Wealth is not one thing
What should have always been clear, but is becoming clearer, is that “wealth” is not just one blob. There is a huge level of difference and nuance within the band.
A lot of new money is coming into the sector, whether that be first generational, younger generations inheriting, or just a more inclusive sector. Wealth managers and advisers are going to be seeing a number of different faces in their remote meetings.
More on this is discussed with Royal Bank of Canada in this very issue.
Attracting these new members of the wealthy is tricky. New generations have different demands to the previous. Can incumbent private banks, the old guard, keep up with these changing needs? Many are certainly trying, but perhaps a Gen Y, or even Gen Z, HNWI does not want to go with a traditional player? Firms like Fortu Wealth (covered in this issue) are launching to try and fill this gap and plant themselves as a new generations first private bank.
Younger investors are fond of ESG and sustainable investments, but is that a differentiator anymore?
Old firms shrinking
As new firms join the sector, incumbents have shown signs of cutting back.
JPMorgan Chase is reportedly withdrawing from its private banking operations in Mexico and has entered into an agreement to refer the business to BBVA Mexico.
The move to exit Latin America’s second-largest economy comes as rich customers look to transfer their funds in some Latin America markets to world capitals, reported Bloomberg citing people familiar with the issue.
This was partly triggered by president Andres Manuel Lopez Obrador’s populist policies that includes a tax clampdown.
The bank will continue to cater to its clients from Mexico via its platform outside of the country, according to the report. The news was not confirmed by the bank.
UBS is reportedly weighing a sale of its wealth management arm in Spain as part of the group’s review under new CEO Ralph Hamers.
Options for the Spanish unit may include a divestiture or exit, said reports citing people familiar with the issue.
The business, which manages around CHF10bn ($11bn) in assets, may interest domestic Spanish lenders though UBS has not started talks with any potential buyer, according to the report.
No official confirmation came from UBS on the matter.
At present, Hamers is reviewing all of the Zurich-based bank’s businesses and has questioned the need of a domestic footprint in markets where a local partnership could be more effective in serving affluent customers.
Last December, UBS agreed to offload its domestic wealth management business in Austria to Liechtenstein-based private bank LGT. Around 60 employees of the UBS unit will join LGT as part of the deal.
Furthermore, Wells Fargo has agreed the sale of Wells Fargo Asset Management (WFAM) for $2.1bn to GTCR and Reverence Capital Partners.
WFAM is the asset management arm of the wider Wells Fargo group and comprises of Wells Fargo Funds Management, Wells Capital Management Incorporated, and Wells Fargo Asset Management (International).
As part of the deal, Wells Fargo will own a 9.9% equity interest and also continue as a client and distribution partner.
As old firms get smaller and new players get bigger, we are sure to see a battle for the middle ground.
Patrick Brusnahan, Editor