RANI JARKAS

Global Wealth Management Market Study

Wealth management grew 4.8% from 2015 to 2020. This remarkable trajectory drove its price to about $475.9 billion. The market is predicted to rise 9.0% annually from $475.8 billion in 2020 to $730.7 billion in 2025. The market is expected to grow 8.8% to $1,116.1 billion between 2025 and 2030.

The extraordinary growth of the developing market, a rise in the population of esteemed high-net-worth persons, the introduction of digitisation, and increased internet penetration led to a significant growth boost in the preceding era. An aging population, rising rich fortunes, rising demand for unorthodox investments, rising individual investor contributions, and rising internet access will drive the impending expansion. The COVID-19 pandemic, fintech companies, asset managers’ wide variety of services, and passive investments may limit wealth management’s growth.

Wealth Manager Types

Equity, fixed income, alternative assets, and other asset groups gracefully comprise the respected wealth management sector. In 2020, the fixed income market dominated the wealth management market with a 64.8% share. The wealth management fixed income market is expected to grow at a 9.2% CAGR from 2020 to 2025.

Classification divides wealth management into three distinct categories: esteemed human advisory, smart robo advisory, and harmonious hybrid. When carefully segmented by advising mode, the human advisory market, which made up 97.7% of the wealth management industry in 2020, was the leader. Robo advising is expected to grow rapidly in wealth management with a 20.5% CAGR from 2020 to 2025. Advising mode classification shows this extraordinary trajectory.

Wealth management firms include private banks, investment managers, full-service wealth managers, stockbrokers, and others. These entities make up the different wealth management market segments. In 2020, private banks dominated wealth management with 41.1% of the market. It becomes the top segment in this recognised domain with this exceptional feat. The famous wealth management organization predicts that the other industry will experience substantial growth. The 2020–2025 CAGR will be 12.1%.

Market Overview

Wealth management companies are divided by size. This market sector dominated wealth management in 2020 with a 60.7% share. The wealth management market for medium- and small-sized firms is expected to grow the fastest from 2020 to 2025, with a 9.4% CAGR.

Wealth management is divided into pension funds, insurance corporations, sovereign wealth funds (SWF), high-net-worth individuals (HNWI), and the esteemed mass wealthy market. Due to their selective customer, these categories are meticulously segregated. In 2020, the acclaimed mass affluent market controlled 45.2% of the appreciated wealth management market, making it the most significant category. The sovereign wealth fund (SWF) market is expected to grow rapidly from 2020 to 2025, with a 10.6% compound annual growth rate (CAGR).

North America ruled 53.7% of the worldwide wealth management market in 2020, making it the most powerful region. After Western Europe, the rest of the world arrived. Wealth management will grow fastest in Asia Pacific and Western Europe, with CAGRs of 9.62% and 9.61%, respectively. Africa and North America will follow these patterns, with 8.9% and 8.6% market growth, respectively.

Wealth Management Market Analysis

Fragmented wealth management has many diverse participants. The top ten market players held 24.74% of the market in 2020. The sector is highly competitive because of regulatory limits, price competition, and infrastructure issues. Grandiose financial institutions, esteemed brokerage enterprises, distinguished investment banking firms, esteemed local merchant banks, and other similar banks that graciously extend their exquisite offerings and services to esteemed regional clientele and industries are the main culprits for this fragmentation.

Morgan Stanley led with a 4.00% market share, followed by Bank of America Corporation with 3.91%. Wells Fargo & Co., at 3.05%, and UBS Group AG, at 3.58%, ranked high. JPMorgan Chase & Co., at 2.99%, and Citigroup Inc., at 2.52%, showed their lasting influence. HSBC Holdings plc maintained its top spot with a 1.64% stake. Goldman Sachs Group, Inc.’s 1.26% shareholding showed its lasting significance. Industrial and BNP Paribas, at 0.74%, joined Credit Suisse Group AG, at 1.04%.

The global wealth management sector is expected to increase from $498.70 billion in 2020 to $850.90 billion from 2021 to 2028, a 7.1% CAGR. FinTechs have disrupted wealth management. Benefits include helping people develop complex financial strategies and easing financial stress. Digitization has also driven market growth. 

The Covid-19 Pandemic’s Huge Impact On Wealth Management 

The market’s growth is hindered by government limitations on asset management firms, a lack of price transparency, and rising costs. Geographically, the Asia-Pacific wealth management market share is expected to expand at 8.4% CAGR. This growth should generate $289.22 billion during the study period.

