Table of Contents
Executive Summary
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- The market
- Steady revenue growth
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- Figure 1: Total UK wealth management industry revenues – fan chart, 2009-19
- Five-year forecast
- Sub-sector performance
- Portfolio composition
- Market factors
- Recent investment performance
- Other important risk factors
- Companies, brands and innovation
- Product innovation
- Leading players in the market
- Continued growth in discretionary services
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- Figure 2: Investment assets held by wealth managers, by mandate type, 2009-13
- The consumer
- Identifying and profiling the wealth target audience
- Approach taken to making investment decisions and managing portfolio
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- Figure 3: Segmenting the target wealth market, by approach to investment management and decision-making, July 2014
- Level of contact with professional advisers and wealth managers
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- Figure 4: Frequency of contact for advice or to trade investments, by type of firm, July 2014
- Client investment holdings
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- Figure 5: Investments and other assets held, by wealth tier, July 2014
- Investor risk tolerance
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- Figure 6: Attitudes toward risk, by wealth tier, July 2014
- Areas of client interest
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- Figure 7: Agreement with statements regarding investment interests, by wealth tier, July 2014
- Attitudes toward product charges
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- Figure 8: Level of confidence in product charges being clear and transparent, fair and value for money, July 2014
- Financial priorities over the coming 12 months
- Expected investment activity over the coming year
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- Figure 9: Assets expect to buy, sell or maintain over the next 12 months, July 2014
- What we think
Issues and Insights
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- Wealthy investors need reassurance that product charges are ‘fair’ and ‘value for money’
- The facts
- The implications
- Enter the new digital players
- The facts
- The implications
- An ageing client base poses fresh challenges for wealth managers, but also presents an opportunity
- The facts
- The implications
Trend Application
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- Cool Vending
- Brand Intervention
Market Drivers
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- Key points
- Hold tight: it’s a bumpy ride
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- Figure 10: FTSE 100 and FTSE All-Share – daily index movements, January 2004-September 2014
- Global market cap grew strongly in 2013, but can this be repeated in 2014?
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- Figure 11: Market capitalisation of global stock exchanges, by region, 2008-14
- Legislative and regulatory developments
- FCA investigated market abuse controls and agency responsibilities
- Ban on new referral payments to discretionary fund managers
- Platforms adjust to new charging rules in myriad ways
- Pressure mounts over investment fund fee transparency
- International initiatives
- CRD IV brings added disclosure and reporting pressures
- MiFID II aims to close ‘gaps’ in the existing regulatory framework and bolster investor confidence
Market SWOT Analysis
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- Figure 12: Wealth management market – SWOT analysis, 2014
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Who’s Innovating?
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- Key points
- Hargreaves Lansdown plans to launch a D2C discretionary service to help fill the ‘advice gap’
- Others are set to follow suit
- The rise of the ‘online’ wealth manager
- Technology firm launches app for mass affluent investors
- Digital innovation
Market Size and Forecast
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- Key points
- Wealth manager revenues saw modest growth in 2013
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- Figure 13: Size of the UK wealth management sector, by number of client accounts, value of investment assets managed or administered and total revenues, 2009-13
- Increased volatility in Q4 2014 could hit asset wealth
- Looking ahead: steady growth forecast
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- Figure 14: Total UK wealth management industry revenues – fan chart, 2009-19
- Figure 15: Forecast of total UK wealth management industry revenues, 2014-19
- Forecast methodology
- Fan chart explanation
Segment Performance
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- Key points
- Full-service wealth managers put in the strongest performance in 2013
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- Figure 16: Number of wealth manager accounts and the value of assets managed, by type of firm, 2010-13
- Private banks have seen their share of total industry turnover decline over the past four years
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- Figure 17: Wealth manager revenues, by type of firm, 2010-13
- Investment management fee income is the dominant revenue stream
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- Figure 18: Proportional distribution of wealth manager revenue streams, by type of firm, 2012 and 2013
- Firms managed to cut costs in 2013…
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- Figure 19: Operational costs as a proportion of revenue, by type of firm, 2010-13
- …boosting profitability
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- Figure 20: Profit margin, by type of firm, 2010-13
Portfolio Composition
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- Key points
- Nearly a fifth of all client accounts are valued at over £250K
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- Figure 21: Number of wealth manager accounts/portfolios, by value band (nominee accounts only), 2013
- Private banks have seen a 6% drop in client portfolios worth under £250K
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- Figure 22: Number of wealth manager accounts/portfolios, by firm type and value band (nominee accounts only), 2013
- Asset allocations have hardly altered over the past five years
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- Figure 23: Proportional distribution of wealth manager assets, by type of asset class, 2009-13
- Just over a fifth of investment assets are held in some form of tax wrapper
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- Figure 24: Proportional distribution of wealth manager assets, by ownership, 2013
