Avaloq, a tech provider to private banks such as HSBC, Deutsche Bank, Barclays and Edmond de Rothschild, released its Wealth Management Index today. It reveals a new geography of wealth management as modern markets pull away from traditional European powerhouses.
The latest Wealth Management Index from Zurich-headquartered
Avaloq reveals that the
US, Singapore and the United Arab Emirates rank ahead of the
UK. Drawing on more than 60 indicators, the index assesses
each market across five key dimensions: macroeconomic conditions,
financial market maturity, demographics, regulatory environment,
and technology and digital adoption.
The index compares factors shaping wealth management
activity across 15 markets: Belgium, Germany, Hong
Kong, Italy, Japan, Luxembourg, Malaysia, the Netherlands,
Singapore, Switzerland, Thailand, the US, UAE, UK, and
Vietnam.
Rather than measuring market size or assets under management, the
index evaluates the underlying conditions that support long-term
wealth management activity, offering a comparative view of each
market’s structural competitiveness, Avaloq said.
Such indices can feed into ideas about whether wealth managers,
looking at international expansion and strategy, should increase
resources in particular markets, including hiring staff, shut or
open booking centers, and make other moves. This jostling
for pre-eminence is a feature of globalization. Earlier
this year, data from Boston
Consulting Group showed that Hong Kong has now edged ahead of
Switzerland as the world”s largest cross-border financial hub.
Singapore is in third spot, and the US is in fourth.
Singapore performs consistently across all five dimensions, the
US stands out for the depth and participation of its financial
markets, while the UAE benefits from favorable demographics
and high levels of digital adoption.
Established financial centers such as the UK, Switzerland and
Luxembourg continue to benefit from mature financial sectors and
regulatory frameworks, while markets such as Singapore and the
UAE illustrate how balanced performance of growth drivers can
also create attractive wealth opportunities, the report found.
UK profile highlights strengths and
constraints
The UK sits within the middle tier of the overall index,
reflecting a mix of significant competitive advantages and
broader economic constraints, the firm said.
Its strongest performance comes from financial market maturity
and regulatory environment, underpinned by the depth of its
capital markets, established financial infrastructure and
supportive regulatory framework. The UK also performs strongly in
technology and digital adoption, reinforcing its position as one
of the most advanced wealth management centers.
However, the findings show that a sophisticated financial system
does not necessarily translate into equally strong macroeconomic
conditions. While the UK scored highly for the maturity of its
financial system, comparatively weaker macroeconomic indicators
weigh on its overall index performance. The UK is not unique in
this regard. Other wealth management centers, including Hong
Kong, Switzerland and Luxembourg, also display distinct
combinations of strengths and constraints. (The cost of living is
high in Switzerland, for example.)
“The findings highlight the enduring strengths of the UK’s wealth
management sector. Strong financial infrastructure, a supportive
regulatory framework and advanced digital capabilities continue
to provide an attractive foundation for wealth management
activity, even as macroeconomic conditions remain challenging,”
Suman Rao, managing director, UK and Ireland at Avaloq, said.
“For wealth managers, the opportunity lies in building on these
strengths through continued investment in technology, operational
efficiency and client experience to be better positioned to
capture future prospects.”