The landscape of wealth management for ultra-high-net-worth individuals (UHNWI) continues to evolve, as highlighted by the Forbes 400 list of wealthiest individuals living in the USA. A recent article has analyzed the Forbes 400 list back to 1990 to determine the source of wealth creation across industries.
In this blog post, I will review this article and highlight what I believe Swiss wealth management banks should do to maintain their relevance and leadership. In sum, I will argue that Swiss wealth management banks should focus on understanding the primary sources of wealth creation among UHNWI, adapt to their evolving needs by embracing technology and digital transformation, expand and diversify their asset management services, and maintain personalized wealth management while ensuring robust regulatory and compliance frameworks.
The Changing Landscape of Wealth Creation
From the analysis of the Forbes 400 lists from 1990 to 2020, several key trends in wealth creation have emerged. The primary sectors contributing to the growth of wealth have shifted, reflecting broader economic transformations. This section highlights these trends and their implications for Swiss wealth management banks.
The past three decades have seen a marked shift in the industries contributing to significant wealth creation. According to the data in the article, the finance and insurance, information technology, retail and trade, and manufacturing sectors have all played important roles, but their relative importance has changed over time.
Nominal Wealth Growth Rates by U.S. Industry (CAGR, 1990-2020)
| Industry | 1990-2000 | 2000-2010 | 2010-2020 | 1990-2020 |
| Manufacturing | 16.0% | -1.9% | 9.5% | 7.6% |
| Retail and Trade | 17.1% | 1.6% | 14.0% | 10.7% |
| Information Technology | 23.2% | -3.8% | 10.7% | 9.5% |
| Financial Services | 15.3% | 7.8% | 6.7% | 9.8% |
| All U.S. households | 7.1% | 3.7% | 6.5% | 5.7% |
The retail and trade, as well as the information technology sectors have shown significant growth, particularly driven by e-commerce and digital media. The finance and insurance sectors (especially asset management as a sub-sector), have maintained a solid growth rate, reflecting the sector’s ability to adapt and thrive despite economic turbulences such as the dot-com bubble or the financial crisis.
The Rise of Self-Made Wealth
An important trend is the increasing proportion of self-made individuals among the wealthiest. This shift indicates a dynamic U.S. economy, where entrepreneurship and innovation are highly rewarded. In the early 1990s, a significant portion of wealth was inherited, but by 2020, approximately 70% of the Forbes 400 members had amassed their wealth through entrepreneurial activities. It would be interesting to compare this to a European Forbes 400 list. My hypothesis would be that the percentage of inherited wealth in Europe is higher than in the USA.
Percentage of Self-Made Forbes 400 Members (1990-2020)
| Year | Percentage of Self-Made Forbes 400 Listees |
| 1990 | 40% |
| 2000 | 45% |
| 2010 | 55% |
| 2020 | 70% |
The Rise of Asset Management Billionaires
The rise of asset management billionaires, likely entrepreneurs involved in private equity and hedge funds, is a notable trend on the Forbes 400 list from 1990 to 2020. These individuals have capitalized on their ability to generate high returns through sophisticated investment strategies and have increasingly dominated the financial services sector in terms of wealth creation. Their influence underscores a shift in the financial landscape, where senior executives from traditional banking and insurance are being outpaced by entrepreneurs from dynamic, high-yield investment sectors.
Number of Forbes 400 Financial Services Listees by Sub-Industry (1990-2020)
| Financial Services Sub-Industry | 1990 | 2000 | 2010 | 2020 |
| Commercial Banking | 16 | 5 | 4 | 4 |
| Security Brokerage | 6 | 8 | 7 | 9 |
| Insurance | 10 | 12 | 7 | 5 |
| Asset Management | 10 | 23 | 61 | 70 |
| Others | 9 | 6 | 7 | 3 |
| Total Finance and Insurance | 51 | 54 | 87 | 91 |
Implications for Swiss Wealth Management Banks
Given these shifts, Swiss wealth management banks must reconsider their strategies to continue attracting and serving UHNWI effectively. Here are key areas I believe they should focus on:
Embrace Technology and Digital Transformation
The rise of wealth in the information sector underscores the importance of technology in wealth management. Swiss wealth management banks should invest in digital transformation to enhance the client experience, streamline operations, and offer advanced financial products and services. This includes leveraging big data, artificial intelligence AI, and potentially blockchain technology to provide personalized products and services and robust security protocols.
By implementing these technologies, wealth management may gain deep insights into client behavior, preferences, and risk tolerance, enabling more personalized investment strategies and improved client service. Blockchain technology, in particular, may offer enhanced security and transparency, which are crucial for UHNWI clients, helping to streamline transactions and reduce fraud.
Expand and Diversify Asset Management Services
With asset management becoming a significant source of wealth, Swiss wealth management banks should further expand their offerings to include not only traditional mutual funds but also private market investments (e.g., private equity, private real estate, private infrastructure, venture capital). Tailoring their services to meet the specific needs of UHNWI, such as bespoke portfolio management and exclusive investment opportunities, can set them apart from their competitors.
Additionally, to cater to the diverse investment preferences of UHNWI, wealth management banks should offer a broad range of investment products, including sustainable and impact investments that align with clients’ values and societal goals. Effective risk management tools and strategies, such as stress testing, scenario analysis, and dynamic asset allocation, can also be crucial for protecting clients’ wealth.
Focus on Personalized Wealth Management
The diverse nature of modern wealth creation requires a personalized approach to wealth management. Swiss wealth management banks should offer tailored financial advice that encompasses all aspects of a client’s financial life, including investment management, estate planning, tax optimization, and philanthropic endeavors – or in other words: wealth planning.
Personalized financial advice can enhance the relevance and effectiveness of the services provided. Succession planning ensures the smooth transfer of wealth across generations, with comprehensive services including the establishment of trusts / foundations, wills, or family governance structures. Tax optimization strategies can significantly enhance net returns on investments, while philanthropic advisory services may help clients achieve their philanthropic goals through charitable foundations.
Enhancing Regulatory and Compliance Frameworks
As wealth becomes more complex and global, regulatory and compliance challenges increase, Swiss wealth management banks should stay ahead of regulatory changes and ensure robust compliance frameworks to protect their clients’ interests and maintain their reputation for integrity and reliability. Implementing comprehensive compliance programs, which include regular staff training, thorough documentation of processes, and proactive monitoring of regulatory changes, is important.
Proactive engagement with regulators and politicians may help banks influence policy development and gain early insights into potential changes. Despite the increasing role of technology, the importance of personal relationships in wealth management remains critical. Swiss wealth management banks should continue to emphasize trust, leveraging their reputation for client confidentiality and bespoke service, including strict data protection measures and personalized services tailored to each client’s unique needs.