The world’s riches are shifting towards emerging economies as new wealth management centres rise to eclipse traditional financial capitals.
Singapore is gaining on Switzerland, which takes the number one slot, according to international accountants PwC.
The organisation’s latest Global Private Banking and Wealth Management Survey revealed Switzerland may have assets worth more than US$2 trillion under management, but many finance and banking professionals expect Singapore to snatch the crown within two years.
Many also believe London will challenge both due to a new era of tax transparency that removes the need to move assets offshore to a somewhere offering banking anonymity.
Financial centres to watch include Dubai, Miami, Hong Kong, Shanghai and Mexico City.
Changing client needs
The report urges North American and European financial centres to reassess the way they handle clients as fund managers have to introduce new products and services that meet new regulatory standards as tax transparency levels the wealth management playing field.
“Wealth management needs to undergo the same rigorous changes that healthcare is going through because the problems are essentially the same,” said a PwC spokesman.
“As people live longer, long term care becomes more important in healthcare. The same longevity also means wealth has to last longer as lifestyles and retirement periods change as well.”
The report also pointed out that wealth managers need to understand that the market is not the same worldwide.
Developed countries have an aging population, said the PwC spokesman, while emerging markets have a younger, more dynamic and entrepreneurial population. They have differing needs that financial firms must take into account.
Mistrust of banks
PwC pinpointed one of the main reasons clients leave their financial advisers is because the firm cannot satisfy the demands of younger clients and handle estate planning to move wealth between generations adequately.
The report also highlights a lack of trust in banks and a tougher regulatory framework is forcing changes on the banks, but clients still lack confidence in their advice.
The study recommends private wealth managers should think more about solutions and advice than products and services.
“New wealth managers are coming to the market with innovative ideas,” said the spokesman. “The market is evenly split between offshore and onshore providers, although high net worth customers tend to stay onshore while ultra-high net worth and family office clients look farther afield.
“Many clients are newly wealthy, and these clients are expected to make up around two-thirds of all wealth management business in two years or so.”
