Manama: Mahmood Rafique, Editor: The Kingdom of Bahrain’s financial wealth will experience a sturdy Compound Annual Growth Rate (CAGR) of 3.9% in new wealth reaching $98.7 billion by 2026.
This is the crux of a new report published by Boston Consulting Group (BCG$), titled, Global Wealth 2022: Standing Still Is Not an Option.
“We see the Middle East and Africa financial wealth growing year after year, including Bahrain, despite a tremulous global market,” Mustafa Bosca, Managing Director and Partner, BCG, said. “Bahrain’s financial wealth has been growing approximately 6 per cent yearly since 2016 to USD 81.6 billion and is expected to continuously grow to 2026. In addition, approximately 47% of Bahrain’s wealth derived from the Ultra High Net Worth (HNW) segment in 2021, which are individuals who are worth more than USD 100 million.”
Although people tend to think of net-zero as a 2050 goal, the report notes that wealth managers must act immediately to embed sustainable investing across the entire client life cycle.
The opportunity for wealth managers is clear: nearly 80% of clients surveyed said that they would consider increasing their crypto holdings if wealth managers offered advisory and education services. Two-thirds of clients who sourced their crypto investment with third parties said that they did so because they did not think their wealth managers offered such services. To determine whether crypto is right for their businesses, wealth managers must consider if, when, and how they want to participate.
On average, wealth managers that excel at customizing offers and interactions see higher rates of client satisfaction and lower rates of churn than others do. Personalization is a complex undertaking that requires introducing new data and analytics, connecting processes across the firm’s front, middle, and back offices, and changing ways of working. In the report, BCG identifies three actions that wealth managers vying to deliver individualized service at scale can take to improve personalization: prioritize capabilities that recur across journeys; design for value and scale; and back clever ideas with the right enablers.
The valuation multiples of digital wealth management firms are six or seven times as high as those of traditional wealth managers. Digital wealth management institutions are delivering faster customer growth, cheaper cost structures, and superior rates of innovation. To protect their future profitability, traditional wealth managers must evolve with the times.
“The wealth management agenda is getting more crowded—and the items on it more urgent. Net-zero, crypto, personalization, and digitization are not merely arenas that leaders can simply consider. They are imperatives whose outcomes will determine which institutions grow client share over the next five years. The most important question facing wealth managers right now is not which initiatives to prioritize—but how best to execute on all of them,” Bosca, added.
