Abstract
The wealth management and private banking industry has enjoyed several years of strong growth buoyed by healthy equity and property markets and a rapidly growing population of high net wealth individuals. This report looks at the industry and its sub-sectors with new consumer research providing insight into the thoughts and motivations of the HNW demographic.
Considering the current economic climate, Mintel' s research revealed a remarkably assured group of HNW households. Attitudes towards remaining invested in all asset classes are very good, giving us an insight to the knowledgeable and disciplined approach the many HNW individuals take to their long-term investing. Knowledgeable advisers with a good track record remain important to consumers in an industry that remains very relationship-driven.
Market share details reveal an industry dominated at the top by big international names but still possessing a roster of many tens of players. Industry growth appears poised to remain strong, barring the current situation growing into a large economic collapse, although participants will need to reinforce relationships as investors get jittery.
- The wealth management and private banking industry has grown impressively in the past few years, both in the amount of assets under management and in the number of clients' accounts.
- The population of the wealthy, households earning £100K+, has been increasing strongly for the past six years. Barring profound economic difficulties in 2008, the trend should continue.
- Despite capital markets being in turmoil since September, the intention to continue investing, in all asset classes, is very strong on the part of the wealthy.
- The personal nature of the wealth management and private banking industry remains important. Advice remains very relationship-driven, although subtle changes are creeping in.
Table of Contents
- Issues in the Market
- Market in Brief
- Key points
- A segmented market...
- ...and a growing market
- Figure 1: Population of high net wealth individuals, 2005 and 2006
- Markets enter a volatile period
- Figure 2: FTSE 100 index, 1988-2008
- Growing revenues
- Figure 3: Revenue growth, by subsector, 2003-06
- High earners are engaged, interested and knowledgeable
- Figure 4: Attitudes towards investing, January 2008
- The owner/operator
- Figure 5: Occupational make-up high net worth individuals, by investible assets, July 2007
- Internal Market Environment
- Key Points
- SIPPs driving interest
- Figure 6: Product ownership, December 2007-January 2008
- Asset allocation
- Client recruitment -- building relationships...
- ...with staff quality paramount
- A renewed push
- Treating Customers Fairly
- London as the furnace
- Broader Market Environment
- Key Points
- Varying opinions on what 2008 holds
- The government moves to ease interest rate fears
- Figure 7: Bank of England Base rate, 1985-2007
- The FTSE had enjoyed a strong run, until now
- Figure 8: FTSE 100 index monthly close, 1988-2008
- Disposable income growth still looks good for future
- Figure 9: Growth in PDI, 2002-12
- Growth forecast in the number of ABs
- Figure 10: Socio-demographic composition of United Kingdom, adults aged 15+, 2006-12
- Influences on consumer confidence
- Figure 11: Consumer confidence-influencing investment behaviour, 2008
- Competitive Context
- Key Points Summary:
- The IFA and the high street bank
- Figure 12: Sources of wealth management advice, 2006
- Online
- Property investing
- Figure 13: Investment ownership, June 2007
- Figure 14: Size of the buy-to-let market, 2000-07 (H1)
- Strengths and Weaknesses in the Market
- Strengths
- Property investing is losing its sparkle
- Investors remain committed to staying invested
- Continuing growth in the need for professional advice
- Population of wealthy is growing strongly
- SIPPs set up
- Weaknesses
- Economic and financial markets' instability
- Raft of new and sophisticated products and changes in regulations intimidate some consumers
- Mass-market availability of products
- Internet making self-management possible
- Market Size
- Key Points
- Strong growth
- Figure 15: Total wealth management sector, 2005 and 2006
- From mass affluent to super rich
- Figure 16: Liquid asset* ownership within the wealthiest 5% of UK adults, 2001 and 2006
- Portfolio size
- Figure 17: Population, by portfolio size, 2006
- Sub-sector growth
- Figure 18: Market growth, 2005 and 2006
- Mandate type
- Figure 19: Asset control, 2004-06
- Segment Performance
- Key Points
- Revenue by sub-sector
- Figure 20: Revenues, by sub-sector, 2003-06
- Assets by type of firm
- Figure 21: Assets, by firm, 2004-06
- Types of accounts used
- Figure 22: Tax wrapper, 2006
- Investment types
- Figure 23: Investment type, 2006
- Revenues sources -- Execution only execution-only brokers
- Figure 24: Execution-only brokers' revenue divisions, 2000 and 2006
- Revenue sources -- Full-service brokers
- Figure 25: Full-service brokers' revenue divisions, 2000 and 2006
- Market Share
- Key Points
- Big names dominate
- Figure 26: Assets, by firm size, 2006
- Industry table
- Figure 27: Assets under management, 2007
- Companies and Products
- Key Points Summary:
- Minimum assets required
- Figure 28: Minimum investible assets required, 2007
- Barclays Wealth
- Coutts & Co
- Brewin Dolphin
- Schroders
- Brand Communication and Promotion
- Key Points
- Minimal above-the-line adspend
- Figure 29: Adspend on press, television, radio, print and outdoor, by selected wealth management service providers and private banks, 2002/03-2006/07
- Secondary advice
- Figure 30: Sources of financial advice, by liquid assets, 2007
- Channels to Market
- Key Points
- Manager route
- Figure 31: Market share, by manager, 2006
- Would not use advice
- IFAs are feeling the squeeze
- Stockbroker
- The Consumer -- Product Ownership, Investible Assets, Population and Attitudes
- Key Points
- Population
- Figure 32: Population of households earning £100K+, 2000/01-2006/07
- Opportunities and Implications
- Topping the earning charts
- Figure 33: Product ownership, December 2007-January 2008
- Opportunities and Implications
- Investible assets...
- Figure 34: Investible assets, December 2007-January 2008
- ...and the link to product ownership
- Figure 35: Product ownership, by investible assets, December 2007-January 2008
- Implications and opportunities
- Asset maximisation key
- Figure 36: Feelings about investing and wealth, December 2007-January 2008
- Opportunities and implications
- The Consumer -- Advice
- Key Points
- High street bank still key for high earners
- Figure 37: Sources of financial advice, December 2007-January 2008
- Opportunities and implications
- Spreading the net
- Figure 38: Sources of financial advice, by investible assets, December 2007-January 2008
- Opportunities and implications
- Quality of staff holds the secret of success
- Figure 39: Attributes sought in advice firms, December 2007-January 2008
- Independence -- how important is it?
- Figure 40: Attributes sought in advice firms, by investible assets, December 2007-January 2008
- Implications and opportunities
- Referral is crucial
- Figure 41: How adviser was selected, December 2007-January 2008
- Opportunities and implications
- Is there any need for advice?
- Figure 42: Investment decision-making process, December 2007-January 2008
- Figure 43: Investment decision-making process, by investible assets, December 2007-January 2008
- Help, not hand holding
- Implications and opportunities
- Appendix -- Minimum Investible Assets Required
