Boston Consulting Group Tells Asset Managers to Try a Bit Harder
BCG sees a fast-growing universe of uninvested wealth that the fund industry should wake up to.
New competitors and fee pricing may be taking a bite out of profits for asset managers, but the total amount of personal finance wealth up for grabs grew by 12 percent in U.S. dollar terms to $202 trillion in 2017. Investable assets represented 60 percent of the global total, and upwards of 80 percent in certain emerging markets could be tapped by managers.
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According to the Boston Consulting Group’s annual report on wealth management, the expansion of the market is more than double the year before and is represents the strongest rate of growth in five years. The trick for asset managers wanting to get a piece of the growing market is to tailor their investments to individual clients by forging tight connections to advisors, BCG advised.
“Asset managers need to change the way they deliver funds to clients,” said Anna Zakrzewski, partner and global leader in the wealth management practice, at a panel discussion Thursday. “Before it was one size fits all. Now managers need to put forward funds that are increasingly tailored to an individual,” she added. To do that, managers need to better understand the ultimate clients of their products.
North America represented the largest share of global wealth with $86 trillion, but BCG expected China will create more new wealth between now and 2022. Personal capital in China will be increasingly available to global asset managers as the country continues to liberalize rules and regulations governing the activities of foreign investors.
If recent trends persist, BCG expected global wealth to grow at a compounded annual rate of 7 percent from 2017 to 2022 in U.S. dollar terms.
Asset managers have the largest opportunity in emerging markets, where only 21 percent of total wealth was tied up private companies, life insurance, pensions, and other illiquid assets. The remaining 79 percent was in play.
In the developed world, however, nearly half (46 percent) of the total is already locked up and thus difficult to tap.