BCG - The Boston Consulting Group

• Note to the Reader
• Preface
• Executive Summary
• The Global Wealth Market: Staying on the Path to Growth
• The Other Third of Global Wealth: Accessing Clients in Challenging Markets
• The Front Office: Organizing for Growth
• Moving Forward
• For Further Reading

The crisis that began with a sharp downturn in the U.S. housing market has since roiled financial markets around the world. Most wealth managers have been spared a direct hit, but many have become more concerned about finding new avenues for growth. Some wealth managers are exploring opportunities outside the most developed markets, which had the greatest exposure to the crisis. Others are looking for opportunities to improve their own organizations as a way to boost growth.

North America and Western Europe accounted for about two-thirds of the world's wealth in 2007. The remaining  third was spread across more challenging markets around the world, where wealth has generally been growing at much faster rates than in markets on the beaten path. The ongoing crisis, which continues to cast a pall over larger and more established wealth markets, is likely to further increase the unevenness in growth rates.

To reach what we call the other third of global wealth, many wealth managers will need to enter or expand their presence in unfamiliar markets. The questions surrounding  these opportunities are as complex as the markets themselves: In which regions is wealth expanding the fastest? Where can the highest concentrations of attractive high-net-worth clients be found? Which markets are easiest to enter? In each market, which client segments own most of the wealth? What kinds of investments do they prefer? What are the biggest barriers to growth?

Our study highlights a set of challenges that are common to developing wealth markets, but it also underscores the importance of knowing as much as possible about each specific market in order to reach potential clients. To this end, our study delves into individual markets in Asia-Pacific (China, India, and Japan), Latin America (Brazil and Mexico), and Eastern Europe (Russia and Poland). We also revisited the Middle East, a market we explored in depth in last year's report.

The other third of global wealth could be an attractive source of high-margin growth. Still, wealth managers should not expect emerging markets, which tend to have less developed supply and demand, to also have less competition. Instead, players need to prepare to fight pitched battles in these markets. They also need to have realistic expectations for growth, because many emerging markets are relatively small.

Our study also addresses some of the most pressing concerns about positioning and structuring the front office at wealth management organizations. The financial crisis has given a new sense of urgency to the questions that many wealth managers have about their front offices. Even in turbulent times, wealth management remains a relatively stable business and a valuable source of growing revenues. The front office is the focal point for client-facing capabilities that underpin that growth.

Wealth managers that hone their front offices and develop targeted strategies for new markets can set themselves up for strong growth, even in the face of continued financial turmoil.

Victor Aerni is a partner and managing director in the Zurich office of The Boston Consulting Group.

Christian de Juniac is a senior partner and managing director in the firm's London office.

Bruce Holley is a senior partner and managing director in the firm's New York office.

Tjun Tang is a partner and managing director in the firm's Hong Kong office and the head of BCG’s Financial Institutions practice in Greater China.