Rising inflation across the world is forcing an end of accommodating monetary policy, with knock-on effects in the stock market, bonds, and even emerging speculative asset classes such as cryptocurrency. Digital investing will receive a big boost in 2022 as retail banks cross-sell simple robo-advice services to their mass market clients.
This report discusses the key trends and themes that will shape the global wealth industry over the course of 2022. These include the ongoing COVID-19 pandemic, the shift to digital channels, consolidation within the industry, and ESG considerations.
What are the market dynamics of the wealth management industry?
Global wealth is expected to top $124 trillion by the end of 2022. Wealth growth will decelerate as economic growth is tempered. HNW investors are expected to account for over half of the gains in wealth over the course of 2022. The HNW client base will have the strongest growth, which is expected to be more than double the affluent rate. Inequality will tick up once again in 2022, with HNW individuals expected to add more in absolute wealth value than all other consumers combined. This reflects the trend observed in the recovery from the pandemic, whereby HNW investors who stayed invested in stock markets (directly or indirectly) were able to capture the bulk of gains across recovering asset prices better than consumers from lower wealth tiers. Trend growth over the forecast period is expected to be moderate.
What is the regional outlook of the wealth management industry?
The wealth management market report offers information on the distribution of household wealth across North America, Latin America, Asia Pacific, Middle East and Africa, Western Europe, and Central and Eastern Europe. All wealth markets across all regions are expected to grow by 2025. In 2022, North America covers nearly 48% of the wealth management industry. The region is primarily driven by the huge US market. In the US market, both equity and mutual fund holdings rank ahead of the deposit market as investment vehicles for household wealth.
Asia Pacific and the Middle East and Africa are the only regions expected to regain their historic share of global wealth. A heavier reliance on bank deposits and a general lack of financial market development across these regions will hold back overall growth rates. Western Europe is forecast to continue losing ground in the global wealth markets due to relatively sluggish economic growth and an enduring reliance on low-yielding bank deposits in the household savings mix.
Wealth management market, by region
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What is the impact of inflation on the wealth management market?
Inflation levels in the UK reached a 30-year high at 5.4% in 2022 and the US Federal Reserve announced it likely to increase interest rates in March 2022. In 2020, investors were relying on safe haven assets, but riskier investors were taking advantage of cheaper stocks. However, this growth is expected to slow down from 2022 onwards as the stock market recovery slows down and interest rates continue to make deposits unattractive. Despite cryptocurrencies accounting for a very low percentage among North American investors’ portfolios, over 75% of HNW investors are showing an increased interest in cryptocurrencies. Despite high volatility, the opportunity for large returns is still enticing investors.
What is the impact of the COVID-19 pandemic on the wealth management market?
Over the past two years, wealth managers have had to adapt to a new, digital-focused way of conducting business with their clients due to the COVID-19 pandemic. 2022 began with rising infection rates due to the Omicron variant, further enforcing the need to develop hybrid/digital channels when working with clients. Continuing to remain adaptive to clients’ needs will be key in order to protect assets under management (AUM) and profits amid the continued uncertainty.
What is the impact of the shift to digital channels on the wealth management market?
More than 40% of the world’s investors are using digital investment channels. There has been a distinct increase in digital investing among retail investors since the pandemic broke out. Asia Pacific still leads as the most digital investment market, but the pandemic has narrowed the gap between it and more mature markets in Europe and North America. Markets in the Middle East and Africa are increasingly opting for advice coupled with digital investment channels.
What is the impact of consolidation on the wealth management market?
Consolidation will affect all parts of the wealth value chain. It is leading to the creation of more large financial advice firms serving diversified clients via a range of channels. Dealmaking in the aftermath of crisis is common and will only drive further consolidation in the industry at all stages. The fragmentation of the industry brought about by technology-enabled new players will be steadily reversed. Certain markets such as Switzerland will see dealmaking in order to shore up profitability.
What is the impact of ESG on the wealth management market?
Growing awareness of social responsibility and sustainability have driven demand for ESG investments across all affluent bands, including HNW investors. Global ESG fund assets have more than doubled within a year, while the number of ESG funds increased by 80%. Ubiquity as well a greater focus on ESG issues in response to COVID-19 have driven this impressive rise in ESG assets. Yet the financial services industry remains a laggard.
Which are the key players in the wealth management market?
The key players in the wealth management industry are Amundi, UBS, HSBC, Citibank, Morgan Stanley, Goldman Sachs, Wealthfront, J.P. Morgan, Macquaire, Nutmeg, Schwab, and Robinhood.
Wealth management market, by key companies
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Market report scope
|Key wealth management trends||COVID-19 Pandemic, Shift to Digital Channels, Consolidation Within the Industry, and ESG Considerations|
|Key regions||North America, Latin America, Asia Pacific, Middle East and Africa, Western Europe, and Central and Eastern Europe|
|Key companies||Amundi, UBS, HSBC, Citibank, Morgan Stanley, Goldman Sachs, Wealthfront, J.P. Morgan, Macquaire, Nutmeg, Schwab, and Robinhood|
- Wealth markets around the world are expected to cool in 2022 after the recovery-driven growth of 2021, supported by large-scale government spending and very loose monetary policy.
- While declining as a business concern or opportunity, the pandemic will cause significant disruption to normal economic patterns until it becomes sufficiently endemic across a large enough part of the world that control measures are not required to manage its impact on health systems.
- Expect more consolidation in key markets such as asset management and digital wealth management (such as robo-advisors), as well as in fragmented slow growth markets such as the Swiss private bank scene.
Reasons to Buy
- Understand the key trends impacting the wealth management industry in 2022 and how to respond.
- Discover the effect of COVID-19 on the offshore industry and how to benefit from the new trends.
- Understand the recommended approach to client portfolio strategies in current market conditions.
- Learn about risks resulting from the industry’s growing dependence on technology.
- Stay ahead of your competitors by reaching out to new emerging client demographics that offer huge revenue growth potential.
Table of Contents
Table of Contents
Frequently Asked Questions
The key wealth management market trends in 2022 are COVID-19 pandemic, the shift to digital channels, consolidation within the industry, and ESG considerations.
The key regions for the distribution of household wealth are North America, Latin America, Asia Pacific, Middle East and Africa, Western Europe, and Central and Eastern Europe.
Some of the key companies in the wealth management industry are Amundi, UBS, HSBC, Citibank, Morgan Stanley, Goldman Sachs, Wealthfront, J.P. Morgan, Macquaire, Nutmeg, Schwab, and Robinhood.