Private Banking and Wealth Management Survey 2020: How to win in wealth over the next decade
Pressure on wealth management profits will become fiercer in the decade ahead as low interest rates prevail. Business heads say global expertise, proximity to clients, technology and providing sustainable investing opportunities will help them win more business.
Last year was a mild relief for many wealth managers. The positive returns of global stock markets (the S&P500 alone saw returns of more than 25%) provided a brief respite from the overall arc of slowing growth rates in wealth that was so much in evidence in 2018.
This year, however, wealth managers are not expecting markets or revenues to be as strong. Private bankers surveyed by Euromoney say they are less bullish on revenues in the year ahead than at any time since 2015. Continued fee compression, low interest rates and increasing spend on technology and talent, coupled with ever-present regulatory costs, are putting pressure on a business line that was seen by many universal banks as a revenue stream diversifier.
It is still an attractive business to be in, but it will be a challenging decade ahead – especially for those that do not have wealth management as their core business or, in the case of universal banks, those that have yet to connect wealth management to other business lines.