Since our previous edition in 2021, the COVID-19 pandemic has ended and there has been a resurgence of inflation and increase in geopolitical tensions. Rising interest rates have played a significant role in wealth management, influencing investment strategies, portfolio performance and financial planning decisions. Several notable bank failures occurred concurrently, causing disruption in the wealth management businesses. These failures were mostly due to liquidity mismatches, mishandling of interest rate risks and broader economic pressures. In such a dynamic and uncertain environment, international wealth management has a crucial role in protecting, preserving and growing client wealth.
As the world changes quickly, so too must wealth managers. The improving macro environment for wealth generation in 2023 is driving growth levels back to the historical trend, after a setback in 2022. Moreover, the advent of new technologies, particularly generative AI, is opening up new possibilities. Technology-driven interactions between clients and banks are becoming the norm, necessitating costly investments in the Digital Transformation of business. Questions arise about whether these investments in differentiated propositions and partnerships are being spent wisely and if they will lead to improved performance - or whether they are just table stakes.
To face these challenges and capture new pockets of growth, international wealth managers are prioritising innovative collaboration models with clients and local partners, more sophisticated Products Offerings, automation for efficiency and robust yet flexible technological platforms.
“Switzerland continues to lead the competitiveness ranking, followed by Singapore. The US advances to third Place.”
Competitiveness is a measure of the long-term prospects of a wealth management centre. While wealth managers can overcome adverse business conditions, especially in the short term, providers and clients can be expected to gravitate towards more competitive Locations over time. The competitiveness ranking includes only the leading centres, where competition is fierce and constant improvement is essential for All centres to avoid falling behind. The Market is continually evolving, leading to changes in competitive conditions. This edition adjusts the assessment of international capital flows, cost drivers and bureaucracy costs and introduces indicators related to AI.
In the 2024 ranking, Switzerland keeps its leading position with Singapore following closely behind, as in previous years. Notably, the US has climbed to third in the ranking and Hong Kong moves down to fourth Place, indicating a persistent long-term development. The next four centres are All Close together, but with the UAE moving up one Place and the UK dropping one.
Given the highly competitive Global wealth management Market, every centre should target continued progress, regardless of its present position.
Overall competitiveness rank
“Switzerland remains the largest centre, although closely followed by the UK and US”
With USD2.2tn of international assets, Switzerland remains the largest booking centre - slightly ahead of the UK by only USD8bn, which comes in second Place. Total IMV reached USD10.1tn in 2023, an increase of 2.9% compared to the previous year. While total IMV has remained relatively stable over the past five years, the share of IMV per centre has changed. Switzerland (21.4% in 2023 vs. 23.7% in 2020) and Panama & Caribbean (1.7% in 2023 vs. 3.3% in 2020) lost Market share while the UK (21.4% in 2023 vs. 18.8% in 2020), the US (20.8% in 2023 vs. 18.2% in 2020), Hong Kong (9.9% in 2023 vs. 9.1% in 2020) and Luxembourg (4.6% in 2023 vs. 4.2% in 2020) All gained. Singapore (7.2% in 2023 and 2020) and Bahrain (1.1% in 2023 vs. 1.0% in 2020) both remained stable.
IMV growth recovers after dropping significantly in 2022
2022 was marked by a significant fall in IMV, which dropped by 15.6% compared to the previous year. This was contrary to expectations given that there was a significant increase in geopolitical uncertainty in that year and IMV typically tends to increase in times of uncertainty, as wealthy individuals seek to park their assets in safe havens. However, the fall in IMV can be explained by the fact that the US dollar appreciated in 2022, thereby reducing the value of IMV on conversion of assets from local currency into USD. The reverse occurred in 2023, when the US dollar depreciated in value back to ’normal levels’, increasing IMV on conversion of assets from local currency into USD. As a result, IMV increased in 2023 by 2.9% compared to the previous year.
Another key observation is the continuing fall in the share of IMV as a percentage of total financial wealth, from 5.3% in 2013 to 3.7% in 2023. This demonstrates a growing preference for local banking over international banking. A possible explanation for this is that wealthy individuals and their families may be less motivated to move assets to an international Location to cut their overall tax liabilities, as the difference in taxation levels between home and foreign countries narrows. As a result, wealth managers focused on international clients must constantly adapt their go-to-Market, Products and booking centre strategies.
Strategic priorities and enablers to succeed
Globally active wealth managers must adapt to the evolving needs of local and international clients and understand shifting demographics and preferences. Focusing on wealth creation Region such as North America and Asia Pacific would enhance revenue streams and strengthen Market positioning - whereby wealth managers should consider both local and international strategies. Offerings access to differentiated investments, such as private Market opportunities, is crucial for attracting and retaining Ultra High Net Worth Individuals (UHNWIs). Additionally, wealth managers should offer alpha generating Products, access to Private Equity or differentiated Real Estate investment opportunities, to justify fees and retain clients.
To thrive in competitive international Market, wealth managers should consider five enablers for success:
To meet the diverse needs of clients, deliver a Hybrid client-advisor experience by combining digital convenience with personalised advisory Services.
Pursue inorganic growth through M&A to expand Market presence and Capabilities, enabled by effective integration. Those players that excel in implementing the other enablers will be best positioned both to afford acquisitions and to effectively integrate them, thereby creating superior scale on their platforms.
Streamline operations, by automating routine tasks and optimising processes to enhance efficiency and Services delivery.
Develop a scalable and agile technology architecture to support growth and adaptability.
Enhance Data management and integrate GenAI to derive actionable insights and personalise client Services, to achieve sustained competitive advantage.
The future of Global wealth management is poised to be shaped by significant technological advancements, regulatory changes, geopolitical risks and macroeconomic shifts. As wealth centres navigate these dynamics, Region like the UK and Hong Kong may face long-term challenges to their competitiveness, while Singapore and the US appear positioned to emerge as potential leaders. Switzerland, today’s leader, must focus on enhancing its regulatory frameworks and re-establish trust following the Credits Suisse debacle and invest in Digital Transformation and optimising operational efficiencies, to defend its leading status in the Global Market