Assets under management of the world’s wealth management industry rose by 17 per cent to $16.5 trillion in 2010 from a year ago, but the industry has become far less efficient and margins are under pressure, according to a new survey of almost 230 institutions tracked by Scorpio Partnership.

Its Key Performance Indicator of profitability has dropped by a median of 35 per cent from its level in 2009. Cost/income ratios have, on average, risen to 78.2 per cent from 72.4 per cent a year before, while net new money inflows stood at just $900 million, or a fall of 60 per cent from a year before.

“The wealth management engine is still misfiring for many. On the one hand the asset management machine is working and this is shoring up numbers. While, for virtually all banks, in terms of attracting new business it has been a case of no net new money,” said Seb Dovey, managing partner at Scorpio.

“Significantly, our global HNW data shows there are strong signs of wealth creation even in these complex markets and yet new clients are still holding back from opening accounts with the industry,” Dovey said.

Rankings of the top 10 managers held steady, with the 10 largest firms accounting for about $8.733 trillion, or 64 per cent of the total fee-based AuM of the sector; the top 20 managers $10.451 trillion, or 77 per cent of the total.

The biggest players are, in descending order of size: Bank of America, UBS, Morgan Stanley, Wells Fargo, Credit Suisse, JP Morgan, Royal Bank of Canada, HSBC, Deutsche Bank, Pictet. BofA has more than 10 per cent of all such private banking assets. (However, it remains a predominantly domestic US player, while UBS arguably remains the most international).

The assets under management overseen by wealth managers now account for 42 per cent of the world’s HNW assets, suggesting that the industry has so far only managed to control less than half of the “share of wallet” of such assets, the report found.

Scorpio argues that according to its analysis of the industry, it could potentially oversee $26 trillion of client money, so that bankable assets would be two thirds of the total, leaving significant room for growth.