Avaloq, a tech provider to private banks such as HSBC, Deutsche Bank, Barclays and Edmond de Rothschild, released its Wealth Management Index yesterday. It reveals a new geography of wealth management as markets shift from traditional European powerhouses.
The latest Wealth Management Index from Zurich-headquartered
Avaloq finds that
the UK ranks behind the US, Singapore and the United Arab
Emirates across a range of measures and is in the Index’s
so-called “middle tier.” Drawing on more than 60 indicators,
the index assesses each market on five key dimensions:
macroeconomic conditions, financial market maturity,
demographics, regulatory environment, and technology and digital
adoption.
The index provides a data-driven comparison of the factors
shaping wealth management activity across 15 selected markets.
These include Belgium, Germany, Hong Kong, Italy, Japan,
Luxembourg, Malaysia, the Netherlands, Singapore, Switzerland,
Thailand, the US, the UAE, the UK, and Vietnam.
Rather than measuring market size or assets under management, the
index evaluates the underlying conditions that support long-term
wealth management activity, offering a comparative view of each
market’s structural competitiveness.
The index highlights that leading markets achieve strong outcomes
through different combinations of structural advantages.
Singapore performs consistently across all five dimensions, the
US stands out for the depth and participation of its financial
markets, while the UAE benefits from favourable demographics
and high levels of digital adoption.
Established financial centres such as the UK, Switzerland and
Luxembourg continue to benefit from mature financial sectors and
regulatory frameworks, while markets such as Singapore and the
UAE illustrate how balanced performance of growth drivers can
also create attractive wealth opportunities.
The figures are likely to be seized on by critics of UK tax and
wider economic policy who say that the country has become
increasingly inhospitable for HNW individuals and businesses,
citing developments such as rises in tax and the ending of the
UK”s centuries-old resident non-domicile system. Against that, it
could be argued that other, once less potent financial hubs have
caught up, fuelled by a rising affluent middle class in regions
such as Asia.
Such indices can feed into ideas about whether wealth managers,
looking at international expansion and strategy, should increase
resources in particular markets, including hiring staff,
changing booking centres, and other moves.
This jostling for pre-eminence is a feature of
globalisation. Earlier
this year, data from Boston
Consulting Group showed that Hong Kong has now edged ahead of
Switzerland as the world’s largest cross-border financial hub.
Singapore is in third spot, and the US is in fourth.
UK profile highlights strengths and
constraints
The UK sits within the middle tier of the overall index,
reflecting a mix of significant competitive advantages and
broader economic constraints, the firm said.
Its strongest performance comes from financial market maturity
and regulatory environment, underpinned by the depth of its
capital markets, established financial infrastructure and
supportive regulatory framework. The UK also performs strongly in
technology and digital adoption, reinforcing its position as one
of the most advanced wealth management centres.
However, the findings show that a sophisticated financial system
does not necessarily translate into equally strong macroeconomic
conditions. While the UK scored highly for the maturity of its
financial system, comparatively weaker macroeconomic indicators
weigh on its overall index performance. The UK is not unique in
this regard. Other leading wealth management centres, including
Hong Kong, Switzerland and Luxembourg, also display distinct
combinations of strengths and constraints. The findings reinforce
that wealth management opportunity is shaped by multiple
structural factors rather than excellence in any single area, the
firm continued.
“The findings highlight the enduring strengths of the UK’s wealth
management sector. Strong financial infrastructure, a supportive
regulatory framework and advanced digital capabilities continue
to provide an attractive foundation for wealth management
activity, even as macroeconomic conditions remain challenging,”
Suman Rao, managing director, UK and Ireland at Avaloq, said.
“For wealth managers, the opportunity lies in building on these
strengths through continued investment in technology, operational
efficiency and client experience to be better positioned to
capture future prospects.”
Looking ahead, the firm highlighted that success is likely to
depend less on any single characteristic or historical advantage
and more on how effectively markets combine complementary
strengths. The index shows the importance of looking beyond
headline rankings to understand the factors that underpin
long-term market competitiveness.