A bumper year for the world of wealth

The year 2014 saw the emergence of some key trends in wealth management, which will continue to re-align the private client world.

January: The year kicked off with a major reorientation from one of the global wealth giants. The world learned that Barclays was planning to stop serving clients with less than £500,000 (€646,00). The move was brought about from the additional costs of regulation, which caused many wealth managers to reconsider their services for the mass affluent segment. 

It was one of two very significant strategic decisions for Barclays. Later in 2014, it was revealed the Wealth and Investment Management division would cease to stand alone but would be subsumed into personal and corporate banking, alongside UK and retail banking operations. 

Following on from the 2013 trend, acquisitions were also rife in 2014. One of the first of the year was Falcon Private Bank’s sale of its Hong Kong business to EFG International. Falcon suggested at the time that its decision to leave one of Asia’s main wealth hubs was to focus more comprehensively on the Middle East, Africa and Eastern Europe. 

February: Emerging markets remained in focus well into Q1. Standard Chartered announced plans to sell its Swiss private bank, cutting back on non-core operations to prioritise Asia. 

March: Credit Suisse announced it would redefine its strategy for Africa by withdrawing from Angola, the DRC and smaller African markets. In March, the firm began to focus more intently on clients in South Africa, Kenya and Nigeria. 

One of the few firms bucking the APAC trend was Société Générale, which exited private banking activities in Singapore and Hong Kong. The company sold its Asian operations to DBS. The transaction was stated to be for a cash consideration in the region of $220m (€193m). 

April: Merrill Lynch launched their ‘recognition’ club for brokers bringing in more than $8m a year from clients. Until this point, Merrill’s top honour was its ‘Circle of Champions’ for advisers who produced $4m of commissions and fees.

Merrill was not the only firm to dedicate focus to the theme of adviser experience in 2014. Earlier in the year, Credit Suisse created a ‘wealth school’ for advisers in Singapore. 

The objective of the facility was training employees and improving standards for client-facing staff. The Swiss giant anticipated 3,500 local employees would benefit from courses over the year. 

May: A groundbreaking deal saw 47 countries sign an accord to share tax information of suspected tax cheats automatically once a year. Launching in 2017, the information to be exchanged will include bank balances, interest incomes, dividends and the proceeds of sales, all of which can be used to establish capital-gains tax balances. 

Significantly, the UK (including protectorates Jersey and the Cayman Islands), Switzerland and Singapore are all part of the agreement, leading to questions over the future of offshore financial centres. 

June: At the year’s halfway mark some good news seeped through. The World Wealth Report 2014 from Capgemini and RBC Wealth Management revealed global wealth had surged. HNW wealth increased in Europe, despite the poor economic context. By contrast, in Latin America, poor equity markets impacted investments and forced many to move holdings to offshore safety nets. 

July: The Scorpio Partnership Private Banking Benchmark noted that banks increased assets under management and net new money. Despite this, there were also indications that the industry was struggling with high cost-income ratios and specific client segments. 

This month also saw Italian insurance giants Generali finally sell their Swiss private banking unit BSI Group to Grupo BTG Pactual for SFr1.5bn (€1.25bn). The sale marks a first foray into Europe for the Brazilian banking group. At the point of acquisition, BSI Group had SFr90bn in assets under management with more than 2,000 employees. 

August: China Merchants Bank opened its first offshore private banking unit in Hong Kong at the offices of its subsidiary Wing Lung Bank, acquired in 2008. The firm, which already had 24 private banking centres on the mainland, will offer financial solutions and wealth management services to HNW clients in Hong Kong and the mainland. 

September: BNP Paribas announced that its responsible investments had crossed the Ä3bn mark, a 50 per cent per year increase in clients’ assets since 2010.  

October: Wealth managers jostled to announce digital developments. In the UK, Lloyds Banking Group revealed plans to revamp their digital delivery of client experience. The projected cost of the project was £1bn and 9,000 jobs and 150 branches will be cut. 

Across the pond, the US market was in the midst of its fixation on the ‘robo-adviser’. Betterment, one of the most widely known platforms in the market, announced a partnership with Fidelity Investments to enable Fidelity-affiliated advisers to use its services to support lower value clients. Merrill Lynch launched its new investment management platform ‘Merrill Lynch One’ to offer clients a single view of holdings across all accounts.

November: The multi-family office space witnessed the second of two significant deals. Stonehage and Fleming, Family and Partners joined forces in a share exchange deal. Earlier in the year, SandAire snapped up rival Lord North Street creating a business spanning London and Singapore. 

December: The big news at the end of the year was that Royal Bank of Scotland was formally launching the sale of the international private banking arm of Coutts. Potential bidders emerged including Credit Suisse, Julius Baer, Malayan Banking, DBS Group Holdings, United Overseas Bank and Société Générale. It is rumoured Coutts international could fetch £1bn. 

The world of wealth in 2014 was hectic and 2015 promises to be just as manic.   

Annie Catchpole is an associate at wealth management think-tank Scorpio Partnership