The Markets June 25, 2008

Merrill Lynch Releases 'World Wealth Report'

Assets of the world’s high-net-worth individuals rose in 2007, particularly in emerging markets.
Reported by

The wealth of the world’s high-net-worth individuals (HNWI) increased by 9.4% in 2007 to $40.7 trillion, according the annual World WealthReport released by Merrill Lynch and Capgemini. The number of HNWI grew 6% to 10.1 million, and the number of ultra-HNWIs increased by 8.8% in 2007. The report found the investors have shifted to safer, less volatile assets and have shown a great interest in green investing (see Investors Look to Greener Pastures).

Emerging Economies

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

The global economy grew by about 5% in 2007, according to the report. The two primary drivers of wealth generation—real GDP and market capitalization—remained solid throughout the year, and worldwide gains were strong in the first half of the year. Despite the slowdown for mature economies in the latter half of 2007, the emerging economies pulled through, particularly in India, China, and Brazil.

In fact, while the U.S. economic downturn weighed heavily on mature economies, evidenced by sluggish GDP growth and weak stock markets in part of Europe and Asia, emerging markets were able to recover and generate a net gain by April 2008, the report says.

The study says India led the world in HNWI population growth at 22.7%, followed by China at 20.3% and Brazil at 19.1%. Russia was home to one of the world’s 10 fastest growing HNWI populations, despite a slight deceleration last year.

“While trends indicate opportunities exist for wealth management firms to tap into new growth markets, success will go to those that recognize their existing service, delivery, and technology strategies must be adapted and tailored to meet the unique needs of these target growth markets,’ said Robert J. McCann, president of Global Wealth Management at Merrill Lynch, in a release (see New HNW Market Requires New Strategies)

While stock market indexes in the U.S., Europe, and Asia experienced moderate growth, emerging markets were on a winning streak, the report says. “The divide between market capitalization growth in mature and emerging economies was significantly more pronounced in 2007 than in previous years,’ said Bertrand LavayssiÈre, managing director at Capgemini Global Financial Services.

Challenges Ahead

The report says the short-term outlook is likely to vary, but the balance between emerging market strength and mature market recovery will likely persist through the year.

The report cites two major obstacles ahead: growth inhibition in mature markets and inflation in emerging markets. The report predicts that global HNWI wealth will increase at a rate of 7.7% per year to $59.1 trillion by 2012.

Deals & People June 25, 2008

Wilmington Trust to Acquire UBS Fiduciary Trust Company

Wilmington Trust has made another big retirement plan services acquisition.
Reported by

The firm announced today that it has signed a definitive agreement to acquire UBS Fiduciary Trust Company, a New Jersey-based provider of trust and investment management services for retirement plans.

UBS Fiduciary Trust Company (UBSFTC), which is being acquired from global financial services company UBS AG, will become part of the Retirement and Institutional Services group within Wilmington Trust’s Corporate Client Services (CCS) business, according to the announcement.

The agreement represents the second acquisition this year in Wilmington Trust’s retirement services business. On April 30, 2008, Wilmington Trust completed the acquisition of AST Capital Trust Company (AST), an Arizona-based provider of directed trustee and trust administration services offered through financial advisors (see Wilmington Trust Expands with Acquisition of AST Capital Trust).

“This new addition of retirement plan assets enhances our position in an expanding marketplace and underscores our commitment to grow our core businesses,’ said Ted T. Cecala, Wilmington Trust chairman and CEO. “It also creates opportunities for future growth and further strengthens our diverse sources of revenue.’

Business Expansion

Wilmington Trust’s Retirement and Institutional Services group provides directed trustee, custodial, trading, and paying agent services to more than 3,000 retirement and employee benefit plans with more than $41 billion in assets under administration. The planned acquisition of UBSFTC will add another 800 plans and $5.5 billion in assets under administration to Wilmington Trust’s retirement services platform, bringing its totals to more than 3,800 plans and $46 billion in assets, respectively.

Through an existing business alliance, AST already serves as an outsource provider of fund accounting and benefit payment services to UBSFTC’s retirement plan clients. The trust and investment management services of the newly acquired company will continue to be available through 8,200 UBS financial advisors.

Kevin Ruth, chairman of UBS Fiduciary Trust Company and head of Wealth Planning U.S. for UBS, said, “The sale of UBS Fiduciary Trust Company demonstrates our commitment to delivering the best client experience for the company’s plan sponsors and participants. Our clients benefit because it combines their existing UBS financial advisor with the scalable service model of AST/Wilmington Trust and is consistent with our overall qualified retirement plan open-architecture approach.’

Pending regulatory approval, Wilmington Trust expects to complete this transaction by late summer. Since AST already is performing services for UBSFTC, Wilmington Trust expects the transaction will have little effect on AST’s or Wilmington Trust’s staffing. Full terms of this all-cash transaction, which will be non-dilutive to earnings in 2008, were not disclosed.

«