Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
- Key sources
Future Opportunities
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- Growing a Longer Tail
- The Real Thing
Market in Brief
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- 5.9 million adults belong to the target wealth group
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- Figure 1: Distribution of investible assets among the UK population, 2010
- Overall wealth management industry revenue recovers in 2010
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- Figure 2: Total wealth management industry revenue*, by firm type, 2005-10
- Only small changes in source of revenue for some firm types
- Private bank fund withdrawal results in £6 billion net fund outflow
- Execution-only accounts behind growth in portfolio numbers
- Majority of client assets still in discretionary accounts
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- Figure 3: Investment assets held by wealth managers, by mandate type, 2006-09
- Prospects for wealth creation more favourable abroad
- Financial crisis has made the wealth industry’s client base wiser
- Tax clampdown on wealthy is affecting business practices
- Market share
- Wealth industry adspend up 19% in 2010
- Key consumer research findings
- Asset ownership
- Use of professional advice
- Attitudes towards banking and financial management
Internal Market Environment
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- Key points
- Trend away from owning direct securities reversed in 2009
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- Figure 4: Asset types as a proportion of total investment assets for wealth managers, 2005-09
- Slump in revenue return on managed assets for wealth managers
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- Figure 5: Revenue return* on discretionary and advisory assets for wealth managers (excluding execution-only stockbrokers), 2004-09
- Financial crisis has altered client behaviour
- In response the industry is changing the way it does business
- Recent regulatory developments
- Tax burden on high earners and wealthy increases significantly
- CGT raised to 28% for higher-rate taxpayers
- Limits on pension tax relief for high earners from April 2011…
- …will motivate them to seek more tax-efficient alternatives
- New government reviewing taxation of non-doms
- Offshore business impacted by regulatory clampdown
Broader Market Environment
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- Key points
- Tentative economic recovery
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- Figure 6: Total GDP, at current prices, 2006-13
- More wealth migrates back into shares as markets recover…
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- Figure 7: FTSE 100 and FTSE All Share – daily index movements, October 2004-October 2010
- …but crisis has created a more discerning client
- More geographical diversification expected
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- Figure 8: Market capitalisation of global stock exchanges*, by region, year to October, 2007-10
- Above-target inflation will increase demand for tax-efficient wrappers
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- Figure 9: Monthly changes in the rate of annual inflation* and Bank of England base rate – UK, October 2007-October 2010
Strengths and Weaknesses
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- Figure 10: Affluent investment and banking – SWOT analysis, 2010
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The Size of the Target Wealth Market
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- Key points
- 3.6 million adults report owning investible assets worth £100K or more
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- Figure 11: Distribution of investible assets among the UK population, 2010
Market Size and Forecast
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- Key points
- Recovery in overall wealth management industry revenue in 2010
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- Figure 12: Total wealth management industry revenue*, by firm type, 2005-10
- Subtle changes in revenue streams among firm types
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- Figure 13: Proportion of revenue, by firm type and stream, 2008 and 2009
- Value of investment assets rises for all wealth manager firm types
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- Figure 14: Value of investment assets, by firm type, 2006-09
- £6 billion net outflow of new funds in 2009
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- Figure 15: Wealth manager investment asset growth and net new business, 2006-09
- Growth in portfolio numbers driven by execution-only accounts
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- Figure 16: Number of portfolios, by firm type, 2004-09
- Market forecast
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- Figure 17: Forecast of wealth management industry revenue*, by firm type, 2006-15
- Fan chart
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- Figure 18: Wealth management industry revenue* forecast confidence range, 2005-15
Market Segmentation
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- Key points
- Private bank portfolio numbers continue to decline
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- Figure 19: Number of nominee* portfolios, by firm type and size, 2009
- Average wealth manager portfolio rebounds to £265K in 2010
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- Figure 20: Number of nominee* portfolios and total value of assets, by size of portfolio for wealth managers, 2009
- Majority of client funds still in taxed accounts
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- Figure 21: Asset ownership for wealth managers as a proportion of total investment assets for 2009
Market Share
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- Key points
- Bank of America number one in global assets under management
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- Figure 22: Top ten largest global wealth managers, by assets under management, 2010
- Barclays Wealth and Coutts & Co control a fifth of the UK market
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- Figure 23: 25 largest wealth managers, by assets under management – UK, December 2009
Companies and Products
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- Major players
- Barclays Wealth
- Coutts & Co.
