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Wealth in the UK: Competitive Dynamics 2015

  • November 2015
  • -
  • Verdict Financial
  • -
  • 38 pages

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 (MandA) 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 MandA 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.

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: MandA, 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.

Table Of Contents

Wealth in the UK: Competitive Dynamics 2015
Table of Contents
Executive Summary
Key findings
Critical success factors
Market Structure
UK wealth managers use a wide range of business models
Family offices and private banks keep investment thresholds high
Wealth managers are concentrated in London and the South East
The UK's top wealth managers continue to grow their books
Discretionary investment thresholds remain stable among the top 20
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
The FCA and the PRA have launched new remuneration rules to discourage excessive risk taking
Competitive Trends
MandA activity
The most notable MandA deal was St. James's Place's acquisition of Rowan Dartington
The IFA market has witnessed a significant amount of MandA activity
The sale of Coutts International was the most high profile divestment in 2015
Organic growth
Wealth managers strengthened their regional presence
New entrants comprised domestic players and new UK operations by international firms
Product and service innovation
Online investment platforms and simplified advice seek to attract cost-conscious investors
A number of new services have been launched to target the HNW and UHNW markets
Mobile wealth management remains an important area of development in 2015
Abbreviations and acronyms
Liquid assets
Mass affluent
Overall methodology
Verdict Financial's 2014 Global Wealth Managers Survey
Global Wealth Model methodology
PAM UK data
Exchange rates
Further reading
About Verdict Financial

List of Tables
Table 1: The different types of UK onshore wealth management providers
Table 2: Competitors with the highest investment thresholds (for discretionary portfolios), 2015
Table 3: Liquid assets held and percentage of HNW clients' assets by region, 2014
Table 4: Top 20 UK wealth management firms by AUM (£bn), 2013-14
Table 5: Minimum investment thresholds across the top 20 competitors
Table 6: Average investment threshold of the top 20 competitors, by business model
Table 7: Fines imposed by the FCA on wealth managers
Table 8: Wealth manager acquisitions, 2015
Table 9: Bellpenny has completed 10 acquisitions so far in 2015
Table 10: Divestment activity, 2015
Table 11: Wealth managers expanded their regional reach in 2015
Table 12: A number of new companies launched in 2015
Table 13: Wealth managers are targeting wealthy clients with new services
Table 14: Pound sterling-US dollar exchange rate, December 31, 2013 and December 31, 2014

List of Figures
Figure 1: Different competitor models focus on different customer segments
Figure 2: The top 20 wealth managers by total AUM are concentrated in London and the South East
Figure 3: Wealth managers' reactions are mixed when it comes to evaluating the impact of RDR

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