Equity Market Rally Helped Boost Assets At Largest Wealth Managers In Q2

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The strong rally in equity markets over the second quarter, coupled with a continued inflow of assets globally, helped boost client assets held by the six largest wealth managers in the world. However, with the U.S. dollar strengthening compared to the Swiss Franc in Q2, total client assets for Swiss banking giants UBS and Credit Suisse nudged lower in dollar terms. However, UBS retained the top spot among all wealth managers globally with total client assets of nearly $2.7 trillion at the end of Q2 2018 – comfortably ahead of second-ranked Morgan Stanley which reported just over $2.4 trillion in client assets.

We capture the impact of changes in wealth management revenues on the share price of the six largest wealth managers in the world – Bank of America-Merrill LynchUBSMorgan StanleyWells FargoJPMorgan Chase and Credit Suisse – in a series of interactive dashboards.

* BofA-Merrill Lynch’s total figure excludes U.S. Trust client assets (as the unit deals with institutional clients)

The table above has been compiled using quarterly client assets figures disclosed by each of these banks over the last five quarters, and includes invested assets (discretionary and fee-based) as well as other brokerage assets associated with their private wealth management operations globally.

The dominance of the top three players in the global wealth management industry is evidenced by the fact that their combined client assets at the end of Q2 2018 stood at over $7.2 trillion – a good 85% higher than the $3.9 trillion in total client assets managed by the next three largest players. Notably, four of the six largest wealth managers are based in the U.S. This can be attributed to the fact that the U.S. has the largest number of high net worth individuals (HNIs) globally by far. While the two Swiss banks garner a significant share of the European wealth management industry, UBS figures at the top of the list thanks to its sizable presence in the U.S.

There was a decline in retail client activity between March and May this year, which had a negative impact on total client assets for large U.S. banks. A reduction in security valuations also played a role in this decline. At the same time, a weaker U.S. dollar had a positive impact on the total client assets for UBS and Credit Suisse at the end of Q1. However, as these two trends reversed in Q2, the U.S. banking giants returned to growth while the Swiss banks saw a reduction in client assets in dollar terms. Wells Fargo stands out here as the only U.S. bank with nearly no change in its client assets over the last few months. We attribute this to a reduction in client confidence in Wells Fargo in the wake of its various scandals, while the Fed’s restriction order weighs on its growth across divisions.

Going forward, we expect upbeat economic conditions in the U.S. to continue to fuel growth in client assets for all these banks. Morgan Stanley in particular will reap the benefits of its increased push into retail banking over recent years – something that should help it cross-sell more wealth management services to existing clients.

Details about how changes to Wealth Management revenues affect the share price of these banks can be found in our interactive model for Bank of America-Merrill Lynch | UBS | Morgan Stanley | Wells Fargo | JPMorgan Chase | Credit Suisse

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