‘Proactive wealth managers will thrive’

Facing volatile equity and bond markets,increasingly demanding clients,and ever-watchful regulatory agencies,wealth managers must proactively

Facing volatile equity and bond markets,increasingly demanding clients,and ever-watchful regulatory agencies,wealth managers must proactively find new ways to counter difficult industry trends if they hope to improve their performance,according to a report titled The Battle to Regain Strength: Global Wealth 2012,by The Boston Consulting Group (BCG),the global management consulting firm. India will continue to be a high growth market over the next five years with 20 per cent plus compound annual growth rate (CAGR),mentions report.

However,in spite of the high growth,pricing pressures make India a challenging market to operate in. For global players in India,the key challenge is to leverage the strength of their global platform while adapting internal policies and risk assessment to increase profitability, mentions report. For domestic players,the key challenge is to adapt a largely retail based model serving customers in the less than R 1 crore segment and more up,to serve lucrative high end customers. Specialist players in the High Networth Individuals/ Ultra High Networth Individuals segment have grown and carved out a distinct niche in the family business space,report says.

Only those wealth managers that take action,as opposed to adopting a wait-and-watch attitude,will be in a position to thrive,regardless of which direction the markets ultimately take, said Monish Kumar,a coauthor of the report and the global leader of BCGs asset and wealth management segment. The volatile equity markets along with slowing down of economy has limited the options of the wealth managers. We do see a general recovery in equity markets as likely, said Peter Damisch,of BCG. But wealth managers will still need to continue their cost-cutting and pricing initiatives,refocus on client discovery,master the ever-shifting regulatory environment,bolster risk management,and find ways to use alternative business models to their advantage, he added.

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The global private financial wealth grew by just 1.9 percent in 2011 to a total of $122.8 trillion. Growth was driven primarily by rapidly developing economies in the new world, not by the old world of traditional,mature ones. In the BRIC countries,total private wealth increased by 18.5 percent in 2011,compared with negative growth in North America (0.9 percent),Western Europe (0.4 percent),and Japan (2.0 percent).

Although the number of millionaire households decreased by a combined 1,82,000 in the US and Japan,globally the number grew by 1,75,000 as many households crossed the millionaire threshold in developing economies,particularly China and India.