Professional Documents
Culture Documents
Riding a Wave
of Growth
The Boston Consulting Group (BCG) is a global management consulting firm and the worlds
leading advisor on business strategy. We partner with clients from the private, public, and not-forprofit sectors in all regions to identify their highest-value opportunities, address their most critical
challenges, and transform their enterprises. Our customized approach combines deep insight into
the dynamics of companies and markets with close collaboration at all levels of the client
organization. This ensures that our clients achieve sustainable competitive advantage, build more
capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with
81 offices in 45 countries. For more information, please visit bcg.com.
RIDING A WAVE
OF GROWTH
BRENT BEARDSLEY
JORGE BECERRA
FEDERICO BURGONI
BRUCE HOLLEY
DANIEL KESSLER
FEDERICO MUXI
MATTHIAS NAUMANN
TJUN TANG
ANNA ZAKRZEWSKI
CONTENTS
INTRODUCTION
13
18
21
28
METHODOLOGY
29
30
INTRODUCTION
MARKET SIZING
A ROBUST YEAR
15.6
43.5
50.3
3.3
59.1
5.0
34.3
2011
2012
5.2
36.0
3.3
37.9
44.6
14.8
2.0
2.3
2011
2012
2013 2018E
2012
8.6
8.8
11.1
3.1
3.5
2011
2012
3.9
5.9
2013 2018E
11.6
4.3
4.7
2011
2012
6.5
5.2
7.2
2013 2018E
4.5
4.8
1.2
15.9
13.9
14.3
15.0
2011
2012
2013 2018E
2013 2018E
2013 2018E
Japan
Western Europe
11.4
2.7
Eastern Europe
2011
North America
2.8
10.7
17.2
10.5
61.0
30.5
37.0
28.3
16.2
24.4
5.4
8.7
14.6
122.0 132.7
198.2
152.0
Latin America
2011
2012
2013 2018E
2011
Global Overview
The growth of private wealth accelerated
across most regions in 2013, although it again
varied widely by market. As in 2012, the
Asia-Pacific region (excluding Japan) represented the fastest-growing region worldwide,
continuing the trend of high growth in the
new world. But substantial double-digit increases in private wealth were also witnessed
in the traditional, mature economies of the
old world, particularly in North America.
Double-digit growth was also seen in Eastern
Europe, the Middle East and Africa (MEA),
and Latin America. Western Europe and
Japan lagged behind with growth rates in
the middle single digits.
As in previous years, North America (at
$50.3 trillion) and Western Europe ($37.9 trillion) remained the wealthiest regions in the
world, followed closely by Asia-Pacific (excluding Japan) at $37.0 trillion. Asia-Pacific,
which in 2008 had 50 percent less private
wealth than North America, has since closed
Exhibit 2 | The Growth of Global Wealth in 2013 Was Driven by Existing Assets
Growth rates
Global
private
financial
wealth
GDP growth
+5.2%
(+5.6%)
Savings rate
+5.9%
(+5.9%)
Equity performance
+20.6%
(+12.8%)
Bond performance
0.6%
(+1.9%)
Cash performance
~0%
(~0%)
~$4.1 trillion3
f
Existing assets2
~$15.2 trillion3
+14.6%
(+8.7%)
Drivers
~$19.3 trillion
2013
(2012)
x%
(y%)
Millionaires
As the debate over the global polarization of
wealth rages on, one thing is certain: more
Exhibit 3 | Asia-Pacific and Its New Wealth Will Account for About Half of Global Growth
Through 2018
Regional contribution to growth in global wealth, 20132018 ($trillions)
Growth ($trillions)
50
6.7
40
2.0
1.9
1.8
0.9
46.2
~38%
8.8
30
24.0
20
~62%
10
New wealth
creation
accounts for
62 percent
of total growth
0
Asia-Pacific
(ex Japan)
North
America
Western
Europe
Latin
America
Middle East
and Africa
Eastern
Europe
Japan
Global
Regional Variation
Strong equity markets helped countries in the
old world, which have large existing asset
bases, to match the rapid growth in assets in
Exhibit 4 | The United States, China, and Japan Had the Most Millionaires in 2013
Ultra-high-net-worth (UHNW) households
