Global Private Wealth Grew 5,3% in 2016

Global private wealth gained momentum in 2016, but wealth managers face a host of challenges if they hope to fight off competitors, deepen client loyalty, and put both revenue and profit growth on a sustainable positive trajectory. Those are higlights from this years' report by The Boston Consulting Group Global Wealth 2017: Transforming the Client Experience.

17th annual study by BCG outlines the evolution of private wealth from both global and regional perspectives, addresses key industry trends, and places special emphasis on how players can create fresh and innovative client journeys by leveraging digital technology to its fullest in wealth management business and operating models. According to the report, global private wealth grew by 5.3% in 2016, to $166.5 trillion, driven primarily by accelerating economic growth and the strong performance of equity markets.

The rise was greater than in the previous year, when global wealth rose by 4.4%. All regions experienced an increase in overall wealth, and Asia-Pacific once again was the fastest-developing region, with nearly double-digit growth of 9.5%. Western Europe posted modest growth (3.2%) as uncertainty over Brexit played a role. By the end of 2017, the level of private wealth in Asia-Pacific is projected to surpass that in Western Europe, and by 2019, the combined level of private wealth in Asia-Pacific and Japan is projected to surpass that in North America.

The report says that offshore wealth grew at a slower pace (3.7%) than onshore wealth did (5.4%) in 2016. Switzerland remained the largest offshore center, with a 24% share, but that share is projected to decline through 2021. Hong Kong and Singapore remain the fastest-growing offshore centers globally because of both their status as the preferred booking centers for regional clients and the anticipation of strong growth in Asia-Pacific. Expansion is expected to continue in the long term, but China’s ongoing restrictions on investment outflows may slow it down to some degree in the short term.

Wealth managers have seen a steep decline in top-line margins over the past ten years, with return on assets declining. According to the report, in order to make a true step change and leapfrog the competition, wealth managers need to shift their approach to digital technology and design advanced, high-impact client journeys front to back, creating a next-generation, 2.0 version of the client experience. Client journeys 2.0 that seamlessly navigate their way through the front, middle, and back office; that cut across all digital, relationship manager, and expert contact points to focus on the moments that matter most to clients.