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Affluent Investing - UK - November 2015

Affluent Investing - UK - November 2015

“Wealth managers have managed to perform well in a testing investment environment in the last year. However, firms must remain vigilant in order to remain successful and provide returns for their clients. The increased market share of discretionary services in 2014 reflects investors’ belief in managers to negotiate turbulent periods better than they could do themselves.”

– Rich Shepherd, Financial Services Research Analyst

This report discusses the following key topics:

Can digital services serve changing needs?
Can managers introduce risk earlier in an investor’s career?
Pension freedoms, an opportunity and a threat?


OVERVIEW
What you need to know
Report scope and definitions
EXECUTIVE SUMMARY
The market
Figure 1: Total UK wealth management industry revenues – Fan chart, 2010-20
Companies and brands
Figure 2: Largest 15 wealth managers, by assets under management – UK, 2014
The consumer
Figure 3: Saving and investment product ownership, July 2015
Figure 4: Approach to investment management and decision making, July 2015
Figure 5: Saving and investment priorities for the next 12 months, July 2015
Figure 6: Sources of financial advice when taking out an investment product, July 2015
Figure 7: Attitudes towards investments, July 2015
Figure 8: Impact of pension freedoms on saving and investing, July 2015
What we think
ISSUES & INSIGHTS
Can digital services serve changing needs?
Can managers introduce risk earlier in an investor’s career?
Pension freedoms, an opportunity and a threat?
THE MARKET
What you need to know
Assets under management grew by 7.9% in 2014…
…driven mostly by investment managers
Discretionary services are the dominant form of wealth management
An uncertain market
Market size and forecast
Wealth managers’ revenues grew by 2% in 2014
Figure 9: Size of the UK wealth management sector, by number of client accounts, value of investment assets managed or
administered and total revenues, 2011-15
Steady growth expected in the next five years
Figure 10: Total UK wealth management industry revenues – Fan chart, 2010-20
Figure 11: Forecast of total UK wealth management industry revenues, 2015-20
Forecast methodology
Market segmentation
Investment managers achieved the strongest asset growth in 2014…
Figure 12: Value of assets managed, by type of wealth management firm, 2011-14
…but full-service wealth managers brought in the most clients
Figure 13: Number of accounts/portfolios, by type of firm, 2013-14
Private banks saw revenues fall in 2014
Figure 14: Wealth manager revenues, by type of firm, 2011-14
Channels to market
Most clients use discretionary services…
Figure 15: Number of client accounts/portfolios, by mandate type, 2010-14
...which achieved 10% growth in assets in 2014
Figure 16: Investment assets held by wealth managers, by mandate type, 2011-14
Market drivers
Volatility on the stock market
Global markets slow and show signs of decline
Figure 17: Market capitalisation of global stock exchanges, by region, 2009-15
Legislative and regulatory environment
KEY PLAYERS
What you need to know
St James’ Place is the UK’s largest wealth manager
Innovation or tradition?
Above-the-line advertising expenditure cut by 45%
Market share
St James’ Place is the UK’s largest wealth management firm
Figure 18: Largest 15 wealth managers, by assets under management – UK, 2013 and 2014
Competitive strategies
Product and regulatory developments in digital innovation…
…but traditions remain important
Focus on higher-value clients
Advertising and marketing activity
Above-the-line advertising spend fell by 45% in 2015
Figure 19: Top ten recorded above-the-line, direct mail and online display advertisers of wealth management products and services,
2011-15
Press and outdoor advertising dominate advertising channels
Figure 20: Recorded above-the-line, direct mail and online display advertising expenditure on wealth management products and
services, by media type, 2013-15
Nielsen Media Research coverage
THE CONSUMER
What you need to know
Investment ownership increases with wealth…
…while most investors have diversified assets
Two thirds make their own investment decisions
Retirement is the biggest saving and investment goal
IFAs are the top choice for advice
Investors favour a long-term, cautious approach
A fifth are more save to invest in pensions since pension freedoms
Segmenting the target wealth market
Segmentation of wealth tiers
Figure 21: Segmentation of total sample, by investable assets, July 2015
Panel composition
Saving and investment product ownership
Wealthier individuals are more likely to invest
Figure 22: Saving and investment product ownership, July 2015
Most clients have diversified assets…
Figure 23: Repertoire of currently owned savings and investment products, July 2015
…especially Affluent and HNW clients
Figure 24: Repertoire of currently owned savings and investment products, by wealth tier, July 2015
Property appeals to diversified investors, but only to a point
Figure 25: Repertoire of currently owned savings and investment products, by saving and investment products owned, July 2015
Investment management approach
Two thirds make all their own decisions
Figure 26: Approach to investment management and decision making, July 2015
All groups turn towards self-directed investing
Figure 27: Approach to investment management and decision making, by wealth tier, 2012-15
Saving and investment priorities
Retirement is the top priority for the next year
Figure 28: Saving and investment priorities for the next 12 months, July 2015
Priorities change with age
Figure 29: Selected saving and investment priorities for the next 12 months, by age, July 2015
Over-65s prioritise looking after what they have
Sources of financial advice
IFAs are the top source of advice
Figure 30: Sources of financial advice when taking out an investment product, July 2015
Online platforms fail to achieve growth in interest…
…but adventurous investors are willing to use their services
Figure 31: Sources of financial advice when taking out an investment product, by attitude towards investment risk, July 2015
Attitudes towards investing
Long-term gains are more important than anything else
Figure 32: Attitudes towards investments, July 2015
Cautiousness is most common among the Aspirational
Figure 33: Agreement with the statement “I’m fairly cautious” towards investing, by wealth tier, July 2015
Green and ethical issues make little impact
Under-45s have shorter-term ambitions
Figure 34: Agreement with attitudes towards investments, by age, July 2015
Impact of pension freedoms on saving and investing
Most investors feel unaffected by pension freedoms…
Figure 35: Impact of pension freedoms on saving and investing, July 2015
…but 30% of under-45s are now more likely to save in a pension
Figure 36: Impact of pension freedoms on saving and investing, by age, July 2015
APPENDIX
Market size and forecast
Figure 37: Best- and worst-case forecast of total UK wealth management industry revenues, 2015-20
Forecast methodology
Data sources, abbreviations and supporting information
Abbreviations
UK Research Methodology
Sampling and weighting
Face to Face Surveys
Definitions
Brand & Social Media Research
Trade research
Desk research
Statistical Forecasting
The Mintel fan chart

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