2023-07-19 14:44:00
Last year something happened that had never happened in almost 15 years before: global financial wealth fell. It fell nearly 4 percent to $255 trillion from $264 trillion a year earlier. Particularly affected: North America, where financial assets fell by around 8 percent. There was also a decline in Western Europe and Eastern Europe, at -2.8 and -1.5 percent respectively. In Asia-Pacific (2.4 percent), Japan (0.8 percent), Central and East Africa (7.5 percent) and Latin America (9.0 percent), considerable increases in wealth were observed, according to an analysis by the Boston Consulting Group shows.
Asian booking centers are becoming more important
There were positive growth rates globally for real investments – the value of investments such as real estate, art, jewellery, premium antiques or even wine rose by 5.5 percent. So if the value of financial assets and real assets are added together in 2022, global wealth actually increased – only by one percent, but at $516 trillion it was just above the value from 2021.
The current economic situation may also have had an impact on how wealthy people move their capital. While Switzerland was still the most important booking center in 2022 with assets of $2.4 trillion, the authors of the study expect that to change by 2027. Then Hong Kong might have overtaken Switzerland – because the analysts expect average annual growth of 7.6 percent, while Switzerland should only rank at 3 percent. Accordingly, growth in the booking centers Singapore (9.0 percent) and the United Arab Emirates (9.6 percent) might be particularly high.
Wealth manager profit margins fell globally – but rose in Western Europe
The global business volume of wealth managers, which the analysts from the Boston Consulting Group define as assets and liabilities under management, fell by 11.7 percent globally in 2022 – mainly because assets under management shrank significantly. The pre-tax profit margin also deteriorated to 18.9 basis points. The picture is different in Western Europe: Here the business volume fell by just under 4 percent, while at the same time revenues – which are the highest average values in the world – rose faster than costs. Ultimately, this resulted in Western European wealth managers improving pre-tax margin to 20.7 basis points.
In an international comparison, the profit margins in 2022 were only better in Latin America than in Western Europe. The development in Asia-Pacific is remarkable: Even if the region is becoming more important as a booking center, profit margins have clearly fallen in recent years. In 2022, the average value was only 14.9 basis points, also because costs have recently increased significantly.
The full Boston Consulting Group study can be found here.
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