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Wealth in the UK: Sizing the Market Opportunity; Sizing the wealth market in the UK and its growth potential.

Wealth in the UK: Sizing the Market Opportunity; Sizing the wealth market in the UK and its growth potential.

Summary

The UK savings and investments market is dominated by deposits, which account for more than half of all liquid assets in the country. However, the growth of the market is fueled mainly by mutual funds, which have performed well even in times of capital market unsteadiness. Mutual funds have consequently attracted a constant flow of new money. Thanks to this, UK liquid assets have been growing since the end of the financial crisis, although a slowdown in recent years has been apparent

Key Findings

  •  Affluent individuals represent just over a quarter of the UK population but hold 91.7% of the UK’s liquid assets.
  •  UK wealth is concentrated mainly in London and the South East, but other regions should grow faster in the near future.
  •  52.2% of UK savings are held in deposits (most of it in instant access accounts), but the solid performance of mutual funds has been attracting inflows to this asset class.
  •  Despite holding 12.1% of their investment portfolios in commodities, property, and alternatives, the UK’s wealthiest individuals show a strong preference towards liquid products.
  •  Tax efficiency remains the main driver for high net worth (HNW) individuals opting to offshore wealth.
Synopsis

Wealth in the UK: Sizing the Market Opportunity analyzes the UK's wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.Specifically, the report:
  •  Sizes the affluent market (both by the number of individuals and the value of their liquid assets) using Verdict Financial’s proprietary datasets.
  •  Analyzes which asset classes are favoured by UK investors and how their preferences impact the growth of the total savings and investments market.
  •  Examines HNW clients’ attitudes towards non-liquid investments, such as property and commodities.
  •  Identifies key drivers and booking centers for offshore investments.
Reasons To Buy
  •  Benchmark your share of the UK wealth market against the current market size.
  •  Forecast your future growth prospects using our projections for the market to 2019.
  •  Identify your most promising client segment by analyzing the penetration of affluent individuals in the UK – both at the country and regional level.
  •  Evaluate your HNW proposition by understanding how the ever-changing UK tax system affects your HNW clients.
  •  Review your offshore strategy by learning about the HNW motivations for offshore investments and their preferred booking centers.


  • Executive Summary
    • Growth in the UK wealth market will be moderate
    • Key findings
    • Critical success factors
  • Sizing and Forecasting the UK Wealth Market
    • The UK is primarily an onshore market, but has a notable offshore business
    • Growth in the onshore market is driven by the HNW segment
      • The UK affluent market remains the fourth largest in the world
      • Affluent individuals represent 27.7% of the adult population
      • The affluent population holds 91.7% of retail liquid assets, with the wealthiest set to record the strongest growth
      • The UK's onshore wealth is concentrated in London and the South East
  • Drivers for Growth in the UK Wealth Market
    • Retail savings and investments growth is slowing but will remain positive in the future
      • The total value of savings and investments in the UK will exceed £2.5tn in 2017
      • Allocations in mutual funds have been increasing
      • Direct equity holdings will continue to decrease
    • Retail deposits have outperformed GDP and average nominal wages
      • Net inflows have been the primary driver for standard deposit growth
    • Retail bond investments account for only a fraction of UK retail savings, but growth is being aided by low inflation
    • Uncertainty regarding future stock market performance is restraining equity holdings but has a positive impact on mutual funds
      • The FTSE 100 is now struggling with growth after posting a new record level
      • The performance of the stock market has had a direct impact on equities, while mutual funds are an alternative to stock holdings
      • Mutual funds are relatively well diversified, which shields performance from the vagaries of the stock market
  • HNW Investment Preferences
    • UK HNW individuals show a strong preference for liquid investments
      • The wealthiest UK individuals are once again turning their attention to hedge funds
      • UK HNW investors have switched from direct property to funds
    • In addition to their onshore portfolios, UK HNW individuals hold 23.5% of their wealth offshore
      • Tax efficiency remains the number one motivation for offshore investment
        • Table UK income tax rates
        • Table Tax on dividend rates
        • Table Capital gains tax rates (%), 2015-16 and 2016-17
        • Table Stamp Duty Land Tax rates (%), 2016
        • Table Land and buildings transaction tax rates in Scotland (%), 2016
        • Table Annual tax on enveloped dwellings rates (%), 2015-16
      • The Isle of Man is a primary booking center for UK HNW offshore wealth
  • Appendix
    • Abbreviations and acronyms
    • Supplementary data
      • Table Total retail resident and non-resident deposits (£bn), 2006-15
      • Table Total retail resident and non-resident deposits($bn), 2006-15
      • Table Total UK adult population by pound sterling asset bands (000s), 2009-15
      • Table Forecast total UK adult population by pound sterling asset bands (000s), 2016f-19f
      • Table Total UK adult population by US dollar asset bands (000s), 2009-15
      • Table Forecast total UK adult population by US dollar asset band (000s), 2016f-19f
      • Table Total UK onshore liquid wealth by asset band (£bn), 2009-15
      • Table Forecast total UK onshore liquid wealth by asset band (£bn), 2016f-19f
      • Table Total UK onshore liquid wealth by asset band ($bn), 2009-15
      • Table Forecast total UK onshore liquid wealth by asset band ($bn), 2016f-19f
      • Table Total UK onshore liquid assets by region and affluent segment (£bn), 2015
      • Table UK retail savings and investments by asset class ($m), 2009-15
      • Table Forecast UK retail savings and investments by asset class ($m), 2016f-19f
      • Table Net inflows and interest performance of UK retail deposits excluding cash ISAs (£m), 2007-15
      • Table Net inflows and performance gains of UK retail equities (£m), 2007-15
      • Table Net inflows and performance gains of UK mutual funds (unit trusts, OEICs, and investment trusts) (£m), 2007-15
    • Definitions
      • Affluent
      • Domicile
      • DTA
      • FATCA
      • HNW
      • Liquid assets
      • Mass affluent
      • Net inflows
      • Onshore
      • Performance/interest growth
      • Residency
      • TIEAs
    • Methodology
      • Verdict Financial's 2015 Global Wealth Managers Survey
      • Global Wealth Model methodology
      • UK Retail Savings and Investments Methodology
      • Exchange rates
        • Table Pound sterling-US dollar exchange rate, December 31, 2014 and December 31, 2015

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