Scorpio Partnership issues findings of its 2015 Global Private Banking Benchmark, which looks at key performance indicators such as AuM growth, operating profits and net new money, among others.

With an estimated $20.6 trillion under management, 2014 was a solid year for the global wealth management industry but didn't manage to replicate 2013's growth surge, while the US remains the largest market of opportunity for business with high net worth clients, according to research released today.

Scorpio Partnership's 2015 Global Private Banking Benchmark shows that AuM for the 200 wealth managers the research firm assesses annually increased by an average of 3.4 per cent in 2014, albeit significantly less than the 14.5 per cent hike logged in 2013. Operating profits improved by 3.3 per cent on average, up slightly from 3.1 per cent in 2013, and net new money was +25.8 per cent in 2014 versus -14.0 per cent in 2013.

The sector is under pressure from a continued squeeze on operating efficiency, Scorpio noted, with the industry average cost-income ratio having risen by 90 basis points to 84.4 per cent in 2014 – up from 83.5 per cent in 2013 and 79.9 per cent in 2012.

“This is a complex moment in the history of our industry,” said Sebastian Dovey, managing partner at Scorpio. “The operating model is facing major growing pains to accommodate the expectations of financial groups for wealth management divisions to deliver sustained high margin results. The good news is client volumes and demand for wealth services are strengthening for many. But the bad news is the industry is still tackling major compression factors in terms of costs versus income. Some are not moving quickly enough with rates of growth slowing.”

The top ten global private banks by AuM, according to Scorpio's 2015 ranking (but representing 2014), are: UBS ($2.04 trillion); Morgan Stanley ($2.02 trillion); Bank of America Merrill Lynch ($1.95 trillion); Credit Suisse ($883.7 billion); Royal Bank of Canada ($704.4 billion); Citi ($550.5 billion); JP Morgan ($428 billion); BNP Paribas ($370.7 billion); HSBC ($365 billion); and Goldman Sachs ($363 billion). These players in AuM terms together manage 47.1 per cent of the overall wealth management market, with UBS holding a 9.9 per cent industry share.

The research firm noted that besides UBS and Morgan Stanley breaking through the $2 trillion AuM barrier, there were few changes in its 2015 ranking compared to 2014. Some European-headquartered firms felt the pinch of currency woes, however, while HSBC's AuM actually declined year-on-year by -4.5 per cent. On the other hand, AuM at BMO Financial Group – which claims 11th spot – shot up by 95.5 per cent off the back of its acquisition strategy during the year in review.

“Looking ahead, in the intensely competitive market it will be the details that make the margin of difference,” Dovey said. “The winners will be those that pay the most detailed attention to the optimised commercialisation of the client journey and benchmarking this among peers.”

As mentioned above, Scorpio said the US – according to various industry estimates – is the biggest market of opportunity for high net worth business. It emerged that the ten leading US firms by AuM logged an average growth of 7.1 per cent – double the global average. They are, in descending order: Morgan Stanley; Bank of America Merrill Lynch (which is close to hitting the $2 trillion mark); UBS Wealth Management Americas; Citi; JP Morgan; Goldman Sachs; Wells Fargo; Northern Trust; BNY Mellon Wealth Management; and Bessemer Trust.