Table of Contents
Introduction
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- Abbreviations
- Key sources
Executive Summary
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- The market
- 15% of population in the target wealth market
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- Figure 1: Size and segmentation of the target wealth market based on investible assets*, July 2011
- Total wealth manager revenues rises by 8% in 2010
- Near to mid-term growth likely to be less robust
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- Figure 2: Overall wealth manager revenue, 2006-16
- Rising costs hit pre-tax profits
- Portfolio numbers rise across the board
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- Figure 3: Number of accounts/portfolios held, by firm type, 2006-10
- Portfolio segmentation
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- Figure 4: Assets by ownership as a proportion of total investment assets with wealth managers, 2010
- Over two thirds of funds under discretionary management
- Market factors
- Lethargic economic growth to continue for foreseeable future
- Markets will remain susceptible to wild swings in valuation
- Equity-based investments will remain attractive despite malaise
- Internal market environment
- Clients have become harder to please
- Regulatory developments
- Companies, brands and innovation
- Market share
- Brand communication and promotion
- Apps, social media and sports stars
- The consumer
- Asset ownership
- Sources of financial advice
- Personal financial management style
- What we think
Issues in the Market
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- How is new technology influencing wealthy client behaviour?
- What kind of impact is the RDR having on wealth managers?
- In what key ways have affluent investor attitudes and behaviour changed in the last few years?
- How can the industry turn the trend toward self-directed investing in its favour?
Future Opportunities
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- Taking advantage of the trend toward self-management
- Tapping into unrealised asset growth potential
Internal Market Environment
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- Key points
- The asset allocation shift to collectives continues
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- Figure 5: Asset types as a proportion of total investment assets for wealth managers, 2006-10
- Managed asset revenue in a slump but could rise in 2011
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- Figure 6: Revenue return* on discretionary and advisory assets for wealth managers (excludes execution-only stockbrokers), 2005-10
- Top wealth management firms struggling to rebuild reputation
- Firms will need to up their game to satisfy a more demanding client base
- Current regulatory developments
- RDR’s impact on investment advice
- Sophisticated advice could become harder to come by
- Rundown of tax changes impacting the affluent
Broader Market Environment
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- Key points
- Persistent challenges drag down near-term economic growth prospects
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- Figure 7: GfK NOP Consumer Confidence Index, September 2006-September 2011
- Wealth manager fortunes largely tied to the prevailing economic mood
- Sharp market movements keeping wealthy investors on edge
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- Figure 8: FTSE 100 and FTSE All Share – daily index movements, November 2006-November 2011
- High inflation, taxes and low interest rates make equities attractive
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- Figure 9: Monthly changes in the rate of annual inflation* and Bank of England base rate – UK, October 2008-October 2011
Swot
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- Figure 10: Affluent investing – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- Barclays Wealth launches exclusive iPad app
- Coutts taking advantage of social media
- Private banks tying lending rates to level of client investment
- Private banks getting creative about recruiting top sports stars
Market Size and Forecast
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- Key points
- Total wealth manager revenues rises by 8% in 2010
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- Figure 11: Total revenues of wealth managers, by firm type, 2006-11
- 2011 growth expected to be more subdued
- Investment management fees the key source of revenue growth in 2010
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- Figure 12: Wealth manager revenue streams, by firm type, 2009 and 2010
- Solid growth in portfolio numbers for all firm types
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- Figure 13: Number of accounts/portfolios held, by firm type, 2006-10
- Value of assets managed nears £400 billion
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- Figure 14: Number of accounts and the value of assets managed, by wealth managers, by firm type, 2006-10
- £20 billion net inflow of funds in 2010
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- Figure 15: Wealth manager investment asset growth and net new business, 2007-10
- Wealth manager profitably impacted by rising costs
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- Figure 16: Wealth manager costs as a proportion of total revenues, by firm type, 2006-10
- Five-year forecast
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- Figure 17: Overall wealth manager revenue, 2006-16
- Revenues forecast to remain in positive territory…
- … but are highly sensitive to unresolved issues facing global economy
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- Figure 18: Overall wealth manager revenues, by firm type, 2006-16
- Forecast methodology
- Fan chart explanation
Portfolio Segmentation
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- Key points
- All firms see a rise in portfolio numbers across all value bands
