Boston Consulting Group issued its annual Global Wealth Report for 2024.
The report highlights that global net wealth staged a significant recovery in 2023, growing by 4.3% after a difficult year in 2022. Much of this growth was driven by a rebound in financial markets, with financial wealth rising by almost 7%.
North America and Western Europe saw particularly strong growth in financial wealth, up 8.9% and 4.4% respectively. In contrast, growth in the Asia-Pacific region was more subdued at 5.1%, primarily due to a slowdown in China. Cross-border wealth also grew by 5.1% in 2023, with Switzerland remaining the largest booking center worldwide.
Despite the market rebound, profitability continues to be a concern for wealth managers. Profit margins only improved slightly in 2023, as rising costs erased most of the gains from increased client business volume. The report suggests this long-term negative trend in profit margins is likely to continue unless the industry undergoes a transformation.
One potential catalyst for this transformation is the rise of generative AI (GenAI) technologies. The report highlights how GenAI could have a transformative impact across the wealth management value chain – from enhancing client acquisition and onboarding to improving internal operations and client servicing. Early pilots have shown significant potential, with use cases that could boost productivity, efficiency and the overall client experience.
To harness the full potential of GenAI, the report outlines six key action steps for wealth managers. These include setting a clear strategic vision, incorporating business feedback, and developing a comprehensive implementation roadmap. The report emphasizes that wealth managers who proactively embrace GenAI as part of their digital transformation efforts will be best positioned to define the future of the industry.
Here is a summary of the key points from the 2024 Global Wealth Report from Boston Consulting Group:
Global net wealth grew by 4.3% in 2023, recovering from a modest 0.2% increase in 2022. This was driven by a 6.9% rise in financial assets.
- North America and Western Europe saw the fastest growth in financial wealth, up 8.9% and 4.4% respectively. Asia-Pacific growth was slower at 5.1%.
- Cross-border wealth grew 5.1% in 2023. Switzerland remains the largest booking center, while the UAE had the highest percentage growth.
- Profitability remains a concern for wealth managers, with profit margins only improving slightly despite the market rebound.
- Generative AI (GenAI) is identified as having transformative potential across the wealth management value chain, from client acquisition to internal operations. Potential use cases could boost productivity and the client experience.
- Six key action steps are outlined to help wealth managers integrate GenAI into their digital transformation efforts.
Link to the full report: Global Wealth Report 2024
