The rising tide of stocks last year further erased the damage of the 2008 financial crisis and buoyed worldwide personal wealth to a new record high.
For the banks and firms managing that money, though, it was a year of mixed performance, Boston Consulting Group said in its latest annual global wealth report.
Global wealth grew by $9 trillion, or 8 percent, to $121.8 trillion last year, slowing from the pace set in 2009 when markets snapped back 10 percent. The world's collective investments and savings have surged $20 trillion from the lows of 2008 and left the world $10 trillion richer than in 2007.
The wealth management industry is better off than it was a year ago, and clients put more of their assets into equities as they regained confidence, said Peter Damisch, a BCG partner in Zurich and co-author of the report.
North America had the largest absolute gain, $3.6 trillion, helping it pass Europe -- where the euro fell hard amid the region's sovereign debt crisis -- as the wealthiest region. Asian emerging markets like China and India again experienced the fastest rate of growth.
BCG includes cash and securities, but excludes holdings in businesses, residences and luxury goods. All figures were reported in dollars based on year-end exchange rates, which last year magnified the growth of non-U.S. assets in every region except Europe.
(To see a graphic illustrating global wealth by world regions, click on: http://r.reuters.com/syw79r )
Bank and brokerage accounts grew a little fatter thanks to stock gains and savings. BCG also found equities occupied a bigger portion of personal assets -- up to 35 percent from 29 percent -- amplifying the effect of rising markets.
Cash and deposits fell by 4 percentage points to 45 percent of private portfolios worldwide, indicating investors were willing to take on more risk, while bonds rose by 2 points to 25 percent, BCG said.
Boston Consulting forecasts global wealth will grow by nearly 6 percent a year through 2015 to $162 trillion, driven by economic expansion, capital markets and savings.
The world's biggest banks are turning to wealth management as a reliable, high-return business as they adapt to regulatory changes spurred by the 2008 financial crisis. Rising assets usually translate to more fees and investment activity.
Yet money managers last year posted mixed results, based on its assessment of 120 private banks and the wealth management units of large institutions.
The pace of asset growth slowed from 2009, when stocks boomed from their crisis lows, while net new money, though higher than in 2009, lagged pre-crisis levels. The average pretax profit margin widened slightly on rising revenue.
Expenses also rose, while productivity declined: assets per adviser fell by 20 percent and revenue per adviser fell by 17 percent, BCG said. Firms meanwhile paid out more for bonuses, expanded staff and incurred more legal and compliance costs.
The pressure on wealth managers, at least in some markets, has yet to fully subside, Damisch said.
Profit margins also are squeezed by clients who are more cautious about investments but also more assertive in dealing with their bankers. Investors are choosing more ETFs, a low-margin product, and demanding more information about fees, returns and services.
The banks have to prepare for the 'new tomorrow' of more demanding clients, more focus on retirement products and better ways of doing cross-border business. The world is getting more complicated and banks have to prepare for it, Damisch said.
(Reporting by Joseph A. Giannone, editing by Matthew Lewis)