Market Definition
The wealth management approach is designed for the individual looking for a comprehensive solution for their financial future. It covers all areas of financial life, from earning money and investing it wisely to managing your spending, taxes and insurance.
According to a report by Altus Market Research titled, “Wealth Management Global Market 2022 Size And Strategies To 2030: By Type of Asset Class: (Equity; Fixed Income; Alternate Assets and Others); By Advisory Mode; By Type of Wealth Manager; By Enterprise Size; By Type of Client; By Service Element“, the wealth management market size reached a value of nearly $475.9 billion in 2020, having increased at a compound annual growth rate (CAGR) of 4.8% since 2015. The market is expected to grow from $475.8 billion in 2020 to $730.7 billion in 2025 at a rate of 9.0%. The market is then expected to grow at a CAGR of 8.8% from 2025 and reach $1,116.1 billion in 2030.
Market Growth by Key Players:
The wealth management market revenue is fragmented, with a large number of players. The top ten competitors in the market made up to 24.74% of the total market in 2020. The market is highly competitive due to regulatory, intense price competition and other infrastructure challenges. This fragmentation is mainly due to the presence of a large financial institutions, brokerage firms, investment banking companies, and local merchant banks and other banks who provide the similar products and services local customers and industries. Morgan Stanley was the largest competitor with 4.00% of the market, followed by Bank of America Corporation with 3.91%, UBS Group AG with 3.58%, Wells Fargo & Company with 3.05%, JPMorgan Chase & Co. with 2.99%, Citigroup Inc. with 2.52%, HSBC Holdings plc with 1.64%, The Goldman Sachs Group, Inc. with 1.26%, Credit Suisse Group AG with 1.04% and Industrial and BNP Paribas with 0.74%.
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Strategies by Key Players:
Player-adopted strategies in the wealth management market growth include business expansion through mergers and acquisitions, client interaction to improve the client serving, investing in technology with a focus on superior client experience, product capabilities, efficiency and effectiveness, new digital infrastructure strategies and collaborations across business lines and improving operational excellence and business expansion through new innovations.
Market Growth Drivers:
Growth in the historic period resulted from strong emerging markets growth, growth in the number of high-net-worth individuals, digitization and increased internet penetration.
Going forward, increasing retiree population, increasing wealth of high-net-worth individuals, rising demand for alternative investments, growth in individual investors investments and increase in internet penetration will drive the growth. Factors that could hinder the wealth management market growth in the future include the COVID-19 pandemic, fintech firms, wide range of services offered by asset managers and passive investments.
Market Growth by Segments:
The wealth management market trends are segmented by segmented by type of asset class into equity, fixed income and alternative assets and others. The fixed income market was the largest segment of the wealth management market segmented by type of asset class, accounting for 64.8% of the total in 2020. Going forward, the fixed income market is expected to be the fastest growing segment in the wealth management market segmented by type of asset class, at a CAGR of 9.2% during 2020-2025.
The wealth management market is segmented by advisory mode into human advisory, robo advisory and hybrid. The human advisory market was the largest segment by advisory mode, accounting for 97.7% of the total in 2020. Going forward, the robo advisory is expected to be the fastest growing segment in the wealth management market segmented by advisory mode, at a CAGR of 20.5% during 2020-2025.
The wealth management market is segmented by type of wealth management firm into private banks, investment managers, full service wealth managers, stockbrokers and others. The private banks market was the largest segment by wealth management firm, accounting for 41.1% of the total in 2020. Going forward, the others market is expected to be the fastest growing segment in the wealth management market segmented by wealth management firm, at a CAGR of 12.1% during 2020-2025.
The wealth management market is segmented by enterprise size into large enterprises and medium and small enterprises. The large enterprises market was the largest segment by enterprise size, accounting for 60.7% of the total in 2020. Going forward, the medium and small enterprises market is expected to be the fastest growing segment in the wealth management market segmented by enterprise size, at a CAGR of 9.4% during 2020-2025.
The wealth management market is segmented by type of client into pension funds, insurance companies, and sovereign wealth fund (SWF), High-Net worth Individual (HNWI) and mass affluent market. The mass affluent market was the largest segment by type of client, accounting for 45.2% of the total in 2020. Going forward, the sovereign wealth fund (SWF) market is expected to be the fastest growing segment in the wealth management market segmented by type of client, at a CAGR of 10.6% during 2020-2025.
Market Growth by Region:
North America was the largest region in the wealth management market, accounting for 53.7% of the total in 2020. It was followed by Western Europe, and then the other regions. Going forward, the fastest-growing regions in the wealth management market will be Asia Pacific, and, Western Europe where growth will be at CAGRs of 9.62% and 9.61% respectively. These will be followed by Africa, and North America, where the markets are expected to grow at CAGRs of 8.9% and 8.6% respectively.
COVID-19 Impact
Global economic activity is suffering major setback due to the coronavirus outbreak and the measures being taken to control it. This will have broader implications on the wealth management industry, with countries implementing aggressive financial policies to recover and stabilize the economic situation. Wealth management firms are mainly focusing on cash preservation and protecting costs structures for portfolio firms during the coronavirus months. Investors are planning and working towards protecting their assets during these turbulent times. Amid the pandemic, the overall wealth investment fell with rising risk averse behavior of the clients and reduction in the amount of wealth in the hand of the people.
Future Investment Opportunities:
The top opportunities in the wealth management market segmented by type of asset class will arise in the fixed income segment, which will gain $168.1 billion of global annual sales by 2025. The top opportunities in the wealth management market segmented by advisory mode will arise in the human advisory segment, which will gain $239.5 billion of global annual sales by 2025. The top opportunities by type of wealth manager will arise in the private banks segment, which will gain $78.7 billion of global annual sales by 2025. The top opportunities in the wealth management market segmented by enterprise size will arise in the large enterprises segment, which will gain $148.8 billion of global annual sales by 2025. The top opportunities in the wealth management market segmented by type of client will arise in the High-Net-Worth Individual (HNWI) segment, which will gain $121.9 billion of global annual sales by 2025. The wealth management market size will gain the most in the USA at $108.2 billion.
Market: Trend-based Strategies
Market-trend-based strategies for the wealth management market include investing in deploying more AI applications for faster customer response, investing in cybersecurity technologies to enhance their security capabilities, offering hybrid services to increase service offerings, consider using robo advice to reduce the cost of fund management, consider investing in big data solutions to improve client acquisition and retention rates, adapt to the changing demographics to drive revenues, focus on offering ethical investing services, focus on providing personalized services and focus on partnerships, collaborations and acquisitions.
Growth Strategies by Altus Market Research for Companies in the Market:
To take advantage of these opportunities, The AMR recommends the wealth management companies to focus on hybrid wealth management services, focus on offering personalized services, focus on investing in cybersecurity technologies, focus on developed markets, increase adoption of internet and social media, increase visibility through websites, focus on fast-growing end-use industries.
