Bear Stearns equity-research report spotlights the top private-client firms. The 10 biggest wealth-management firms increased their collective profit by nearly 60% in the past two years, according to a report by Bear Stearns equity analysts.

"Nearly all the performance metrics [for wealth management] are on an upward curve," write Bear Stearns researchers Christopher Wheeler and Matthew Ingram, who are based in London. "Although the same could be said of investment banking, it is evident that the wealth-management industry looks better placed to weather inevitable market storms."

Fragmentation

In fact wealth management is the fastest-growing space in the financial-service sector.

UBS, which made $5.7 billion in the first half of 2007, tops the list. That accounted for 39% of the Zurich-based bank's total profits in the six-month period. Merrill Lynch, which made $3.7 billion from wealth management (or16.2% of its total profits), came in second. Credit Suisse and Citigroup took third and fourth place.

Credit Suisse was the only bank the Bear Stearns analysts studied whose wealth-management profits declined -- from 35.4% to 26% -- between the first half of 2005 and the same period in 2007.

As profitable as wealth management may be, it is still quite fragmented, say Wheeler and Ingram. UBS, the biggest wealth manager by assets under management, has only a 3% share of the world's wealth market.

As a result, some of the biggest wealth managers are looking to the high-growth markets in developing countries. UBS and Credit Suisse have made Brazilian acquisitions in the past year or so; Julius Baer has opened offices in Argentina, Columbia, Uruguay and Mexico. All three Swiss banks have targeted the Middle East's booming wealth market with offices in Dubai, Abu Dhabi, Bahrain, Doha and Beirut. -FWR

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