But other stories have been happier: there have been a number of new firms launched or expanded; some potentially beneficial merger and acquisition deals were agreed (as always, we have to wait to see how joyful such marriages prove), and there is the continued development of mobile apps and related technologies. In Asia, Latin America and even in more developed countries, money is being made, driving the growth of the industry overall.

And despite the fears at the start of 2012, the eurozone is still alive, although the feeling might be that the patient is still in intensive care. The problems of debts in Western democracies are still formidable: at the time of writing, US policymakers have still to reach a deal on how to avoid falling over a “fiscal cliff” of automatic spending cuts and tax hikes at the start of 2013. China has a new leadership (although democracy had not much to do with it); Japan has elected a new government keen on monetary reflation; France elected a tax-raising socialist government (boosting London’s already-hot property market). In Switzerland, there are glimmers that this proudly independent nation, long used to its bank secrecy laws, is adjusting to a climate of increased demand for transparency. For all the talk there is about a mass exodus from Geneva and Zurich and a shift to Asia, some of that noise might be exaggerated. The Alpine state is a resilient place with a well educated workforce and a solid rule of law - hardly ingredients for serious decline.

Asia still ascending

In Asia, the large Western and domestic banks continued to expand some of their operations. In the case of Swiss firm Vontobel, for example, it partnered up with ANZ, the Australia/New Zealand firm in the autumn, to get itself more of a foothold in the Asia-Pacific market. This follows a similar kind of deal between Julius Baer and Australia’s Macquarie in 2011. Regulators in Hong Kong and Singapore, meanwhile, have not been shy of cracking the whip against behavioural lapses: Hong Kong’s regulator in April moved to tighten the screws over money laundering, for example. Meanwhile, reports suggest that one area of potentially strong growth is the Asian family office market. With so many businesses being family-controlled in Asia, the market for single and multi-family offices looks big. Many of the big banks are targeting this market now and expanded further in 2012. 

The North America market has shown more signs of progress this year, emerging from a period when the industry focused on keeping its head above water. The implications of regulatory changes such as the Dodd-Frank legislation continue to be digested. As this publication highlighted in a number of reports from across the US, the entrepreneurial vigour of US wealth management cannot be underestimated. Firms such as Charles Schwab are taking a determined move to develop sectors such as the RIA market; the sector for dealing with ultra high net worth clients is seeing developments from big banks, such as Wells Fargo with its Abbot Downing unit. 

FATCA Attack!

From the US, the acronym “FATCA” (Foreign Account Taxation Compliance Act) has become as well known as RDR or MiFID. The US act, which in its first versions presented a scary picture of onerous compliance burdens on foreign financial institutions, has arguably been made less frightening through some delays to rollouts of implementation and through treaties between the US and several major economic powers. Fears that expat Americans would be denied financial services or be hit with painful tax bills might have been overblown, but when a country such as the US is as desperate for revenues as the US now is, fears will remain.

In Latin America, the continent's largest economy, Brazil, is becoming a place to watch not only as a source of wealth management client, but as moves have shown, a source of financial institution wishing to break into other markets. Brazil's Safra Bank, for example, now owns the controlling stake in Switzerland's Sarasin. Maybe other LatAm banking names will be showing up in the European M&A stakes.

And besides the eurozone crisis, another area of turmoil - the Middle East and North Africa - has had its impact on the industry. Some of the promise of the so-called "Arab Spring" has faded; London and Switzerland, for example, have witnessed the impact of wealthy MENA region citizens seeking safe havens for their money. More positively, another continued growth area - albeit not spectacular - appears to have been the market for Shariah-compliant wealth management.

RDR

In the UK market, perhaps the biggest news story of all has been preparation – or concerns about the lack thereof – for the Retail Distribution Review programme of reforms to UK wealth management advice. In essence, the RDR aims to squash the use of trail commissions by advisors, and is about encouraging fee-based payment for those wishing to retain the name “independent” in their business. The RDR has encouraged firms to merge, be acquired or buy rivals to obtain economies of scale. Discretionary asset management has been outsourced; new “RDR share classes” for financial products have been launched in recent weeks.

In late November, Deloitte warned about the possible unintended consequences of the RDR, predicting that after its implementation a third of consumers will opt for do-it-yourself financial planning to avoid paying advisor fees. A poll of 2,000 UK residents found that 32 per cent are likely to go the DIY route for financial planning and investment product research. Having chosen investment products themselves, 27 per cent of respondents said that they would go direct to the provider – cutting out the advisor as the “middle man”. This survey may be a warning of things to come.

Many of the big banks this publication speaks to, such as UBS, Credit Suisse, JP Morgan and Coutts, say they are not just ready for RDR but will fare well in a market where professionalism and objective financial advice are explicitly paid for. Time will tell. This publication will be keeping a beady eye on progress and, on the other side, watching to see if there really is going to be a major problem of “orphan clients” cast aside by firms requiring higher minimums of assets to stay viable. There are already signs that such things are happening: the UK wealth advisor, Bestinvest, has even set up a new service to cater for such expected castaways.