According to a recent report published by Allied Market Research, titled, “Wealth Management Market by Business Model, Provider, and End-user Type: Global Opportunity Analysis and Industry Forecast, 2021-2030,” the global wealth management market size was valued at $1.25 trillion in 2020, and is projected to reach $3.43 trillion by 2030, growing at a CAGR of 10.7% from 2021 to 2030.
Rapid increase in need for alternative investments, emergence of FinTechs (Financial technology), and growing demand for wealth management products & services drive the growth of the global wealth management market. Wealth management provides wide range of offerings such as financial advice management, portfolio, accounting, trading management, performance management, risk & compliance management, reporting, and others. The demand for wealth management is growing exponentially due to several benefits such as helping in eliminating financial stress & creating financial plans primarily for high net worth individuals.
Furthermore, the global wealth management market is in its developing phase, and exhibits high growth potential, due to rapid adoption of robo-advisor technology among wealth management firms, rise in need for operational efficiency & transparency in providing wealth management product lines, and surge in demand for customized advisory among high net worth individuals globally.
Based on business model, the human advisory segment is growing in the market as these advisors serve a changing client base in a variety of demographics and provides fluidity in the approach towards managing wealth.
Region wise, North America dominated the market in 2020, and is expected to maintain this wealth management market trends during the forecast period. This is attributed to presence of high number of high net worth individuals and increasing number of competition among banks such as UBS, Morgan Stanley, and Bank of America Corporation to offer the maximum benefits to their clients. This is a major growth factor for the wealth management services in North America. However, Asia-Pacific is expected to grow at the highest CAGR during the forecast period, as several high net worth & ultra-high net worth individuals continue to demand wealth management product lines in the region.
COVID-19 Impact Analysis
The COVID-19 pandemic has a negative impact on the wealth management market, owing to economic slowdown, unpredictability in global financial sectors, and highly volatile market. The pandemic has affected both investors and wealth management firms and investors experienced direct impacts on their existing portfolios. Moreover, firms with larger customer bases have relied on electronic means through artificial intelligence (AI), or social media to connect with their clients, which has become challenging factors to the wealth management firms. Therefore, demand for wealth management product offerings has declined tremendously during the global health Crisis.
The wealth management industry has been severely affected, due to sudden business shutdown, economic slowdown, unprecedented recession, and instability in individuals’ income levels. Moreover, improving approaches to cost including tactical cost cuts, transforming the operating model, developing differentiated product offerings, and considering inorganic growth opportunities & strategic partnerships has become challenging factors for the wealth management companies. As a result, these major factors affected the growth of the wealth management market during the pandemic situation.
Key findings of the study
- By business model, the human advisory segment led the highest wealth management market share, in terms of revenue in 2020.
- On the basis of provider, the FinTech advisors segment is expected to exhibit the fastest wealth management market growth rate during the forecast period.
- Region wise, North America generated the highest revenue in 2020.
The key players operating in the wealth management market analysis include Bank of America Corporation, BNP Paribas, Charles Schwab & Co., Inc., Citigroup Inc., CREDIT SUISSE GROUP AG, Goldman Sachs, JPMorgan Chase & Co., Julius Baer Group, Morgan Stanley, and UBS. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.