Shifts in the UK Wealth Management Landscape

Introduction

The UK wealth management market has been turned on its head as events have changed the nature of Britain's high net worths (HNWs) and altered the competitiveness of private banks. This report describes the nature of the competitive and customer changes that have taken place, and provides recommendations as to what wealth managers need to do to succeed in this new environment.

Scope

*Analyzes the data contained in Private Asset Managers 2009

*Draws on the results of Datamonitor's Wealth Management Market Leaders Survey

Highlights

In 2008, significant numbers of British HNWs moved their business away from the larger wealth managers toward the small and medium providers. Damaged brands, images and reputations and questions over the financial stability of the larger providers partly account for this shift, but the overloading of relationship managers also played a part.

The crisis has resulted in important attitudinal shifts in the UK's HNW population. HNWs are more demanding in general, and seeking greater contact with their relationship managers. There are significant numbers looking to participate in the market recovery and these individuals want their bankers to be proactive with investment suggestions.

Going forward, the larger players will need to address several areas of weaknesses, especifically the relative shortage of relationship managers within their organizations. The smaller and medium-sized players need to focus on taking clients in the short term, and holding onto them and growing their share of wallet in the longer term.

Reasons to Purchase

*Understand the changing competitive landscape in the UK, and the reasons underlying this

*Gain insight into the shifting attitudes of HNWs and what this means for wealth managers

*Learn what wealth managers need to do in the short, medium and long term to keep and capture clients

Report Highlights

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Overview
1

Catalyst
1

Summary
1

Methodology
1

Executive Summary
2

Large players have lost ground to their smaller competitors, and there is plenty for them to be worried about going forward
2

In the wake of the crisis, HNWs are wanting more banker contact and less mistakes
2

Larger wealth managers need to address the overloading of relationship managers, while smaller wealth managers need to exploit the window of opportunity
2

Table of Contents
3

Table of figures
4

Table of tables
5

COMPETITIVE CHANGES IN THE UK WEALTH MANAGEMENT MARKET
6

The largest players in the UK wealth management market have been severely tested and the rankings are changing
6

The total assets under management by the top 25 providers fell in 2008
6

For many wealth managers, the changes in AUM and total clients in 2008 went in opposite directions
8

The total number of staff has swollen and contracted in line with the movements of AUM
9

The larger players have lost ground to their smaller competitors, and there is plenty for them to be worried about going forward
11

Large wealth managers were soundly beaten in 2008 by the medium and small-sized players
11

Fundamental weaknesses around perceived financial stability, brand and personal relationships are contributing to the larger wealth managers' problems
12

The larger wealth managers appear to be overloading their relationship managers with clients
14

The relative overloading of relationship managers within larger wealth manager is not likely to ease in the near future
15

CUSTOMER CHANGES IN THE UK WEALTH MANAGEMENT MARKET
16

In the wake of the crisis, HNWs are wanting more banker contact and less mistakes
16

There is a large group of HNWs wanting to profit from recovery
16

Not making errors is seen as being key in retaining HNW clients
18

Increased face-to-face contact is the key to increasing share of wallet
19

STRATEGIC RECOMMENDATIONS FOR UK WEALTH MANAGERS
21

Larger wealth managers need to address the overloading of relationship managers and work on quality, while smaller wealth managers need to exploit this window of opportunity
21

Key action one: avoid cutting support staff-do not underestimate their importance
23

Key action two: Recruit good relationship managers and get client loading ratios to an acceptable level
23

Key action three: Assess damage to brands, images and reputations and seek to rectify problems
28

APPENDIX
29

Methodology
29

Private Asset Managers (PAM) 2009
29

Wealth Management Market Leaders Survey 2009
29

Bibliography
29

Further reading
29

Ask the analyst
29

Datamonitor consulting
30

Disclaimer
30
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List of Tables

Table 1: AUM within UK wealth managers in 2007 and 2008
7

Table 2: Changes in AUM and total clients in 2008
9

Table 3: Changes in total staff and relationship manager compared with AUM growth
10

Table 4: Changes in 2008 AUM, client base and discretionary/advisory split
12

Table 5: What will determine HNWs' choice of wealth management service over the next two years?
14

Table 6: Relationship managers within large providers do appear to be stretched compared with those in smaller providers
15

Table 7: In 2008, small and medium-sized players were strong recruiters
15

Table 8: What are HNWs demanding today?
17

Table 9: What is the best way to retain clients today?
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Table 10: What is the most effective means of increasing share of wallet today?
20

Table 11: Large wealth managers would have to vastly increase the number of relationship managers to reach the client loading factors of the smaller players
23

Table 12: Large wealth managers would have to vastly increase their numbers of relationship managers to reach the loading factors of the smaller players
25
List of Figures

Figure 1: UK HNWs are most influenced by personal relationships in their choice of wealth manager
13

Figure 2: UK HNWs are looking to ways to profit in the current environment
17

Figure 3: The best way for wealth managers in the UK to retain HNW investors is not to make errors
18

Figure 4: The best way for wealth managers in the UK to increase share of wallet is by increasing face-to-face contact
20

Figure 5: The relative client loading of the different sized players in the UK market and its impact on quality of service
24

Figure 6: Large wealth managers contact clients on the telephone less frequently than smaller players
26

Figure 7: The larger the wealth manager, the less frequently their relationship managers meet up with HNW clients
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