The return of the global wealth manager?
Covid-19 may accelerate larger wealth managers’ global ambitions.
A look at wealth management earnings at the largest firms at the end of the first quarter proved that the hypothesis is true: wealth management is a good business to be in – always. UBS Global Wealth Management increased its operating profit before tax year on year to $1.2 billion from $863 million, even while invested assets fell to $2.3 billion.
It remains to be seen what the second quarter brings as client activity slows. It will be interesting to see who is picking up net new assets because, in times of crisis, clients get to see in real time whether their manager is working for them.
Already some wealth managers are saying that they have seen large inflows as clients drop other advisers. A consolidation of wallet share is inevitable.
Who wins that share? For sure, those who have remained committed to wealth management over the last decade – those that have invested in technology, advice and asset allocation. But also, those that are deemed the safest pair of hands – the latter being typically the large Swiss managers and the US banks.
But even if there is some consolidation, there’s also going to be renewed competition as universal banks see the value of wealth management businesses.