Global wealth rises but fund houses suffer

City A.M. Reporter
THE combined wealth of households around the world rose 12 per cent last year and nearly surpassed the 2007 high-water mark, yet money managers faced lower revenue and shrinking profit margins, according to an industry study released yesterday.

Global assets under management rose to $111.5 trillion (£75.9 trillion), just short of the 2007 year-end peak, Boston Consulting Group said in its annual study of the wealth management business. But while client assets have almost recovered from the 2008 financial crisis, client trust in their advisers has not.

North America led the world with a $4.6 trillion increase in total assets, up 15 per cent to $35.1 trillion, while Asia-Pacific countries posted the strongest recovery with a 22 per cent jump to $3.1 trillion.

Europe remained the wealthiest corner of the world, weighing in at $37.1 trillion of assets.

Boston Consulting noted that, among world regions, only the United States and Japan had not regained 2007 levels. The collapse of debt markets, followed by a deep recession, led to a 10 per cent plunge in global wealth.

Looking ahead, BCG projects global wealth will increase at an average annual rate of six per cent this year through 2014, faster than was reported in the five year period ending last year.

Much of that growth will be driven by the Asia Pacific region where, excluding Japan, investable assets will increase at twice the global rate.

“There’s no doubt that wealth will continue to grow faster in emerging markets, fuelled by strong economic growth,” said Tjun Tang, a BCG partner and a co-author of the report.

Offshoring wealth by the rich also grew nine per cent last year, with $7.4 trillion in assets placed in countries where the investor has no legal residence. Switzerland remains the largest offshore banking centre.