- JPMorgan Private Bank
- HSBC Private Bank
- UBS Wealth management
- Lloyds TSB Private Banking
Brand Communication and Promotion
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- Key points
- Asset management and private banking adspend up 19% in 2010
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- Figure 24: Total advertising expenditure on asset management and private banking and other related products and services, 2008-10
- Bank of Scotland and NatWest account for over half of all adspend
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- Figure 25: Advertising expenditure on asset management and private banking – top 20 advertisers, 2009 and 2010
- Press accounts for three fifths of adspend in 2010
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- Figure 26: Proportional distribution of adspend on private banking and asset management, by main media type, 2010*
- Sponsorships commonly used to promote wealth management
Channels to Market
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- Key points
- Majority of wealth management client assets in discretionary accounts
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- Figure 27: Investment assets held by wealth managers, by mandate type, 2006-09
- Technology has improved asset management capabilities
The Consumer – Profile of the Target Wealth Market
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- Key points
- In 2010 13% of population say they are in the target wealth market
- A cautionary note
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- Figure 28: Size and segmentation of the target wealth market based on investible assets*, September 2010
- Target wealth market skewed towards the over-55s
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- Figure 29: Target wealth groups, by gender, age, socio-economic group, detailed lifestage, lifestage and marital status, September 2010
- As expected wealth is highly concentrated in the South of the country
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- Figure 30: Target wealth groups, by working status, household income and region, September 2010
- Level of Investible assets considered ahead of income
- Above-average levels of tech-savvy among wealthy
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- Figure 31: Target wealth groups, by media usage, September 2010
The Consumer – Asset Ownership
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- Key points
- Investment in shares and property highest among Ultra Affluent or HNW
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- Figure 32: Asset ownership, by total value of investible assets, September 2010
- More investment options open up as one moves up wealth scale
- Some variation in ownership according to gender and age
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- Figure 33: Asset ownership, by gender and age, September 2010
- Socio-economic background and income levels and asset ownership
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- Figure 34: Asset ownership, by socio-economic group and gross annual household income, September 2010
The Consumer – Use of Professional Advice
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- Key points
- Professional advisory services in demand at upper end of wealth scale
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- Figure 35: Sources used for financial or investment advice, by total value of investible assets, September 2010
- High street banks remain relevant no matter what age
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- Figure 36: Sources used for financial or investment advice, by gender and age, September 2010
- Use of the internet significantly higher among younger adults
- Level of affluence and income impact types of sources used
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- Figure 37: Sources used for financial or investment advice, by socio-economic group and gross annual household income, September 2010
The Consumer – Attitudes towards Banking and Financial Management
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- Key points
- The higher amount of investible assets, the higher the expectations
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- Figure 38: Most important attributes in choosing a company to deal with, by total value of investible assets, September 2010
- Key attitudinal target groups
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- Figure 39: Size and segmentation of the target wealth market based on investible assets, by target groups, September 2010
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- Figure 40: Size and segmentation of the target wealth market based on investible assets, by target groups, September 2010
- Variations in asset ownership levels between groups
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- Figure 41: Asset ownership, by total value of investible assets, by target groups, September 2010
- Attitudinal groups and sources of advice
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- Figure 42: Sources used for financial or investment advice, by total value of investible assets, by target groups, September 2010
Appendix – Market Size and Forecast
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- Figure 43: Forecast of wealth management industry revenue*, best and worst case data, 2005-15
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Appendix – The Consumer: Attitudes towards Banking and Financial Management
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- Figure 44: Most important attributes in choosing a company to deal with, by total value of investible assets, by target groups, September 2010
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- Figure 45: Target groups, by demographics, September 2010
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