Abstract
Introduction
The country' s serious economic issues are having a major effect on the UK' s
onshore wealthy population, potentially causing them to lose faith in their
wealth managers. To keep clients, wealth managers need to know what this
lucrative customer wants from them, in terms of products, services and
interaction.
Scope of this research
- HNW demographic and attitudinal attributes based on our Wealth Management
Market Leaders Survey 2009
- Extensive primary research from 20 wealth management companies highlights
their strategies for revenue growth, acquiring and keeping clients
- Indepth assessment of how RBS' s UK wealth management operations are
currently perceived, following the spate of bad news from the RBS group
Research and analysis highlights
UK HNWs are displaying typically defensive behavior in the face of the
economic instability, and have lifted their proportion of assets held in cash
and near cash from 15% in 2008 to 28% in 2009. Within the ranks of the HNWs
there are, however, a significant number looking to position for the recovery.
British wealth managers see increased face to face contact as key to
increasing share of wallet; ironically they are currently among the worst in
Europe at keeping in touch with clients, and this is something that they must
address.
The dramatic fall of the RBS group has damaged its collection of prized
private banking operations in the UK. RBS needs to focus on strengthening the
client-banker relationship at the current time. Meanwhile, RBS' s competitors
should be using this opportunity to plunder RBS' s treasures: its clients and
relationship managers.
Key reasons to purchase this research
- Understand the HNW population' s investments by sector and geography,
appetite for risk, and reasons for choosing/leaving their wealth service
- Assess the threats and opportunities for wealth managers by understanding
how peers are planning to grow revenues, acquire and keep clients
- Gain an understanding of the strengths and weaknesses of RBS' s UK wealth
management operations, as well as the associated opportunities and threats
Table of Contents
OVERVIEW
- Catalyst
- Summary
- Methodology
EXECUTIVE SUMMARY
- RBS' s wealth management service appears to be ripe for plundering
- After many years of prosperity, Britons have fallen on hard times
- HNWs are mostly defensive, but there are important differences in their
attitudes that wealth managers need to cater for
- Wealth managers need to consider the overlooked area of advisory services
and step up the frequency of their client contact
SPECIAL FEATURE: RBS' S VULNERABLE WEALTH MANAGEMENT SERVICE
- RBS' s wealth management service is looking weak on a number of fronts and
competitors would do well to exploit this
- RBS has a significant wealth management operation in the UK
- RBS has undergone a dramatic slide and has needed to be bailed out by
the UK government
- RBS' s wealth management operations are being affected by these changes
- RBS' s brand and perception of financial stability have taken a knock,
putting even more of an emphasis on service quality
- RBS' s wealth management offering is rated by its peers as slightly above
average, but is nothing special
- RBS has been relatively successful at keeping clients from defecting,
but not at keeping relationship managers from defecting
- There are plenty of weaknesses that RBS needs to address and that
competitors should be exploiting
- Key implications for RBS: concentrate on clients and relationship
managers
- Key implications for RBS' s competitors: it is open season on RBS' s
clients and relationship managers
THE UK' S WEALTH
- The years of heady growth and prosperity have come to a dramatic end in
Britain
- Redundancies, pay freezes and reduced bonuses have become the order of
the day
- For business owners it has become much more difficult to generate wealth
- Property prices in the UK have undergone sharp falls
- The stock market has been the centre of much selling activity
- UK investors continue to play it safe with their wealth
- Deposits have attracted a lot of money of late
- Wealth data in 2009
THE UK HIGH NET WORTH INVESTOR
- UK HNWs have displayed typically defensive behavior but are starting to
return to the riskier asset classes
- UK investors have moved en masse into cash, but they are already moving
money into equities in anticipation of a recovery
- Over the next two years, fixed income, real estate and alternative
investments will become more important in HNWs' portfolios
- The key product winners in two years' time will be closed ended real
estate funds and corporate bonds
- British HNWs may not be particularly knowledgeable on investments but they
are demanding when it comes to service
- HNWs exhibit lower than average knowledge of products and market
conditions
- UK HNWs are demanding when it comes to their wealth management service
- The current market declines have impacted on different clients in
different ways
- Clients' investment demands are changing but not in a uniform way
THE UK WEALTH MANAGER' S VIEW
- Wealth managers disagree about what HNWs will be demanding in two years'
time but agree about which areas to focus resources on
- Several fundamental products and services will be in demand from HNWs in
the next two years
- There are a few common areas where wealth managers will be focusing
resources in two years' time
- While personal relationships are still key in HNWs' choice of wealth
managers, clients are focusing much more on the financial stability of
providers
- Financial stability is very important to HNWs in Britain
- British wealth managers see personal relationships as their biggest
strengths, and brand, image and reputation as their biggest weaknesses
- Customer contact is important both in terms of increasing share of wallet
and improving client retention
- Increased face to face contact is the key to increasing share of wallet
- Wealth managers that do not make errors will be very successful at
retaining HNWs
- UK wealth managers are not talking to their clients with the same
frequency as their European counterparts
- British clients are being contacted by phone less frequently than in
other countries
- UK wealth managers are the worst in Europe at meeting their clients face
to face
- The performance of their overall portfolio is what HNWs most want to
talk about when they speak to their wealth manager
- UK wealth managers generally feel that competitors owned by nationalized
or part-nationalized banks will become less competitive
- Wealth managers are not particularly positive about the prospects for
nationalized or part-nationalized banks
- Wealth managers believe that nationalized and part-nationalized
providers are not seen as more sound by clients, and will face a number of
problems going forward
APPENDIX
- The drivers of growth in the wealthy population
- Income growth (combined with inflation, changes in GDP by sector,
household savings rates and debt levels)
- Investment returns (market capitalization, interest rates and bond
yields)
- The following measures are not, in themselves, drivers of wealthy
population growth
- Market capitalization
- GDP
- The following measures are not drivers of wealthy population growth except
under very restricted circumstances
- Primary residence value growth
- Inheritance
- Methodology
- Wealth Management Market Leaders Survey 2009
- Global Wealth Model
- Bibliography
- Definitions
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
TABLES
- Table: Wealth managers' view about the strengths and weaknesses of RBS' s
wealth management services
- Table: Wealth managers' view about the strengths and weaknesses of RBS' s
wealth management services
- Table: Wealth managers' view about the strengths and weaknesses of RBS' s
wealth management services
- Table: RBS is looking very vulnerable as a business
- Table: What proportion of your HNWs' portfolios is allocated to the
following five asset classes?
