Wealth Management and Private Banking Services in Developing Markets

How should wealth managers and private bankers find and serve the wealthy in developing countries? They should enter those countries where overall wealth is expected to grow and where the proportion of affluent people is expected to grow. This paper shows the factors within a country that influence levels of wealth, changes in wealth, and the proportion of affluent investors and argues that wealth managers should enter the countries with those characteristics, particularly countries with a strong rule of law. The authors also find evidence that advanced wealth management and private banking services may help grow a wirehouse’s book of business in developed — but not necessarily developing — markets. In developing countries, the quality of institutions plays a determining role in creating wealth and increasing the number of high-net-worth individuals.