Wealth managers report client attrition in the first quarter

According to the Global Private Banking and Wealth Management Survey released today by PricewaterhouseCoopers LLP, the average U.S. wealth management firm experienced client attrition of 6% to 10% and assets attrition of 11% to 25%.

The report stated that chief financial officers of wealth management firms are forecasting a 15% increase in new assets under management, and revenue growth of 13% through the rest of this year. However, financial officers predicted no growth in profits this year “before tax growth.”

Thus, the most profitable segment of the market includes clients with net assets of $500,000 to $20 million, according to the survey of 238 wealth managers in more than 40 countries.

Besides, the study concluded that in order to remain competitive, wealth management firms will also need to slash costs by 20%, while at the same time increasing investments in technology, due diligence and reporting.

According to the accounting and consulting firm`s study, only 20% of chief executives consider their client relationship managers “to be of high caliber in terms of meeting their client needs.”

C. Steven Crosby, leader of the U.S. private banking and wealth management practice for New York-based PricewaterhouseCoopers, says that the pressures on the industry may force consolidation.

In addition, the survey found “no direct link between size and profitability” for wealth management firms, what does not appear an attractive goal for wealth managers to pursue.