- Table: HNWs' portfolio allocation now versus in 2 years' time
- Table: HNWs' portfolio allocation by product area now, versus in two
years' time
- Table: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat
low, 3 = somewhat high, 4 = very high)
- Table: HNW attributes on a scale of 1 to 4 (1 = very low, 2 = somewhat
low, 3 = somewhat high, 4 = very high)
- Table: What are HNWs demanding today?
- Table: In two years' time, how much demand do you expect from HNWs for the
following product areas?
- Table: What product areas will your wealth management service focus most
resources on in the next two years?
- Table: What will determine HNWs' choice of wealth management service over
the next two years?
- Table: What are your company' s biggest strengths and weaknesses today?
- Table: What is the most effective means of increasing share of wallet
today?
- Table: What is the best way to retain clients today?
- Table: On average, how often do your relationship managers speak by phone
to each HNW client?
- Table: On average, how often do your relationship managers speak in person
to each HNW client?
- Table: When speaking with clients, what do they most want to talk about
today?
- Table: To what extent do you agree with the following? (1 = strongly
disagree, 2 = somewhat disagree, 3 = somewhat agree, 4 = strongly agree)
- Table: To what extent do you agree with the following? (1 = strongly
disagree, 2 = somewhat disagree, 3 = somewhat agree, 4 = strongly agree)
FIGURES
- Figure: The luster has disappeared from RBS' s brand, image and reputation,
but it still offers above average service quality
- Figure: RBS is slightly above average for products, about average in
advisory service and below average for technology
- Figure: RBS is not good at keeping its relationship managers from defecting
- Figure: The labor market has been hit by higher unemployment and lower
average real wages
- Figure: The AIM market illustrates how hard things are for British
entrepreneurs looking to create or realize wealth
- Figure: The British property bubble has popped, and many predict further
falls in value
- Figure: The FTSE has been hit hard, but not as badly as other European
markets
- Figure: Britons have pruned back their holdings in bonds, shares and
mutual funds
- Figure: The majority of HNW wealth in the UK is invested in the ' equities'
asset category, with this accounting for 30% of all investments
- Figure: Investors will return to the out of favor asset classes in the
next two years
- Figure: In 2011, investors will have less of their portfolios in equities
- Figure: HNW investors in the UK have a lower market and product knowledge
than their European counterparts
- Figure: Personal relationships and personal contact are still paramount in
retaining HNWs
- Figure: In the UK, HNW investors' greatest demand is for discretionary
asset management services
- Figure: In two years' time, the greatest demand amongst HNW investors in
the UK will be for discretionary asset management with 25% of HNW investors
demanding this category of product
- Figure: Wealth managers in the UK will be focusing most of their resources
on discretionary asset management in two years' time
- Figure: HNW investors in the UK are most influenced by personal
relationships with clients in their choice of wealth manager
- Figure: The greatest strength of wealth managers in the UK is their
personal relationships with clients
- Figure: The best way for wealth managers in the UK to increase share of
wallet is by increasing face to face contact
- Figure: The best way for wealth managers in the UK to retain HNW investors
is to make no/less errors
- Figure: In the UK, wealth management relationship managers speak to
clients by phone approximately once a month
- Figure: Wealth management relationship managers speak in person to clients
approximately once each half year
- Figure: The majority of clients in the UK want to speak to their wealth
manager about the performance of their overall portfolio
- Figure: Wealth managers in the UK think that boutique wealth managers will
have the best opportunities in the next few years
- Figure: Nationalization and part-nationalization has lead to negative
perceptions of wealth managers
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