OREANDA-NEWS. Wealth managers and private banks are anticipating unprecedented growth over the next three years, according to the latest findings from PricewaterhouseCoopers 2007 Global Private Banking/Wealth Management Survey, with chief executives predicting that, on average, their assets under management will increase at a staggering rate of 30% per annum, reported the press-centre of  PricewaterhouseCoopers.

The survey, which captured the views of senior executives of 265 organisations within the global private banking and wealth management industry, highlighted that markets in Asia Pacific and Eastern Europe are expanding the fastest, as organisations rush to service the new wealth creators in these regions. In Asia Pacific, CEOs expect their organisations’ assets under management to grow at an annual rate of 34% and in Russia between 30 and 50%. CEOs’ plans for growth include entry into these lucrative markets, including by acquisition. Almost 90% of CEOs feel that there will be at least some, if not significant, consolidation in the industry and more than 50% of CEOs plan to open operations in new countries over the next two years to access new clients.

PricewaterhouseCoopers latest findings also revealed a real commitment among wealth managers to increase ‘share of wallet’, compared to previous surveys. Share of wallet has emerged as the new key performance indicator as wealth managers seek to become trusted advisers and gain new clients. Currently under 50% of wealth managers hold more than 40% of their clients’ investable wealth but over the next three years this proportion is estimated to increase dramatically to almost 80% of wealth managers holding over 40% of a client’s wealth.

Ekaterina Lazorina, Partner, PricewaterhouseCoopers, comments on the situation in the Russian market:

“In connection with the positive economic situation and the overall increase in the wealth of the Russian population, the Russian market presents unique opportunities for wealth management companies. Leading global providers of private banking services have already expressed an interest in the Russian market, and some have begun to do business in Russia over the past year. With the arrival of international banks the Russian market will become more mature, will witness expanded product lines and more sophisticated service offerings. This should give Russian banks the motivation to develop their infrastructure, to expand the range of financial solutions they offer and to raise the overall efficiency of their operations. Also, as is the case elsewhere, the most important task for Russian banks will be to attract, train and retain client managers”.

The key to wealth managers achieving their aggressive growth targets is their ability to recruit and retain quality client relationship managers (CRMs) but there are not enough quality people to support the market’s anticipated growth. Only 26% of CEOs claim to be very confident that they will be able to recruit enough CRMs over the next three years to support their growth plans and just 17% rate CRMs as having very high ability to manage the needs of their clients.

Compared with PricewaterhouseCoopers 2005 survey, there has been a quantum shift in the importance placed on IT efficiency to support the increased effectiveness of CRMs and the impact of branding to attract new clients. Wealth managers are investing heavily in both areas as they rapidly become a battlefield for differentiation and profitability. However, the survey suggests that more work needs to be done, with nearly 30% of chief operating officers admitting that not all their current IT systems are fit for purpose. The sums involved will be substantial and will put a strain upon profitability unless anticipated growth targets are realised.