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Wealth in the UK: Competitive Dynamics 2016

  • November 2016
  • -
  • Verdict Financial
  • -
  • 39 pages

Summary
Since the introduction of the Retail Distribution Review (RDR) in 2012, the UK wealth management competitive landscape has undergone a steady evolution. New business models have emerged as both new and established players seek ways to address the range of financial demands of retail, mass affluent, and cost-conscious high net worth (HNW) individuals. Several digital platforms have launched in the UK market in 2016, ranging from extensions of traditional wealth managers to robo-advisors. With the Financial Conduct Authority (FCA) addressing issues of regulated technology and improved communication, initiatives will continue to develop going forward.

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 over 8% year-on-year between 2014 and 2015.

- The advice market continues to be a key focus for the FCA, which introduced a series of proposals in March 2016 to improve access. One such proposal centers around an 'Advice Unit' to help grow the automated advice market in the UK by helping firms develop mass-market automated advice models.

- Merger and acquisition (MandA) activity has largely been driven by established players wanting to capture greater market share or expand their client offerings. For example, Aegon acquiring Cofunds from Legal and General and Cazenove Capital Management acquiring the wealth management business of C. Hoare and Co.

- To resonate with audiences who prefer digital-only solutions and simplified advice, the robo-advice market in the UK grew with new entrants Wealthify and Munnypot.


Synopsis
“Wealth in the UK: Competitive Dynamics 2016” analyzes the UK wealth management market, with a focus on the top 20 competitors and the HNW investor segment. The report is based on analysis using Verdict Financial's 2016 Global Wealth Managers Survey and Verdict Financial's UK Regional Wealth Markets Analytics.

Specifically the report includes:

- An overview of the top wealth managers in the UK based on business model and minimum investment thresholds and ranking based on AUM.

- Recent news related to regulations that pertain to wealth managers. This includes improved communication with consumers, investors with non-domiciled status, technology, and Brexit's impact on regulation.

- Insight into recent MandA activity, new entrants to the UK market, and divestment activity.

- Product and service innovations, including automated services and personalized offerings.


Reasons To Buy
- Identify the top 20 wealth managers in the UK by AUM and minimum investment thresholds.

- Gain insight into MandA activity and organic growth for both new entrants and incumbents.

- Understand changes made to UK regulations related to MiFID, consumer communication, and technology.

- Learn about recent product and service innovations among traditional wealth managers.

- Understand the growth within robo-advice services.

Table Of Contents

Wealth in the UK: Competitive Dynamics 2016
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 current landscape of the UK advice market is made more clear following the FCA's financial advice survey
FAMR has led to a number of proposals to improve access to advice
The FCA has also sought to improve consumer communication
Wealth managers now have more guidance on how to present information
The FCA focuses on regulatory technologies through Project Innovate
Despite Brexit, MiFID II remains on the horizon, but has been pushed back to 2018
The RDR has largely paved the way for MiFID II
The FCA continues to request stakeholder input regarding MiFID II
The permanent non-domiciled status will be terminated in 2017
Further amendments to non-domicile rules will have an impact on UK property
The FCA is increasing accountability in the financial services sector
Brexit will no doubt impact the UK financial market
Business conduct and culture are key issues in encouraging compliance
New rules on whistle blowing have been launched in 2016
Firms will have increased responsibility over their staff under the Senior Managers and Certification Regime
The largest fines in 2016 were imposed for misconduct in the wealth management and asset management markets
The FCA has published the final version of the UCITS Remuneration Code to impose new requirements for management companies and risk-taking.
Recruitment in wealth management is focused on regulation-related roles
COMPETITIVE TRENDS
MandA activity
The most notable MandA deal was Societe Generale's acquisition of Kleinwort Benson
The IFA market has witnessed a slowdown in MandA activity
Major players carry out divestment activity in 2016
Organic growth and restructures
Wealth managers strengthened their regional presence
Wealth manager restructuring in 2016 centered around maximizing efficiencies
New entrants comprised international firms and robo advisors
New entrants comprised UK operations by international firms
New robo-advice platforms also enter the UK wealth management space
Product and service innovation
Wealth managers respond to demand for online platforms with a personal touch
Traditional wealth managers look to robo-advice services
Some wealth managers have launched enhanced financial planning solutions
New services have been launched to target HNW and UHNW segments
Wealth managers in the UK target expat populations
APPENDIX
Abbreviations and acronyms
Definitions
Affluent
Domicile
HNW
Liquid assets
Mass affluent
Overall methodology
Verdict Financial's 2016 Global Wealth Managers Survey
Global Wealth Model methodology
PAM UK data
Bibliography
Further reading
About Verdict Financial
Disclaimer


List of Tables
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


List of Figures
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, 2015
Table 4: Top 20 UK wealth management firms by AUM (£m), 2014-15
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, October 2015 - September 2016
Table 9: Succession Group has completed 10 acquisitions since October 2015
Table 10: Divestment activity, 2016
Table 11: UK wealth managers expanded their regional reach in 2016
Table 12: A number of companies launched in the UK in 2015 and 2016
Table 13: A number of robo-advice firms launched in the UK
Table 14: Wealth managers are targeting wealthy clients with new services

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