Dublin, May 31, 2024 (GLOBE NEWSWIRE) -- The "Global Wealth Management Market: Analysis By Advisory Mode, By Channel, By Enterprise Size, By Region Size and Trends with Impact of COVID-19 and Forecast up to 2029" report has been added to ResearchAndMarkets.com's offering.
The global wealth management market was valued at US$1.85 trillion in 2023 and is expected to reach US$2.92 trillion by 2029. The market is expected to grow at a CAGR of approx. 8% during the forecasted period of 2024-2029.
Wealth management remains a sector with enduring growth potential, driven by growing household and entrepreneurial wealth, underfunded retirement savings, over-reliance on non-financial assets, individual responsibility for retirement, and intergenerational wealth transfer. The ongoing wealth creation, demographic shifts, technological innovation, and regulatory developments are likely to drive demand for wealth management services, positioning the industry for sustained growth in the forthcoming years.
Moreover, factors like the adoption of digital technologies such as AI, Blockchain, and Big Data, along with the growing popularity of digital asset management services and sustainable investing, are expected to further drive market expansion. Additionally, digitalization and process automation would streamline operations, enhancing efficiency and attracting more investors to the wealth management sector. Thus, as individuals increasingly prioritize financial planning and wealth preservation, wealth management firms are well-positioned to meet these evolving needs and capitalize on the expanding market opportunities.
Market Segmentation Analysis:
By Advisory Mode: In 2023, the human advisory segment held the highest share of the market, whereas the robo-advisory segment is expected to be the fastest-growing segment in the forecasted period. Despite the rise of digital technologies and automated platforms, human advisory mode has seen growth in recent years and is expected to continue expanding. This is primarily due to the enduring value of human interaction and expertise in financial decision-making, particularly for complex wealth management needs.
On the other hand, the rise of digital technology and increasing comfort with online financial services have made robo-advisory platforms more accessible and appealing to a broader range of investors, particularly millennials and Gen Z, who prefer digital-first approaches to wealth management. Secondly, robo-advisory services offer cost-effective solutions with lower fees compared to traditional human advisors, making wealth management more affordable and accessible to a wider audience.
By Channel: The wirehouses segment held the highest share in the market, whereas the RIA segment is expected to be the fastest-growing segment in the forecasted period. Wirehouses have been losing importance and dominance over time as the rise of independent registered investment advisors (RIAs) and boutique wealth management firms has provided clients with more choices and alternatives to traditional wirehouse services.
Financial Advisors (FAs) continue to leave the large Wirehouses, driven by faster growth in the Independent channel- where advisor teams typically operate their own practice and maintain their own brand. On the other hand, RIAs are gaining importance and dominance over time. The increasing demand for fee-based, fiduciary-driven advice has led more investors to seek out RIAs who prioritize transparency and objectivity. Additionally, regulatory changes and industry trends favoring fee transparency and fiduciary standards have further propelled the growth of RIAs.
By Enterprise Size: Large enterprises held the highest share in the market, whereas small & medium enterprises (SMEs) is expected to be the fastest growing segment in the forecasted period. Large enterprises often have substantial financial resources and complex financial needs, making them prime candidates for comprehensive wealth management services.
Additionally, large enterprises may have diverse shareholder bases, including institutional investors, high-net-worth individuals, and corporate entities, necessitating tailored wealth management solutions to meet the diverse needs of stakeholders. On the other hand, despite their smaller size compared to large enterprises, SMEs often have complex financial needs and face similar challenges related to investment management, retirement planning, and risk mitigation. As SMEs continue to grow and expand, they require professional wealth management services to help them manage their finances effectively and achieve sustainable growth.
By Region: North America held the major share of the market. North America boasts a sizable population of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs), who require sophisticated wealth management services to preserve and grow their assets. This concentration of wealth has created a robust demand for comprehensive financial planning, investment management, and estate planning services, driving the growth of the wealth management industry in the region. Moreover, the wealth management business has benefited from strong secular growth as US wealth generation has far surpassed GDP growth over the past three decades, particularly post the Great Financial Crisis. Income inequality has also grown, with wealth generation accelerating among the wealthiest cohorts (who are more likely to use wealth management services).
Favorable regulatory environments and tax incentives in certain European countries have attracted wealthy individuals and families, driving the growth of the wealth management industry. Moreover, private equity (PE) firms are becoming more involved in European wealth management, bringing expertise to develop faster, more profitable business models. The UK is a major player in the European wealth management market because of its mature financial services industry, low interest rates, and GDP growth. Regulatory reforms, including a shift towards a more principled approach post-Brexit, aim to make the UK the world's most innovative financial hub, presenting transformation opportunities for the wealth management industry.
The wealth management market in China is experiencing robust growth due to several interconnected factors. Firstly, the emergence of a younger, wealthier demographic is reshaping the landscape, with many individuals either accumulating wealth through their own ventures or inheriting generational wealth. This demographic shift brings with it new expectations and demands for wealth management services, as individuals seek better ways to generate income and safeguard their assets in an uncertain economic environment characterized by low interest rates. On the other hand, the wealth management industry in India has been placing significant emphasis on crafting tailored portfolios for its customers. Its relevance has grown even more in the current ecosystem, wherein the industry is transitioning from distribution-oriented models to advisory-focused ones.
Key Market Dynamics:
Growth Drivers
- Increasing Number of Ultra-High-Net-Worth Individuals
- Accelerating Shift Towards RIA Channel
- Increasing Alternative Assets Under Management
- Growing Internet Penetration Rate
- Economic Expansion
- Growing Customization
- Accelerating Growth in Wealth Management Loans
Challenges
- Regulatory Compliance
- Cybersecurity Risks
- Market Volatility
Market Trends
- ESG as a Method of Investing
- Consolidation Amongst RIAs
- Growing Shift Towards Robo-Advisors
- Growing Intergenerational Wealth Transfer
- Increasing Demand for Outsourcing
- Embracing Wealth-as-a-Service Infrastructures
- Increasing Investment in Big Data Analytics
- Recent Technological Advancements
- Integration of AI, Machine Learning, and Automation
Competitive Landscape:
The global wealth management industry exhibits fragmentation, encompassing a diverse array of firms ranging from traditional full-service providers offering comprehensive financial services to modern digital platforms focusing on lower-touch interactions. The key players in the global wealth management market are:
- UBS Group
- Morgan Stanley
- Bank of America
- JPMorgan Chase
- The Goldman Sachs Group
- Wells Fargo
- Citigroup
- BNP Paribas
- BlackRock, Inc.
- The Charles Schwab Corporation
- Northern Trust
- Julius Baer Group
The industry trend of financial advisors (FAs) leaving the Wirehouses (Bank of America, Wells Fargo, UBS) in favor of independent channels continues, as Bank of America and Wells Fargo continue to experience advisor attrition at an elevated clip through 2022 and into 2023. This has been driven in part by less attractive compensation / lower payouts at the Wirehouses relative to smaller players, and enhanced technology / solutions offerings at the independents.
Meanwhile, the biggest beneficiaries of this shift are the Regional Brokers, most notably, LPL Financial and Raymond James as these firms have been the strongest organic growers, and typically rank the highest in terms of net advisor wins. Moreover, over the past three years, the Regional Brokers (Raymond James, LPL Financial, Ameriprise) saw the largest mix shift from Brokerage to Advisory channels, aided by faster net new assets (NNA) growth in Advisory, as well as an accelerating pace of Brokerage to Advisory conversions.
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