Market Share
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- Key points
- St James’s Place closes the gap on market leaders, Coutts and Barclays
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- Figure 25: Largest 15 wealth managers, by assets under management – UK, 2012 and 2013
Companies and Products
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- Coutts
- Description
- Position in the market
- Private client proposition and investment philosophy
- Distribution
- Key corporate data
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- Figure 26: Coutts key data – UK private client business only, 2009-13
- Figure 27: RBS Group’s Wealth division – key annual data, 2011-13
- Recent activity
- Barclays
- Description
- Position in the market
- Private client proposition and investment philosophy
- Distribution
- Key corporate data
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- Figure 28: Barclays key data – UK private client business only, 2009-13
- Figure 29: Barclays’ Wealth and Investment Management division – key financial data, 2011-13
- Recent activity
- St James’s Place Wealth Management
- Description
- Position in the market
- Private client proposition and investment philosophy
- Distribution
- Key corporate data
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- Figure 30: St James’s Place Wealth Management key data – UK private client business only, 2009-13
- Figure 31: St James’s Place Wealth Management – key annual data, 2011-13
- Recent activity
Brand Communication and Promotion
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- Key points
- Wealth managers spend a limited amount on above-the-line advertising
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- Figure 32: Top ten advertisers of wealth management products and services, 2010-14
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- Figure 33: Total advertising expenditure on wealth management and other related products and services, 2010-14
- Press and outdoor remain the most used advertising channels
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- Figure 34: Proportional distribution of adspend on wealth management, by media type, 2010-14
Channels to Market
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- Key points
- Discretionary sector is the largest, by number of client accounts…
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- Figure 35: Number of client accounts/portfolios, by mandate type, 2009-13
- …and by assets under management
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- Figure 36: Investment assets held by wealth managers, by mandate type, 2009-13
- Discretionary returns under pressure
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- Figure 37: Revenue return on discretionary and advisory assets, 2009-13
Segmenting the Target Wealth Market
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- Key points
- Survey background
- Classifying respondents according to their level of wealth
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- Figure 38: Segmentation of total sample, by value of investable assets (wealth tier), July 2014
- A note about the data
- Demographic profile and variations
Management Approach and Usage of Professional Client Services
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- Key points
- Less than half of the target wealth market employ the services of a professional adviser, at least some of the time
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- Figure 39: Segmenting the target wealth market, by approach to investment management and decision-making, July 2014
- Evidence of a shift towards self-directed decision-making among the wealthiest tiers
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- Figure 40: Approach to investment management and decision-making, by wealth tier, July 2012 and July 2014
- Contact with professional advisers tends to be on an irregular or ad hoc basis
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- Figure 41: Frequency of contact for advice or to trade, by type of firm, July 2014
- More than half of the affluent and HNW have never used the services of a wealth manager
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- Figure 42: Frequency of contact for advice or to trade, by type of firm and wealth tier, July 2014
- Using technology to bridge the advice gap
Investment Holdings
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- Key points
- Asset holdings increase with wealth
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- Figure 43: Pensions, investments and other assets held, by wealth tier, July 2014
- More regular contact with advisers helps to build more complex and diversified portfolios
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- Figure 44: Pensions, investments and other assets held, by management approach, July 2014
Attitudes toward Risk and Investment Interests
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- Key points
- The affluent and HNW are less likely to be ‘cautious’
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- Figure 45: Attitudes toward risk, geographic exposure and investment interests, by wealth tier, July 2014
- Management approach influences investment choice
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- Figure 46: Investment approach and areas of interest, by management approach, July 2014
Attitudes toward Product Charges
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- Key points
- FCA imposes the unbundling of charges
- Less than half of respondents are confident of investment product charges being ‘fair’ and ‘value for money’
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- Figure 47: Level of confidence in product charges being clear and transparent, fair and value for money, July 2014
Investment Plans and Priorities
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- Key points
- Retirement saving is the number one priority
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- Figure 48: Saving and investment priorities over the next 12 months, by wealth tier, July 2014
- Financial goals vary according to level of wealth
- A large proportion of new client money will flow into cash- and equity-based investments
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- Figure 49: Assets expect to buy, sell or maintain over the next 12 months, July 2014
Appendix – Market Size and Forecast
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- Total market forecast – best- and worst-case scenarios
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- Figure 50: Forecast of UK wealth manager revenues – best- and worst-case scenarios, at current prices, 2014-19
- Forecast methodology
- Fan chart explanation
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