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Wealth in the UK: Competitive Dynamics 2015

Summary

Since the introduction of the Retail Distribution Review (RDR) in 2012, the UK wealth management competitive landscape has been undergoing a steady evolution. New business models have emerged as both new and old players seek ways to cost-effectively serve retail, mass affluent, and cost-conscious high net worth (HNW) individuals. A steady stream of direct-to-consumer (D2C) propositions have been launched in the market in 2015, ranging from simplified advice services to robo-advisor offerings and execution-only propositions. With the Financial Conduct Authority (FCA) and HM Treasury launching a consultation into access to advice, we believe this trend will continue into 2016 and beyond.

Key Findings

  • UK wealth manager activity is concentrated in London and South East England. This is unsurprising, as these regions are home to nearly a third of all UK-based HNW individuals.
  • The market leader in terms of assets under management (AUM) is St. James’s Place, followed by Coutts and Barclays. The AUM of the top 20 UK wealth managers grew by around 8% year-on-year between 2013 and 2014.
  • Merger and acquisition (M&A) activity has largely been driven by increasing consolidation in the independent financial advisor (IFA) segment, with competitors with acquisition-led growth strategies (such as AFH Financial Group, Attivo Group, and Bellpenny) accounting for a major share of the 2015 M&A activity.
  • To reach retail and mass affluent customers a number of wealth managers are launching or developing their simplified advice service platforms. Examples include EQ Investors, Charles Stanley, Investec, and Towry.
  • The advice market continues to be a key focus for the FCA, which published guidance in 2015 on boundaries
  • concerning regulated investment advice and is currently seeking views on how simplified advice and robo-advice could help close the advice gap.
Synopsis

Verdict Financial’s “Wealth in the UK: Market Dynamics” report is a comprehensive analysis of UK’s wealth management markets.

What else does this report offer?
  • Overview of the market structure by business model and client thresholds
  • Competitor rankings by AUM
  • Analysis of key regulations relevant to wealth managers, including: the FCA’s guidance on retail investment advice, MiFID II and RDR
  • Insight into the competitive landscape: M&A, new entrants, departures
  • Key trends in product and service developments: new D2C propositions, mobile wealth
Reasons To Buy
  • To find out the latest wealth manager rankings and benefit from the AUM data for 20 biggest competitors.
  • To understand the key pieces of regulation and their impact on the wealth managers, such as MiFID II and the new guidance on simplified advice.
  • To gain insight into the latest product and service trends, such as low-cost  simplified advice services and wealth management apps.


  • Executive Summary
    • Key findings
    • Critical success factors
  • Market Structure
    • UK wealth managers use a wide range of business models
      • Table The different types of UK onshore wealth management providers
    • Family offices and private banks keep investment thresholds high
      • Table Competitors with the highest investment thresholds (for discretionary portfolios), 2015
    • Wealth managers are concentrated in London and the South East
      • Table Liquid assets held and percentage of HNW clients' assets by region, 2014
    • The UK's top wealth managers continue to grow their books
      • Table Top 20 UK wealth management firms by AUM (£bn), 2013-14
      • Discretionary investment thresholds remain stable among the top 20
        • Table Minimum investment thresholds across the top 20 competitors
        • Table Average investment threshold of the top 20 competitors, by business model
  • Regulatory Trends
    • The advice market continues to be a focus of FCA regulation
      • The boundaries of regulated advice were clarified following FCA guidance
      • The FCA also launched a consultation with HM Treasury to improve access to advice
    • For UK wealth managers RDR has largely paved the way for MiFID II
      • HNW clients have welcomed fee transparency
      • The FCA is in the process of implementing MiFID II
    • The permanent non-domiciled status will be terminated in 2017
      • The change in non-domicile rules will have an impact on family offices
    • The FCA has sought to address effective and compliant communication
      • Wealth managers now have more guidance on social media
      • The FCA introduces informal steer for faster advice and a regulatory sandbox for fintech companies
    • More generally, the FCA is increasing accountability in the financial services sector
      • Business conduct and culture are key issues in encouraging compliance
      • New rules on whistleblowing will be launched in 2016
      • Firms will have increased responsibility over their staff under the Senior Managers Regime
      • The largest fines in 2015 were imposed for misconduct in the foreign exchange and IBOR markets
        • Table Fines imposed by the FCA on wealth managers
      • The FCA and the PRA have launched new remuneration rules to discourage excessive risk taking
  • Competitive Trends
    • M&A activity
      • The most notable M&A deal was St. James's Place's acquisition of Rowan Dartington
        • Table Wealth manager acquisitions, 2015
      • The IFA market has witnessed a significant amount of M&A activity
        • Table Bellpenny has completed 10 acquisitions so far in 2015
      • The sale of Coutts International was the most high profile divestment in 2015
        • Table Divestment activity, 2015
    • Organic growth
      • Wealth managers strengthened their regional presence
        • Table Wealth managers expanded their regional reach in 2015
      • New entrants comprised domestic players and new UK operations by international firms
        • Table A number of new companies launched in 2015
    • Product and service innovation
      • Online investment platforms and simplified advice seek to attract costconscious investors
      • A number of new services have been launched to target the HNW and UHNW markets
        • Table Wealth managers are targeting wealthy clients with new services
      • Mobile wealth management remains an important area of development in 2015
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • Affluent
      • Domicile
      • HNW
      • Liquid assets
      • Mass affluent
    • Overall methodology
      • Verdict Financial's 2014 Global Wealth Managers Survey
      • Global Wealth Model methodology
      • PAM UK data
      • Exchange rates
        • Table Pound sterling-US dollar exchange rate, December 31, 2013 and December 31, 2014
    • Bibliography
    • Further reading

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