UBS is still the biggest wealth management firm on the globe in terms of the amount of assets it manages for high net worth individuals, but...

UBS is still the biggest wealth management firm on the globe in terms of the amount of assets it manages for high net worth individuals, but Citigroup is not far behind, according to the latest private banking benchmark survey by London-based consultancy Scorpio Partnership.

UBS retained its pole position in this year’s survey with an 8.7 per cent increase in US dollar terms in assets under management to $1.318 trillion during 2005. In base currency terms (in UBS’s case Swiss Francs), it posted the highest AUM growth among the top 10 banks, rising 25.3 per cent last year.

But Citigroup Wealth Management (Citigroup Private Bank and Smith Barney’s private client business) was not far behind, reporting AUMs of $1.310 trillion and a 14.1 per cent rise in AUMs in 2005.

Third place went to Merrill Lynch with total AUMs reaching $1.1 trillion.

Credit Suisse achieved fourth position with AUMs of $558.7 billion – far behind the top three.

The total AUM growth of the global wealth management industry grew by 18 per cent in base currency terms in 2005 with $8.5 trillion in AUMs, according to Scorpio's survey.

“Following some painful lessons in the recent past, the wealth management industry has hit its stride,” said Sebastian Dovey, managing partner of Scorpio Partnership, in a statement.

“The market leaders are demonstrating a sustained concentration on efficiency and profitability. Critically, they appear to also be achieving a more global proposition that resonates with the rapidly growing first generation new wealth holders. Net new asset flows are reflecting this.”

The Scorpio study also benchmarks the leaders in terms of two different client segments: the high net worth and the ultra-high net worth.

For banks targeting clients with $1 million, Morgan Stanley this year ranks second to UBS, having restructured its Global Wealth Management division. As a result of a re-classification of assets, Morgan Stanley climbed from fourteenth to fifth this year in the global ranking. Overall, the US firms dominate the rankings but have been unable to surpass UBS with $966.6 billion of AUMs in this segment.

In the $10 million plus client target category, including ultra-HNW clients and family offices, the top five firms providing data manage over $1.2 trillion in fee-based assets. This reflects 14.1 per cent of the total private client assets banked within the $8.5 trillion universe analysed. Again, UBS tops this table with $599.3 billion of AUMs.

Significantly, the growth rate in this category is markedly slower than in the $1 million plus category. Further analysis in the Benchmark 2006 indicates that the profitability of this segment is also lower.

“Targeting the ultra-HNW is often cited as the ultimate goal of many private banks," said Scorpio partner Cath Tillotson.

“However, the research is now clearly demonstrating that it is often more profitable for banks to attack the mainstream private client market. There are more opportunities and the solutions can be more efficiently sold.”