High-End Investment Advice Grows Globally

The private banking industry is growing at a level not seen since the late 1990s, according to Scorpio Partnership, a London-based consultancy.

As the biggest private banks continue to make inroads with wealthy clients in the United States, their market share is steadily increasing. According to the firm’s annual survey, private banks now manage more than $4.6 trillion in financial assets, and the largest one is UBS, which has more than $1 trillion in financial assets worldwide.

The total amount of money invested by private banks on behalf of their clients rose 14.4 percent in 2003, which, according to Scorpio, reflects not only an increase in the market but also an influx of new money into these firms.

That makes sense—the large Wall Street institutions, which include some of the nation’s largest broker/dealers, have been increasingly focused on attracting assets from ultra-high-net-worth individuals and have been tailoring their services more directly to those clients. Four of the five largest U.S. broker/dealers—UBS, Merrill Lynch, Morgan Stanley and Citigroup—are also among the top 10 private banks.

“Many firms and advisors have the vision to do this, but they don’t yet have the tools and training to make it a reality,” says John Bowen, president of CEG Worldwide, a wealth management-consulting firm.

For example, UBS recently launched its U.S.-based private wealth management group, headed by two former Merrill Lynch executives, and is building a network of 100 to 150 teams of wealth managers in large money centers throughout the country. Not to be outdone, Merrill recently rebranded its own wealth management group, calling it a “private banking” group now, to reflect the separation between that group and the rest of the retail sales force. Merrill is the second-largest private bank worldwide, with $935 billion in assets, followed by Credit Suisse, Deutsche Bank, HSBC and Citigroup. During the last few years, firms have increased training budgets to focus more on wealth management and capture more of this market, because, as Scorpio’s survey shows, the industry is rather fractured.

“There are probably 100,000 [U.S.] investors that have investable assets north of $10 million, which is representative of about a $2.8 trillion investment opportunity,” said Michael Schweitzer, managing director and co-head of private wealth services at UBS, in an interview earlier this year. “In the broad sense, we’re all kind of pursuing that.”