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- Figure 19: Number of wealth manager accounts/portfolios, by value band – nominee accounts only, 2010
- Majority of assets continue to be held in taxable accounts
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- Figure 20: Assets by ownership as a proportion of total investment assets with wealth managers, 2010
Market Share
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- Key points
- Top four firms control half of global assets under management
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- Figure 21: Top ten largest global wealth managers, by assets under management, 2011
- Barclays Wealth and Coutts & Co manage a fifth of UK assets
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- Figure 22: 25 largest wealth managers, by assets under management – UK, December 2010
Companies and Products
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- Key players
- Barclays Wealth
- Coutts & Co
- UBS Wealth Management
- HSBC Private Bank
- Goldman Sachs Private Banking
- St James’s Place Wealth Management
- Lloyds TSB Private Banking
Brand Communication and Promotion
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- Key points
- Private banking and asset management adspend falls by an eighth
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- Figure 23: Top 20 advertisers of asset management and private banking, 2009-11
- Press ads dominate wealth management industry adspend
- Private banks use sponsorships to raise brand awareness
- Note about NMR data
Channels to Market
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- Key points
- Over two thirds of assets in discretionary management
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- Figure 25: Investment assets held by wealth managers, by mandate type, 2007-10
- Figure 26: Investment assets held by wealth managers, by mandate type, 2006-10
Size and Profile of the Target Wealth Market
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- Key points
- 15% of UK adults say they fall into the target wealth market in 2011
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- Figure 27: Size and segmentation of the target wealth market based on investible assets*, July 2011
- 4.2 million adults have £100K or more worth of investible assets
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- Figure 28: Distribution of investible assets among the UK population, 2011
- Target wealth market is skewed toward affluent over-55s
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- Figure 29: Target wealth groups, by demographics, July 2011
- Level of investible assets of primary significance for wealth managers
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- Figure 30: Target wealth groups, by demographics, July 2011
Asset Ownership
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- Key points
- Direct link between level of wealth and range of assets owned
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- Figure 31: Asset ownership, by level of investible assets, July 2011
- Age and asset ownership positively correlated
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- Figure 32: Asset ownership, by gender and age, July 2011
- Socio-economic status and income matter
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- Figure 33: Asset ownership, by socio-economic group and gross annual household income, July 2011
Sources of Financial Advice
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- Key points
- Direct link between level of wealth and source of advice
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- Figure 34: Sources of financial advice, by level of investible assets, July 2011
- Age and financial advice
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- Figure 35: Sources of financial advice, by gender and age, July 2011
- The future is being shaped by the tech-savvy young and wealthy
- Income and socio-economic background key indicators
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- Figure 36: Sources of financial advice, by socio-economic group and gross annual household income, July 2011
Personal Financial Management Style
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- Key points
- The majority are actively involved in managing personal finances
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- Figure 37: Preferred method of money management, by level of investible assets, July 2011
- Who’s making nearly all financial decisions on their own?
- Who occasionally consults with a professional adviser?
- Who relies heavily on a professional adviser?
- Who delegates all decisions to a professional adviser?
Appendix – Market Size and Forecast
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- Figure 38: Overall wealth manager revenue, 2011-16
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Appendix – Size and Profile of the Target Wealth Market
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- Figure 39: Size and segmentation of the target wealth market based on investible assets, by demographics, July 2011
- Figure 40: Size and segmentation of the target wealth market based on investible assets, by demographics, July 2011
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Appendix – Asset Ownership
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- Figure 41: Most popular financial product ownership, by demographics, July 2011
- Figure 42: Next most popular financial product ownership, by demographics, July 2011
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Appendix – Sources of Financial Advice
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- Figure 43: Sources of financial advice, by demographics, July 2011
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Appendix – Personal Financial Management Style
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- Figure 44: Use of professional advice, by preferred method of money management, July 2011
- Figure 45: Preferred method of money management, by demographics, July 2011
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