Wealth managers faced growing headwinds in 2018, with global high-net-worth wealth growth slowing to 4 percent. Lower AuM growth, more challenging markets and continued fee compression led to declining wealth management business valuations.
The revenue pressure felt by wealth managers in late 2018 highlights the continued vulnerability of operating models to market stress. The rebound in early 2019 brought short-term relief for some but further pressure is inevitable as the end of the cycle approaches – wealth managers must take action.
The report outlines two key priorities for Wealth Managers to consider:
- Rethink footprint in emerging markets – wealth managers need to rethink their positioning across emerging markets, which will constitute over half of global wealth growth vs one third of stock today. Two key regions are of particular relevance: APAC and Latin America (LatAm). For APAC, one of the key priorities will be to assess entry into mainland China. In LatAm, wealth managers need to focus on solving operational, technical and regulatory challenges to provide a seamless onshore and offshore experience for clients.
- Simplify the operating model – wealth managers need to demonstrate their ability to prepare their operating models for an approaching downturn by simplifying their front-office operations and by taking the wheel in tackling allocated costs, which remain stubbornly high.
The full report is available to clients of Deutsche Bank Research