(more than $100 million in private financial wealth)
Millionaire households
Number of millionaire
households (thousands)
2013
1
7,135
Proportion of millionaire
households (%)
2013
(1) Qatar
17.5
Proportion of
UHNW households
(per 100,000 households)
2013
Number of
UHNW households
2013
(1) United States
4,754
16.8
11.3
(2) China
2,378
(2) Switzerland
12.7
(2) Switzerland
(3) Japan
1,240
(3) Singapore
10.0
(4) China
983
(3) Austria
9.3
513
9.6
(3) Germany
881
(4) Norway
8.3
(6) Switzerland
435
(5) Kuwait
9.0
(5) Russia
536
(5) Singapore
7.4
(5) Germany
386
(6) Bahrain
5.9
(6) France
472
(6) Qatar
7.1
(7) Canada
384
5.9
(7) Canada
465
(7) Kuwait
4.5
(8) Taiwan
329
(8) Israel
4.6
417
4.1
(9) Italy
281
(9) Taiwan
4.2
(9) Switzerland
388
(8) Belgium
4.1
10
(10) France
274
(10) Oman
3.7
(10) Italy
374
3.9
11
238
(11) Belgium
3.4
(11) Austria
344
3.9
12
(12) Netherlands
221
(12) UAE
3.3
(12) Turkey
288
(10) Israel
3.7
13
(13) Russia
213
3.1
(13) India
284
(16) Bahrain
3.7
14
(14) Australia
195
(14) Netherlands
3.0
(14) Australia
236
(15) Canada
3.5
15
(16) India
175
(15) Canada
2.9
(16) Brazil
227
(13) Ireland
3.4
Exhibit 5 | China Will Continue to Consolidate Its Position As the Second-Wealthiest Nation
Projected rank in 2018 (Rank in 2013/Rank in 2008)
1
46
(2/4) China
(3/2) Japan
(5/3) Germany
(6/6) France
22
5
2
7 (15/17) India
8
(7/7) Italy
(8/8) Canada
10
(9/9) Australia
3
2
11 (17/18) Russia
3
3
3
3
2
3
2
3
12 (10/10) Netherlands
13 (11/11) Taiwan
14 (14/15) Hong Kong
15 (12/13) Switzerland
0
5
4
5
4
5
40
54
+84%
15
16
9
8
9
7
+129%
4
4
+84%
20
40
60
Total change
2013
2018
launched the Outright Monetary Transactions (OMT) program in the second half of
2012. With a projected CAGR of 3.3 percent,
private wealth in Western Europe will grow
to an estimated $44.6 trillion by the end
of 2018.
2.6
2.4
Asia-Pacific1
1.7
1.1
Latin America
0.8
North America
Total
Switzerland
2.3
1.4
Caribbean &
Panama
Middle East
and Africa
Eastern Europe
0.3
8.9
1.2
Channel Islands
& Dublin
1.1
United Kingdom
1.0
United States
0.7
Other2
0.7
Luxembourg
Total
0.6
8.9
Primary destination
Source: BCG Global Wealth Market-Sizing Database, 2014.
Note: Discrepancies in totals reflect rounding. Offshore wealth is defined as assets booked in a country where the
investor has no legal residence or tax domicile.
1
Including Japan.
2
Includes Dubai and Monaco.
Notes
1. Private financial wealth includes cash and deposits,
money market funds, and listed securities held either
directly or indirectly through managed investments or
life and pension assets, and other onshore and offshore
assets. It excludes investors own businesses, any real
estate, and luxury goods. Global wealth reflects total
financial assets across all households. Unless stated
otherwise, wealth figures and percentage changes are
based on local totals that were converted to U.S. dollars
using year-end 2013 exchange rates for all years in
order to exclude the effect of fluctuating exchange rates.
2. United States and Canada.
3. Germany, France, United Kingdom, Ireland, Italy,
Spain, Portugal, Switzerland, Austria, Netherlands,
Belgium, Norway, Sweden, Finland, Denmark, and
Greece.
4. Russia, Poland, Czech Republic, Hungary, and
Slovakia.
5. Taiwan, China, Australia, South Korea, Hong Kong,
India, Singapore, Indonesia, Thailand, Malaysia, New
Zealand, Philippines, and Pakistan.
6. Mexico, Brazil, Venezuela, Colombia, Argentina, Chile,
Peru, and Uruguay.
7. Saudi Arabia, United Arab Emirates, Israel, Turkey,
South Africa, Kuwait, Iran, Egypt, Algeria, Qatar, Oman,
Morocco, Lebanon, Bahrain, Tunisia, Syria, Yemen, and
Jordan.
