service element and by geography.
By Type Of Asset Class-
The wealth management market can be segmented by type of asset class into
- a) Equity
- b) Fixed Income
- c) Alternative Assets and Others
The fixed income market was the largest segment of the wealth management market segmented by type, accounting for 69.3% of the total in 2019. Going forward, the alternative assets and others segment is expected to be the fastest growing segment in the wealth management market, at a CAGR of 8.6% during 2019-2023.
By Advisory Mode-
The wealth management market can be segmented by advisory mode into
- a) Human Advisory
- b) Robo Advisory
- c) Hybrid Advisory
The human advisory market was the largest segment of the wealth management market segmented by type of advisory mode, accounting for 98.6% of the total in 2019. Going forward, the robo advisory segment is expected to be the fastest growing segment in the wealth management market, at a CAGR of 26.1% during 2019-2023.
By Type Of Wealth Manager-
The wealth management market can be segmented by type of wealth manager into
- a) Private Banks
- b) Full-Service Wealth Managers
- c) Investment Managers
- d) Stockbrokers
- e) Others
The private banks market was the largest segment of the wealth management market segmented by type of wealth manager, accounting for 41.8% of the total in 2019. Going forward, the others segment is expected to be the fastest growing segment in the wealth management market, at a CAGR of 7.8% during 2019-2023.
By Enterprise Size-
The wealth management market can be segmented by enterprise size into
- a) Large Enterprises
- b) Medium and Small Enterprises
The large enterprises market was the largest segment of the wealth management market segmented by enterprise size, accounting for 60.8% of the total in 2019. Going forward, the medium and small enterprises segment is expected to be the fastest growing segment in the wealth management market, at a CAGR of 5.1% during 2019-2023.
By Type Of Client-
The wealth management market can be segmented by type of client into
- a) Mass Affluent
- b) HNWI
- c) Pension Funds
- d) Insurance Companies
- e) Sovereign Wealth Funds
The mass affluent market was the largest segment of the wealth management market segmented by type of client, accounting for 45.3% of the total in 2019. Going forward, the sovereign wealth funds segment is expected to be the fastest growing segment in the wealth management market, at a CAGR of 6.3% during 2019-2023.
By Service Element-
The wealth management market can be segmented by service element into
- a) Asset Management
- b) Portfolio Management and Investment Advisory
- c) Funds, Trusts, and Other Financial Vehicles
The asset management market was the largest segment of the wealth management market segmented by service element, accounting for $180.8 billion or 37.1% of the total in 2019.
By Geography- The wealth management market is segmented into
- o North America
- o Western Europe
- UK
- Germany
- France
- Spain
- Italy
- Denmark
- Switzerland
- Ireland
- Sweden
- Netherlands
- Austria
- Belgium
- Portugal
- Norway
- Finland
- o Asia Pacific
- China
- Japan
- India
- Australia
- Philippines
- Vietnam
- Indonesia
- Malaysia
- New Zealand
- Hong Kong
- Singapore
- South Korea
- Thailand
- o Eastern Europe
- Poland
- Russia
- Romania
- Czech Republic
- o South America
- Peru
- Argentina
- Chile
- Brazil
- Colombia
- Venezuela
- o Middle East
- Saudi Arabia
- UAE
- Turkey
- Israel
- o Africa
- Nigeria
- Egypt
- South Africa
North America was the largest region in the global wealth management market, accounting for 53.7% of the total in 2019. It was followed by Western Europe, Asia Pacific and then the other regions. Going forward, the fastest-growing regions in the wealth management market will be Western Europe, and Asia Pacific.
Wealth Management Competitive Landscape
Major Competitors are:
- • Wells Fargo & Company
- • JPMorgan Chase & Co.
- • Bank of America Corporation
- • Morgan Stanley
- • UBS Group AG
Other Competitors Include:
- • The Goldman Sachs Group, Inc
- • HSBC Holdings plc
- • Credit Suisse Group AG
- • Industrial and Commercial Bank of China Limited
- • Citigroup Inc.
- • Kotak Wealth Management
- • IIFL Wealth Management
- • Axis Bank Wealth Management
- • Edelweiss Wealth Management
- • BNP Paribas Wealth Management
- • Angel Broking
- • Avendus
- • AUM Capital
- • KW Wealth Advisors
- • Noah Holdings
- • AVIC Trust
- • CreditEase
- • Fosun International Limited
- • China Huarong Asset Management Company Limited
- • China International Capital Corporation
- • Macquarie Asset Management
- • Hamilton Wealth Management
- • Professional Wealth
- • Minchin Moore
- • GFM Wealth Advisory
- • VISIS Private Wealth
- • Samsung Asset Management
- • Asset One
- • Bank Central Asia
- • Dolfin
- • Canaccord Genuity Wealth Management
- • Kingswood Group
- • Barclays Wealth Management
- • Lloyds Banking Group
- • Santander
- • AFH Wealth Management
- • Devonshire Wealth Management
- • Alexander House Financial Services
- • St James`s Place Wealth Management
- • Quilter
- • Indosuez Wealth Management
- • Societe Generale
- • UniCredit
- • Intesa Sanpaolo
- • Deutsche Bank
- • Sparkassen
- • Commerzbank
- • ING-DiBa
- • Arcano Partners
- • Sberbank
- • ATON
- • Bank of America
- • Vanguard
- • Charles Schwab
- • Fidelity
- • BNY Mellon Wealth Management
- • Northern Trust
- • Raymond James Financial
- • RBC Wealth Management
- • Bessemer Trust
- • Longview Wealth Management
- • Nicola Wealth
- • Steadyhand Investment management
- • Triasima Portfolio Management
- • WealthBar
- • BTG Pactual
- • Monet Investimentos
- • Quilvest Wealth Management
- • Aiva
- • NBK Wealth Management
- • NOMW Capital
- • Middle East Financial Investment Company
- • Jadwa Investment
- • Arbah Capital
- • BMO Global Asset Management
- • AtaInvest
- • Akbank
- • Al Rajhi Capital
- • Pioneer Wealth Management
- • Investec Wealth Management
- • Rockfin Wealth Management
- • PSG Wealth
- • Citadel
- • Sanlam Private Wealth
- • Nedbank Wealth
- • Stone Wealth Management
- • Noble Wealth Management (Pty) Ltd
- • NFB Private Wealth Management
- • Private Clients Holdings
- • Arab African International Bank
- • ABK-Egypt