Head of the wealth management unit at Bank of America (NYSE:BAC), Sallie Krawcheck, said the focus of the division will be to grow its business beyond the U.S. market, as that’s where the majority of opportunity will be for years.
Talking to a private client conference, Krawcheck noted that of every dollar of new growth in the world, 70 cents of that is from emerging markets, while only 16 cents of it is coming from the United States, underscoring the urgency of expansion in those countries.
This is a nod toward Merrill Lynch, which will lead the way going forward in the sector for Bank of America, which will focus on servicing the emerging wealthy people which are benefiting from the economic growth by providing quality products and services to their people.
The strategy of Bank of America is to target many of the smaller emerging markets who are growing extremely fast. That seems to imply they want to catch the individuals growing their wealth on the way up, rather than wait till they plateau and start to shop around for too many options which would create more competition.
As far as the American wealth management market goes, the challenge for all wealth management units is the baby boomer generation which is already in the early stages of retirement, but will expand to about 76 million over the couple of decades, once they all enter that stage, and it’s not just how well their investments are doing which the boomers are interested in, but how well the wealth managers communicate with them in a way they can understand, and that they can trust them with their capital.
So taking into account the emerging markets and the Western markets, it looks like wealth management is one of the great opportunities for banks and financial institutions heading into the future, and if it is done right, will be a very large part of the revenue and profits generated by the banks.
