the wealth management market
United Kingdom

Update 31/10/2019

MARKET SUMMARY

1.1 Definition and scope of the market research

Wealth management is at the heart of the United Kingdom's financial services industry and this market represents nearly £3.1 trillion in 2018, with £1.6 trillion in investable liquid personal financial assets and £1.5 trillion in defined benefit pension assets. It is the largest asset management centre in Europe and the second largest in the world after the United States. This growth is explained by the fact that the number and wealth of wealthy people in the United Kingdom has increased steadily in recent years. Housing price appreciation, low debt ratios and a favourable economy have all contributed to the creation and appreciation of wealth. However, the sector is changing and evolving, threatened by the risks posed by Brexit.

As a reminder, the activity of asset manager is organised in three stages. The first step is to evaluate, through a balance sheet, the assets of the person who wishes to outsource the management of his assets. The next step is to establish the profile of the person who entrusts his or her assets and in particular his or her risk aversion, profit expectations, i.e. the desired profitability and short and long-term objectives. Finally, it is a matter of managing and investing this capital according to the profile of the assets and the person. The following criteria must then be optimized: profitability, risk or asset transfer.

Wealth management is very dynamic in the United Kingdom and benefits from many technical and tax advances. Indeed, the extensive pension reform in the United Kingdom in 2015 allows people to take charge of their retirement savings for the first time, creating new financial advisory needs for many people. However, traditional asset managers have difficulty attracting these clients, who are much more concerned about the cost of commissions. British asset managers are therefore finding it difficult to increase the number of their clients despite the growing demand for financial advice from retail investors, who are turning instead to acquisitions and partnerships for growth. In addition, with the implementation of MiFID II and GDPR and the high compliance costs, regulation remains a major concern for UK financial advisors. In addition, the presence of robot advisors in the wealth management industry in the United Kingdom is becoming increasingly important, participating in the in-depth review of the industry's business models.

The business model is therefore undergoing a major transformation as the sector digitizes and due to another important phenomenon, the reduction in costs for products and advice, which will continue to decline. Finally, there is a growing demand for access to sustainable and responsible investments that would help to partially reshape the investment model.

 

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