Table of Contents
Introduction
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- Report scope and definitions
- Abbreviations
- Key sources
Executive Summary
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- The market
- Revenue growth expected to slow
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- Figure 1: Forecast of wealth management industry revenues – fan chart, 2007-17
- Sub-sector performance
- Growth in assets under management slowed in 2011
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- Figure 2: Number of client accounts/portfolios and value of assets under management, 2007-12
- Portfolio composition
- Market factors
- Difficult economic and regulatory backdrop
- Companies, brands and innovation
- Product innovation
- Leading players in the market
- Continued growth in discretionary services
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- Figure 3: Investment assets held by wealth managers, by mandate type, 2007-11
- The consumer
- Identifying and profiling the target audience
- Investment approach
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- Figure 4: Segmenting the target wealth market, by approach to investment management and decision-making, July 2012
- Level of contact with professional advisers and wealth managers
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- Figure 5: Frequency of contact for advice or to trade investments, by type of firm, July 2012
- Reaction to economic downturn and market volatility
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- Figure 6: Impact of economic downturn and eurozone crisis on investment attitude/approach, July 2012
- Current financial situation and prospects
- Key financial and investment objectives
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- Figure 7: Top six financial goals over the next 12-18 months, July 2012
- Expected investment activity over the coming year
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- Figure 8: Assets expect to buy, sell or maintain over the next 12 months, July 2012
- What we think
Issues in the Market
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- What is the value of the wealth management market?
- What’s the size of the target audience?
- How will new charging transparency rules affect the market?
- How are clients likely to react to the introduction of advice fees?
- Do incumbents have anything to fear from DIY wealth management?
Trend Application
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- Use new devices to connect and communicate with clients…
- …and develop interactive tools to help them monitor and meet their financial goals
- 2015: Brand Intervention
Market Drivers
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- Key points
- Prevailing economic uncertainties engender greater investor prudence
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- Figure 9: Investor responses to wider market trends, 2012
- Greater market turbulence undermines confidence
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- Figure 10: FTSE 100 and FTSE All-Share – daily index movements, January 2004-September 2012
- Global market cap fell by 14% in 2011
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- Figure 11: Market capitalisation of global stock exchanges, by region, 2008-12
- Lower trading volumes
- Overview of macroeconomic factors influencing investor behaviour
- Key legislative and regulatory developments
- Regulatory body to be replaced in early 2013
- Government backs proposals to separate retail from investment banking…
- …which will have particular implications for the HNW
- Regulator describes the wealth management sector as an “emerging risk”
- Basel III requires banks to hold greater capital
- RDR poses a major challenge for wealth managers
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- Figure 12: Value of compliance-related costs, 2010 and 2011
- Reduction in supply
- Potential winners and losers: passive versus active funds
- Recent tax changes affecting wealthy clients
Market SWOT Analysis
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- Figure 13: Wealth management market – SWOT analysis, 2012
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Who’s Innovating?
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- Key points
- New technology is driving new innovation
- Wealth managers starting to explore social media banking potential
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- Figure 14: Usage of social networking sites, by wealth tier, July 2012
- New ‘online’ wealth managers are emerging in the US and the concept could easily migrate here
- LBG and RBS reposition their wealth management divisions
Market Size and Forecast
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- Key points
- Revenues increased by a respectable margin in 2011…
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- Figure 15: Size of the UK wealth management sector, by number of client accounts, value of investment assets managed or administered and total revenues, 2007-12
- …but growth will slow in 2012, due to a more subdued trading environment
- 2011 sees fall in net new business
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- Figure 16: Investment asset growth and net new business for wealth managers, 2008-11
- Looking ahead: steady growth forecast
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- Figure 17: Forecast of wealth management industry revenues – fan chart, 2007-17
- Figure 18: Forecast of wealth management industry revenues, 2012-17
- Forecast methodology
- Fan chart explanation
Segment Performance
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- Key points
- PCIMs and full-service stockbrokers marginally outperformed the private banks in 2011
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- Figure 19: Number of accounts and the value of assets managed, by type of firm, 2007-11
- PCIMs have grown their share of revenues over the past five years
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- Figure 20: Total wealth management industry revenues, by type of firm, 2007-11
- Investment management fee income is the top revenue stream
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- Figure 21: Proportional distribution of revenue streams, by type of firm, 2010 and 2011
- Cost pressures continue to increase
