There has been some material here previously on the wealth management sector aimed at wealthy private individuals and its growth. I would actually be interested in learning more about the topic, especially on a global level, such as:
Drivers for customer base growth (does the % of the population remain constant or is it possibly growing?)
Market size and number of clients (even broken down by wealth, e.g., UHNW, HNW, and what these are and how they are defined)
What kind of geographical distribution (USA, Western countries, Asia, etc.) and, of course, at the Nordic level
A brief historical overview of the development during different transitional phases, if possible (@Verneri_Pulkkinen might be able to find something for this point?)
I thought this could be helpful, as many seem interested in investing in companies that produce various luxury goods. And on the other hand, all of this is also highly relevant for the wealth management companies themselves. And on the other hand, this also seems to be a relevant perspective for companies selling various health products or services?
I believe Inderes has access to various reports and other data sources where the market has already been analyzed. So, an article or video on these topics would be interesting at some point. So, could you @Sauli_Vilen put something together on the topic at some point
The June Fund Report has now also been released. The report had no major surprises, and the development is in line with our previous comment. AUM will likely reach a new ATH in the coming months (knock on wood), and this should give companies in the sector good prerequisites for H2 and going forward. Company-specific differences are, of course, significant, and an ATH in AUM doesn’t help much if there are angry customers in the vestibule redeeming real estate funds.
Thanks, I looked at the UBS report and some figures included Finland. In Finland, some of our wealth is hidden in relation to citizens of other countries, and we cannot decide on it ourselves. That is, it would be somewhat interesting to see the figures adjusted for pension assets.
Let’s do a small mental calculation with conservative figures for an average situation. Life expectancy after retirement is 10 years; this is likely a very conservative assumption. After taxes, €20,000 per year comes into the account as pension; hopefully, this is also conservative. Let’s forget about retirement moments and discounting from the average retirement year onwards. If inflation is low, the impact is also small.
The value of future cash flows today, based on a rough estimate, is therefore €150,000-180,000 on average. In some tables, Finland would rank closer to its peers when this is taken into account.
It probably isn’t quite like that, as it’s not a fully funded pension. So, the value for an individual is that, but in terms of total assets, there isn’t that much at the moment, because some is directly taken from those working and given to pensioners.
As Kabu also mentions, pensions are mostly paid from the TyEL and YEL contributions of those working.
Pension assets, on the other hand, amounted to 274.4 billion € at the end of last year, which is just under 50k€ per Finn or approx. 165k€ per current pensioner.
A total of 39.1 billion € in pensions was paid last year. With a traditional 4% expected return, paying that pension amount with investment returns would require just under 1000 billion € in pension assets.
Evli today shed light on the situation of its struggling real estate fund. Deferred redemptions totaling 14 MEUR have accumulated over three windows, which is about 25% of the entire fund.
Naturally, this has no significance for Evli (a marginal product), and one cannot draw far-reaching conclusions from the amount of redemptions in this single small fund. However, if other players had redemptions at the same level, tough times would be in store for the real estate fund market
Citigroup reported strong results, with growth across all business segments. The company improved its revenues, raised its dividend, and continued share buybacks. The bank’s capital adequacy remained strong, and business profitability increased in several areas. The services business grew especially due to trading and financing solutions.
Wealth management + personal banking progressed steadily, even as deposits shifted to more profitable investments. Corporate banking benefited from growth in investment banking and lending. Citigroup reportedly continued to optimize capital and risk management, and the company also invested in digital platforms and customer acquisition, which should support development.
Wells Fargo reported a net income of $5.5 billion in the second quarter.
Net interest income decreased to 13 percent, but fee income grew and total revenue increased. Credit card business grew, while auto loans and personal loans decreased.
CEO Charlie Scharf emphasized in his statement the company’s progress and opportunities for growth after the asset cap was lifted.
BlackRock reported strong results and a robust increase in assets, driven particularly by its ETF funds and private markets.
The company also increased its assets under management through an acquisition. The CEO emphasized BlackRock’s client-centric approach and success in attracting new assets.
It was also highlighted that BlackRock’s comprehensive investment strategy and broad platform contributed to the amount of assets under management and the company’s growth potential.
If you heard a loud “POP” sound during the July heatwave, it was likely domestic fund capitals hitting ATH (All-Time High) figures! 190 billion was broken during the summer heat, as market values rose and net subscriptions pulled. This bodes well for the entire sector’s earnings development over the next 12 months. Of course, those managers who are suffering from, for example, real estate fund hangovers won’t benefit much from this
Let’s bring up the news about forest funds again (see my previous tagged message)!
The return differences have continued to widen. S-Pankki’s forest fund has dropped 10% in the last 12 months, which the company explains by changes in interest rates. Conversely, OP’s fund value has gone up 10% in the last 12 months, and UB’s up 5% in 12 months. This is very confusing, as the market is the same for everyone, and everyone’s asset masses are inevitably comparable to each other. As a curiosity, redemptions from S-Pankki’s fund have continued, and now in Q2, 14 MEUR in redemptions were paid out. A total of 23 MEUR, or just over 10% of the entire fund, has now been paid out for the whole year. S-Pankki only has 2% cash left, meaning sales must be made if more redemptions come in. One inevitably wonders if there is a connection between these redemptions and the decrease in value (have they had to test the fair value of assets in the market?)
Perhaps what stands out most here is OP’s return, 10.8% over 5 years, when S is 5.7% and UB 6.9%. The portfolio manager at OP has truly earned their salary, having been able to generate such a tremendous outperformance compared to peers. @ValkoinenPeura commendably analyzed the figures of OP’s fund earlier: Finanssisektori sijoituskohteena - #597 käyttäjältä ValkoinenPeura
Very good point! Indeed, these are only funds registered domestically, and for example, funds registered in Luxembourg are not shown here. Limited partnership (KY) funds are also not shown. However, I think that is a very good indicator of the overall sentiment in the industry.
Let’s also share Petri’s interview from yesterday in this thread. In yesterday’s interview, there was a lot of talk about the industry’s dynamics, and Petri explained in great detail how international expansion & customer acquisition are done in wealth management. Additionally, the competitive situation in the Nordic market and scaling growth in the sector were discussed.
You also briefly discussed those international players, if I recall correctly, with Lauri Vaittinen in InderesPod, but it would also be interesting to hear more thoughts on these. How can local players compete against BlackRock when the business scales so incredibly well.
In traditional products, I understand that a grandmother from Pieksämäki trusts OP’s USA index more than BlackRock’s equivalent, even if the costs were lower, but this is not the case for all products.
Especially when it comes to professional buying, the cost+track combination is probably more of a winning factor, but there’s certainly more to it. Not to mention selling pure institutional products.
So in short: BlackRock & Vanguard vs. Hesulin asset managers
The inheritances from the baby boomer generation will be a truly massive megatrend that will significantly impact funds’ Assets Under Management (AUM). Inheritance values are accelerating, reaching 10-20 billion per year, and are only expected to grow further from 2030 onwards.
190 billion was broken during the summer heat, as market values rose and net subscriptions pulled. This bodes well for the entire sector’s earnings development over the next 12 months. Of course, those managers who are suffering from, for example, real estate fund hangovers won’t benefit much from this 
