The global wealth management industry has continued to grow fast, with a 14 per cent median increase in assets under management in base currency terms, according to the Private Banking Benchmark 2007 from consultancy Scorpio Partnership. This asset growth, driven by the global equity markets and net new money, has combined with improved efficiencies to produce median growth of 24 per cent in operating profits across the industry. This is Scorpio’s sixth study of the international private banking and high net worth wealth management industry. This year it covers a record 180 private banking entities managing a total of $10.8 trillion of assets. It looks at both the global wealth management market and the performance and characteristics of individual wealth managers. The trillion-dollar assets under management league has three members: UBS top, despite slower growth than last year, then Citigroup and Merrill Lynch, while Swiss partnership bank Pictet has leapt into the top 10, with an impressive growth of 30.5 per cent in Swiss franc terms. The private banking and wealth management industry remains very fragmented, however: although the top 10 banks manage some 63 per cent of the total assets in the study, they in fact manage less than 20 per cent of the estimated universe of high net worth assets according to market research data. Ted Wilson, consultant at Scorpio, said: “There is a strong correlation between assets under management and global market indices and this will eventually test the stickiness of these assets. When the markets eventually turn south, clients will not necessarily see private banks as the safest option.” The study highlights that there is still a lot of room for improvement and differentiation in all segments of the industry. Wealth managers meet new challenges with varying degrees of success, which can be measured by certain key performance indicators: these are developed further in the 2007 study and include the cost-income ratio, the gross margin on managed assets, the average assets per relationship, regional distribution of assets and the number of clients per staff member. For example, cost-income ratios — with a 2006 industry median of 63 per cent — have been improving constantly. There are, however, dramatic variations in the actual numbers, from less than 40 per cent for the most efficient to more than 90 per cent for the least.