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- Figure 22: Operational costs as a proportion of revenue, by type of firm, 2007-11
- Private banking sector saw an improvement in profitability in 2011
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- Figure 23: Profit margin, by type of firm, 2006-11
Portfolio Composition
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- Key points
- A fifth of all client accounts are valued at over £250,000
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- Figure 24: Number of wealth manager accounts/portfolios, by value band (nominee accounts only), 2011
- Asset allocations have remained broadly stable over the past five years
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- Figure 25: Proportional distribution of assets, by type of asset class, 2007-11
- Around a fifth of investment assets are held in some form of tax wrapper
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- Figure 26: Proportional distribution of assets, by ownership, 2011
Market Share
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- Key points
- Barclays and Coutts remain well ahead of rivals by AUM
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- Figure 27: Largest 15 wealth managers, by assets under management and number of client accounts – UK, 2010 and 2011
Companies and Products
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- Barclays Wealth and Investment Management
- Description
- Position in the market
- Affluent proposition
- Distribution
- Financial performance
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- Figure 28: Key interim financial data for Barclays Wealth and Investment management, H1 2011 and H1 2012
- Figure 29: Barclays Wealth – key financial data, 2010 and 2011
- Recent activity
- Coutts & Co
- Description
- Position in the market
- Affluent proposition
- Distribution
- Financial performance
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- Figure 30: RBS Group’s Wealth division – key interim data, H1 2011 and H1 2012
- Figure 31: RBS Group’s Wealth division – key annual data, 2010 and 2011
- Recent activity
- UBS Wealth Management
- Description
- Position in the market
- Affluent proposition
- Distribution
- Financial performance
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- Figure 32: UBS Wealth Management division (Europe and Asia) – key interim data, H1 2011 and H1 2012
- Figure 33: UBS Wealth Management division (Europe and Asia) – key annual data, 2010 and 2011
- Recent activity
- HSBC Private Bank
- Description
- Position in the market
- Affluent proposition
- Distribution
- Financial performance
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- Figure 34: HSBC Private Bank – key interim data, H1 2011 and H1 2012
- Figure 35: HSBC Private Bank – key annual data, 2010 and 2011
- Recent activity
- St James’s Place Wealth Management
- Description
- Position in the market
- Affluent proposition
- Distribution
- Financial performance
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- Figure 36: St James’s Place Wealth Management – key interim data, H1 2011 and H1 2012
- Figure 37: St James’s Place Wealth Management – key annual data, 2010 and 2011
- Recent activity
- Hargreaves Lansdown
- Description
- Position in the market
- Affluent proposition
- Distribution
- Financial performance
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- Figure 38: Hargreaves Lansdown – key annual data, 2011 and 2012
- Recent activity
Brand Communication and Promotion
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- Key points
- Wealth managers spend a relatively small amount on advertising
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- Figure 39: Top ten advertisers of wealth management products and services, 2010-12
- Figure 40: Total advertising expenditure on wealth management and other related products and services, 2010-12
- Press and outdoor are the most used advertising channels
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- Figure 41: Proportional distribution of adspend on wealth management, by media type, 2010-12
- Sponsorship activity
Channels to Market
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- Key points
- Discretionary sector is the largest, by number of client accounts…
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- Figure 42: Number of client accounts/portfolios, by mandate type, 2007-11
- …and by assets under management
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- Figure 43: Investment assets held by wealth managers, by mandate type, 2007-11
- Revenue returns under pressure, particularly in the advisory sector
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- Figure 44: Revenue return on discretionary and advisory assets, 2007-11
Assets Held by the Target Wealth Market
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- Key points
- Survey background
- Segmenting respondents according to level of wealth
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- Figure 45: Segmentation of total sample, by value of investable assets (wealth tier), July 2012
- Size of the target market
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- Figure 46: Demographic profile of the target wealth market, by wealth tier, July 2012
- Asset ownership
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- Figure 47: Pensions, investments and other assets held by the target wealth market, by wealth tier, July 2012
Investment Approach and Usage of Professional Client Services
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- Key points
- Just over half the sample prefer to take a DIY investment approach
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- Figure 48: Segmenting the target wealth market, by approach to investment management and decision-making, July 2012
- RDR implementation to impact the adviser-reliant
- The wealthier an individual is, the more they require the services of an adviser
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- Figure 49: Approach to investment management and decision-making, by wealth tier, July 2012
- The adviser-reliant and discretionary-dependent tend to have the most diversified portfolios
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- Figure 50: Pensions, investments and other assets held by the target wealth market, by investment approach, July 2012
