Singapore to become top wealth centre

Singapore is set to take over as the world's top wealth management centre by 2013, a new report has claimed.

PwC's latest report on the private banking and wealth management sector said current centres, including Switzerland and London, would come under increasing pressure from Singapore and Hong Kong as new rules governing the financial sectors are brought in.

“Participants believe the centre of gravity for wealth management is moving, and established centres are under pressure from emerging markets," said Justin Ong, PwC global private banking and wealth management, Asia Pacific leader, said.

"In response to increased regulatory pressures, our respondents see Switzerland, London and, to a lesser extent, New York, all being challenged by the rise of Singapore and Hong Kong in the coming two years.”

The report found the current status quo in the private banking and wealth management industry is changing, with the industry’s focus shifting to client service and value delivery. The changes are being forced partly by new competition in the market, more demanding client expectations, and new regulations.

“Private clients have traditionally been relatively easy to manage, but the financial crisis and recent scandals have awakened the sleeping giant,” said Jeremy Jensen, PwC’s EMEA leader for global private banking and wealth management.

“With clients taking a much more active interest, wealth managers now have to work harder to earn their long-term loyalty and trust. Delivering the clear value that clients want is contingent on understanding and anticipating their changing needs, circumstances and perceptions.”

Regulation has also caused costs to rise for firms, and companies need greater operational efficiency and effectiveness to survive. The survey found that increased regulation, along with these associated costs, was considered the top challenge to business growth.

According to the report, the average cost-to-income ratio remains high, with only 28 per cent of respondents saying cost-to-income ratios were less than 60 per cent.

Some 30 per cent said the regulatory environment would significantly impact their operating costs. A similar number said they expected “significant consolidation” in the next two years.

However, despite these challenges, the report said wealth management is still a lucrative business “with untapped potential for significant growth.

The report surveyed 275 institutions from 67 countries between December 2010 and April 2011. About 62 per cent of responses were from Europe, 24 per cent from the Americas and 14 per cent from the Asia-Pacific region.