WEALTH MANAGER
BENCHMARKING
STRONG GROWTH CONTINUES
Exhibit 6 | KPIs Indicate Strong Asset Growth but Only Slight Improvements in Productivity
and Efficiency
European
oshore
institutions1
European
onshore
institutions
Asia-Pacific
institutions2
Latin American
institutions
North American
banks
North American
brokers
10
73
76
1.5
1.5
Growth
Change in
AuM (%)
Net new
assets3 (%)
2
4
23
24
10
12
10
65
70
1.7
1.7
18
13
13
68
68
2.2
2.8
11
17
90
93
2.7
2.2
10
79
78
0.8
0.9
3
6
4
Productivity
94
92
2.4
2.4
Cost-to-income
ratio5 (%)
76
74
75
65
67
67
80
71
67
68
70
68
73
80
77
Pretax profit
margin6
(basis points)
23
25
25
27
27
28
15
20
19
23
23
22
26
24
24
ROA4
(basis points)
Revenue per
RM ($millions)
91
2.6
79
1.6
65
1.6
65
2.1
92
2.6
77
0.9
Eciency
83
83
80
14
15
15
Exhibit 7 | Since 2010, Wealth Managers Costs Have Increased in Nearly Every Function
Change in total costs, 20102013 (%)
40
32
30
20
14
10
20
19
Legal,
Asset &
Sales and
compliance,
product
front-related
& risk
management
services
management
Accounting,
finance,
& control
Other central
functions
(including
restructuring)
Human
resources
13%
2%
4%
1%
4%
x%
57%
Operations Communications
& IT
& marketing
17%
2%
Exhibit 8 | Globally, the Share of RM Payout Is Decreasing, Although RM Head Counts Are
Moderately Increasing
RM compensation as a share of revenues,
2012 and 2013 (%)
50
42
41
40
30
26
23
20
18
15
16
13
15
25
22
16
11
10
10
Change in
number of RMs,
20122013
2012
European
oshore
institutions
European
onshore
institutions
Asia-Pacific
institutions
Latin
American
institutions
North
American
banks
North
American
brokers
Global
7%
0%
21%
7%
3%
0%
6%
2013
Exhibit 9 | Clients Digital Demand Has Reached the Heart of Wealth Managers Value Chains
Share of wealth managers that oer, and clients who demand, various functions
Value
chain
Important
functionality
clusters
Banks
Clients Pressure
oering demanding to act
Banks
Clients Pressure
oering demanding to act
Banks
Clients Pressure
oering demanding to act
Portfolio view
Understand Transaction history
financial and statements
situation Access to contracts
and policies
Derive
best
possible
solution
Research and
market data
Tailored investment
recommendations
Portfolio analysis
and simulation
Monitoring of investment preferences
Direct RM contact
via video chat
Validate
Peer interaction via
with
social-media network
network
Interactive expert
and
interaction (e.g.,
community with CIO)
Trading/brokerage
Payments and money
transfer
Execute
transactions New-product opening
(basic)
High
Medium
Low
020%
2040%
4060%
60100%
Asia-Pacific
A key driver in the rise of private wealth in
the Asia-Pacific region has been strong GDP
growth over the past five years, especially in
China, India, and Indonesia. Nonetheless, the
economics for wealth managers have been
challenging for several reasons.
First, virtually all international players have
been vying for a slice of the wealth managed
in offshore centers such as Singapore and
Hong Kong, where competition is particularly
intense. In addition, local commercial banks
have entered the market, notably in the lower
wealth bands (under $5 million), further raising competitive pressures. Finally, clientacquisition costs are extremely high, because
RMs with the experience required to attract,
retain, and serve high-value clients are in relatively short supply, driving up compensation.
Yet several trends are reshaping this
landscape. First, the rise of onshore wealth,
driven by in-country GDP growth, is generating additional pools of wealth that can be
targeted with more attractive economics and
a lower level of competition than in
Local commercial banks that have advantages on multiple fronts, ranging from
access to a large base of customers to
strong balance-sheet funding capabilities
Offshore Europe
As the worlds largest offshore center,
Switzerland must cope with numerous key
industry dynamics. Wealth booked from newworld markets such as Asia-Pacific, the
Middle East, and Latin Americacurrently
about one-third of the total in Switzerland
will continue to grow. Wealth booked from
the old world will continue to decline. And
wealth booked onshore in Switzerland will
grow at a very moderate rate, roughly 2 to
24 | Riding a Wave of Growth
Onshore Europe
In Europe, successful onshore private banks
have made explicit choices in their operating
models in order to achieve superior profitability. They have forged highly segmented product and service offerings that are well aligned
with client needs, and have reduced complexity in their portfolios with fewer and more
transparent products. They have developed
finely tuned investment engines with strong
advisory processes as well as excellence in the
front office (stemming from more management focus on this area than in the past).