- Contact with professional advisers tends to be on an irregular or ad hoc basis
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- Figure 51: Frequency of contact for advice or to trade, by type of firm, July 2012
- Over half of the affluent and HNW have never used the services of a wealth manager
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- Figure 52: Frequency of contact for advice or to trade, by type of firm and wealth tier, July 2012
Impact of External Factors on Investment Behaviour
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- Key points
- Economic worries and market turbulence have made many wealthier investors more cautious
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- Figure 53: Impact of economic downturn and eurozone crisis on investment attitude/approach, by wealth tier, July 2012
- Self-directed investors are favouring cash
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- Figure 54: Impact of economic downturn and eurozone crisis on investment attitude/approach, by investment approach, July 2012
- Nearly one in three wealthy individuals feel worse off compared to a year ago…
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- Figure 55: Current financial situation compared to 12 months ago, by wealth tier, July 2012
- …although the ratio falls slightly among the self-directed…
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- Figure 56: Current financial situation compared to 12 months ago, by investment approach, July 2012
- …and there is greater optimism looking forward…
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- Figure 57: Financial wealth expectations over the next 12 months, by wealth tier, July 2012
- …especially among the self-directed
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- Figure 58: Financial wealth expectations over the next 12 months, by investment approach, July 2012
Financial Goals and Investment Plans
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- Key points
- The ‘rich’ are keen on getting richer
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- Figure 59: Financial goals over the next 12-18 months, by wealth tier, July 2012
- Financial priorities vary according to investment approach
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- Figure 60: Financial goals over the next 12-18 months, by investment approach, July 2012
- A large proportion of new client money will flow into cash- and equity-based investments
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- Figure 61: Assets expect to buy, sell or maintain over the next 12 months, July 2012
Appendix – Assets held by the Target Wealth Market
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- Figure 62: Ownership of cash savings products, by demographics, July 2012
- Figure 63: Ownership of investment or other assets (top six only), by demographics, July 2012
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Appendix – Investment Approach and Usage of Professional Client Services
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- Figure 64: Management approach to investing, by demographics, July 2012
- Figure 65: Frequency of using or consulting a high street bank or building society staff/adviser, by demographics, July 2012
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- Figure 66: Frequency of using or consulting an IFA, by demographics, July 2012
- Figure 67: Frequency of using or consulting a sharedealing/stockbroking division of a high street bank or building society, by demographics, July 2012
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- Figure 68: Frequency of using or consulting a private bank or wealth management company, by demographics, July 2012
- Figure 69: Frequency of using or consulting a traditional stockbroker (in person or by phone), by demographics, July 2012
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- Figure 70: Frequency of using or consulting an online broker/sharedealing service, by demographics, July 2012
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Appendix – Impact of External Factors on Investment Behaviour
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- Figure 71: Impact of economic downturn and eurozone crisis on investment attitude and approach (top five responses), by demographics, July 2012
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- Figure 72: Current financial situation compared to 12 months ago, by demographics, July 2012
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- Figure 73: Financial wealth expectations over the next 12 months, by demographics, July 2012
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Appendix – Financial Goals and Investment Plans
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- Figure 74: Top five financial goals over the next 12-18 months, by demographics, July 2012
- Figure 75: Next six financial goals over the next 12-18 months, by demographics, July 2012
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- Figure 76: Expected activity relating to cash savings or money market funds over the next 12 months, by demographics, July 2012
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- Figure 77: Expected activity relating to individual stocks and shares over the next 12 months, by demographics, July 2012
- Figure 78: Expected activity relating to collective investments over the next 12 months, by demographics, July 2012
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- Figure 79: Expected activity relating to government or corporate bonds over the next 12 months, by demographics, July 2012
- Figure 80: Expected activity relating to structured products over the next 12 months, by demographics, July 2012
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- Figure 81: Expected activity relating to property investment over the next 12 months, by demographics, July 2012
- Figure 82: Expected activity relating to specialist investments over the next 12 months, by demographics, July 2012
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- Figure 83: Expected activity relating to alternative investments over the next 12 months, by demographics, July 2012
- Figure 84: Expected activity relating to pension funds over the next 12 months, by demographics, July 2012
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