Wealth management, an esteemed investment advisory business, diligently serves its discerning clients. Money management organizations provide comprehensive and meticulous services to help distinguished clients preserve and grow their wealth. It provides thorough advice backed by extensive research and simple, customized investment implementation. 

It involves meticulously planning to help renowned clients achieve their specific and long-term financial goals. This covers retirement planning, estate and legal planning, accounting and tax services, and a customized wealth services package for selective clients. High-net-worth individuals (HNIs) who have a dedicated wealth manager receive expertly crafted fund allocation recommendations. 

The WHO declared COVID-19 a pandemic in March 2020. Travel restrictions followed this proclamation, disrupting financial markets. Supply chains were disrupted and output dropped. The COVID-19 pandemic has wreaked havoc on worldwide public health and eroded faith in the global economy. Due to the economic slump, international financial sector volatility, and market uncertainty, the COVID-19 pandemic has hurt wealth management demand. 

The pandemic has devastated investors’ fortunes and wealth management organizations, ensnaring both groups. Due to larger companies using social media and AI to engage customers, wealth management firms have faced significant challenges. Wealth management demand has dropped due to the worldwide health crisis. 

Technology Will Drive Market Growth

Chatbots, the Internet of Things, artificial intelligence, and big data analytics have helped wealth management grow. As our world becomes more digital, wealth management firms will invest more in digital and voice-activated assistants to boost consumer engagement. Because chatbots offer a more customized and user-centric experience than mobile apps, esteemed wealth management firms use them. 

Chatbots can screen, monitor, execute, and answer questions remotely due to their remarkable ability to understand natural language and learn from large amounts of data. Wealth managers may use cutting-edge technology to improve operational efficiency in the front and back offices, stay competitive, and better understand their products and services. Please contact our experienced analysts for more information on global wealth management market developments.

Insufficient Pricing Transparency And Trust Might Limit Market Growth

Discriminating clients evaluate wealth managers based on pricing transparency and competitive costs. Vestmark, Inc., a recognised provider of global assets and services, has found that 45% of respected clients do not trust their advisors to charge fees. These discriminating people also dislike wealth managers’ pricing. Thus, lack of pricing transparency and high asset management fees will slow market growth. 

Global assets increasingly offer hybridized services to their esteemed clients, including standardized and personalized advice. Consumers want consistent and reliable answers, which necessitates advising standardization and personalization. Wealth management organizations are fostering automated analysis to provide standardized advisory services while maintaining the highest intricacy of their offerings through tailor-made solutions. 

The renowned human advisory sub-segment is expected to dominate the global market and earn $516.67 billion in sales. Financial advisors in Hong Kong can help investors who may not have the time to carefully monitor and evaluate their investments. Portfolio monitoring is essential to meet financial goals. Human advisors have many benefits, including strong emotional intelligence, adaptability, responsibility, and the capacity to provide highly specific services.

Hybrid Advisory Will Create Opportunities In The Wealth Market

Asset management will provide the largest revenue in Hong Kong in the future. The market is expected to earn $224.92 billion in 2028, up from $142.35 billion in 2027. A 7.2% CAGR is expected to achieve this impressive growth. Digitization gives businesses many ways to improve client connections.

The recognised global assets have realized that overcoming their management issues will determine their success or failure in the ever-increasing competition. Due to this, many asset-intensive companies are investing heavily in cutting-edge solutions to update their operations.

Banks are predicted to grow fastest in the market. The market is expected to earn $439.6 billion by 2028, up from $251.65 billion in 2020. The CAGR will be 7.4%. Given the expected worldwide economic growth, banks will manage people’s growing global assets and wealth during the forecast timeframe. Private banking is also implementing a sophisticated client-centric approach using cutting-edge wealth management tools. Banks can manage their clients’ financial assets anywhere in Hong Kong.

By 2028, the Pacific market is expected to increase at 8.4% CAGR to $289.22 billion. Due to the region’s increased adoption of digital platforms, global assets will benefit. Robo-advising solutions can help tech-savvy investors meet their needs by combining cutting-edge data and powerful algorithms. Wealth management software providers in emerging nations like Hong Kong will benefit from the growing number of small and medium-sized businesses nearby.