A loss of confidence among wealthy clients and a lack of efficiency in banking business models have hit the global wealth management industry.
The good news is that there is $10 trillion in high-net-worth bankable assets that have not been tapped, according to Scorpio Partnership's 2010 Global Private Banking study, which was released Thursday.
The wealth management industry now has $16.5 trillion of assets under management, up from $14.5 trillion in 2008.
Yet Scorpio reports that the real high-net-worth market opportunity is set at $26 trillion, signaling that the global industry currently manages 63.5% of the real market.
The study was released Thursday.
Profitability has dropped by a median of 35% from 2008, according to the study.
And cost/income ratios have risen to an average 78.2%, up from 72.4% in 2008.
In addition, net new money data shows a median inflow across all institutions of $900 million for 2009, a decline of 60% from 2008.
"The wealth management engine is still misfiring for many. On the one hand the asset management machine is working and this is shoring up numbers. While, for virtually all banks, in terms of attracting new business, it has been a case of Net No Money," said Sebastian Dovey, managing partner, in a press release.
"Significantly, our global [high-net-worth] data shows there are strong signs of wealth creation even in these complex markets, and yet new clients are still holding back from opening accounts with the industry," Dovey said.