Yet there are areas that still need attention
for many players. A high level of sales force
effectiveness needs to be became a permanent capability, not a one-off program as it
has for some institutions. Some leading banks
have installed a dedicated central team of private-banking champions who continuously
drive tangible sales-force improvements
across all desksand strive to raise RM performance. In addition, the development of
seamless, fully integrated multichannel capabilities needs a higher priority.
Some midsize players are seeking larger
scaleas well as more efficient IT and operationsby leveraging captive retail-banking
Latin America
Latin America has continued to show appreciable growth in private wealth. Assets are
slowly gravitating back to equities in the
wake of a shift toward money market investThe Boston Consulting Group | 25
In addition, many players have made progress in weeding out their long tail of small,
unprofitable clients. This initiative may have
hindered overall AuM growth but will lead in
time to higher overall profitability. Brazilian
banks generally have a higher minimum AuM
threshold ($1 million to $2.5 million) compared with players in other Latin American
countries ($500,000 to $1 million).
Despite short-term challenges, Brazil remains
a structurally attractive market with healthy
levels of ROA and profitability within reach.
The country also has a favorable environment for wealth creation, with many entrepreneurs freeing up value that was previously
locked inside family-run enterprises that are
now transitioning to professional management. Moreover, international wealth managers are showing no signs of slowing their investments aimed at gaining a firmer foothold
in Brazil.
Mexico. Mexico is also a fast-growing and
attractive wealth-management market. Its
onshore business and broader overall offering
have evolved in tandem with the countrys
relative economic stability.
Mexicos onshore business is dominated by
large universal banks, followed by brokerage
houses and independent advisors. Some of
the larger players are retooling their offerings
while smaller players are generating growth
with low-cost models or niche propositions.
26 | Riding a Wave of Growth
address tax evasion will generate new challenges to the offshore businessand are
likely to spur the development of a more
meaningful onshore market.
Overall, wealth managers in Latin America
will need to further explore ways to differentiate their offerings from those of players in
other attractive emerging markets.
METHODOLOGY
Maintaining Momentum in a
Complex World: Global Wealth
2013
A report by The Boston Consulting
Group, May 2013
Acknowledgments
For their valuable contributions to
the conception and development of
this report, our special thanks go to
the following BCG colleagues.
Asia-Pacific: Ashish Garg, Vish Jain,
Kuo-Loon Loh, Masahide Ohira,
30 | Riding a Wave of Growth
Jorge Becerra
Senior Partner and Managing Director
BCG Santiago
+56 2 338 9600
becerra.jorge@bcg.com
Federico Burgoni
Partner and Managing Director
BCG Singapore
+65 6429 2500
burgoni.federico@bcg.com
Bruce Holley
Senior Partner and Managing Director
BCG New York
+1 212 446 2800
holley.bruce@bcg.com
Daniel Kessler
Partner and Managing Director
BCG Zurich
+41 44 388 86 66
kessler.daniel@bcg.com
Federico Muxi
Partner and Managing Director
BCG Buenos Aires
+54 11 4317 5900
muxi.federico@bcg.com
Matthias Naumann
Senior Partner and Managing Director
BCG Zurich
+41 44 388 86 66
naumann.matthias@bcg.com
Tjun Tang
Senior Partner and Managing Director
BCG Hong Kong
+852 2506 2111
tang.tjun@bcg.com
Anna Zakrzewski
Principal
BCG Zurich
+41 44 388 86 66
zakrzewski.anna@bcg.com
Abu Dhabi
Amsterdam
Athens
Atlanta
Auckland
Bangkok
Barcelona
Beijing
Berlin
Bogot
Boston
Brussels
Budapest
Buenos Aires
Calgary
Canberra
Casablanca
Chennai
Chicago
Cologne
Copenhagen
Dallas
Detroit
Dubai
Dsseldorf
Frankfurt
Geneva
Hamburg
Helsinki
Ho Chi Minh City
Hong Kong
Houston
Istanbul
Jakarta
Johannesburg
Kiev
Kuala Lumpur
Lisbon
London
Los Angeles
Luanda
Madrid
Melbourne
Mexico City
Miami
Milan
Minneapolis
Monterrey
Montral
Moscow
Mumbai
bcg.com | bcgperspectives.com
Munich
Nagoya
New Delhi
New Jersey
New York
Oslo
Paris
Perth
Philadelphia
Prague
Rio de Janeiro
Rome
San Francisco
Santiago
So Paulo
Seattle
Seoul
Shanghai
Singapore
Stockholm
Stuttgart
Sydney
Taipei
Tel Aviv
Tokyo
Toronto
Vienna
Warsaw
Washington
Zurich