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Affluent Investing - UK - November 2015

Published By :

Mintel

Published Date : Nov 2015

Category :

Banking

No. of Pages : N/A

Wealth managers have managed to perform well in a testing investment environment in the last year. However, firms must remain vigilant in order to remain successful and provide returns for their clients. The increased market share of discretionary services in 2014 reflects investors

Table of Content

Overview

What you need to know
Report scope and definitions

Executive Summary

The market
Assets under management grew by 7.9% in 2014
Figure 1: Total UK wealth management industry revenues – Fan chart, 2010-20
Companies and brands
St James’ Place is the UK’s largest wealth manager
Figure 2: Largest 15 wealth managers, by assets under management – UK, 2014
The consumer
92% of Affluent and HNW individuals are investors
Figure 3: Saving and investment product ownership, July 2015
Two thirds make their own investment decisions
Figure 4: Approach to investment management and decision making, July 2015
Retirement is the biggest saving and investment goal
Figure 5: Saving and investment priorities for the next 12 months, July 2015
IFAs are the top choice for advice
Figure 6: Sources of financial advice when taking out an investment product, July 2015
Investors favour a long-term, cautious approach
Figure 7: Attitudes towards investments, July 2015
A fifth are more likely to save to invest in pensions since pension freedoms
Figure 8: Impact of pension freedoms on saving and investing, July 2015
What we think

Issues and Insights

Can digital services serve changing needs?
The facts
The implications
Can managers introduce risk earlier in an investor’s career?
The facts
The implications
Pension freedoms, an opportunity and a threat?
The facts
The implications

The Market – What You Need to Know

Assets under management grew by 7.9% in 2014…
driven mostly by investment managers
Discretionary services are the dominant form of wealth management
An uncertain market

Market Size and Forecast

Wealth managers’ revenues grew by 2% in 2014
Figure 9: Size of the UK wealth management sector, by number of client accounts, value of investment assets managed or administered and total revenues, 2011-15
Steady growth expected in the next five years
Figure 10: Total UK wealth management industry revenues – Fan chart, 2010-20
Figure 11: Forecast of total UK wealth management industry revenues, 2015-20
Forecast methodology

Market Segmentation

Investment managers achieved the strongest asset growth in 2014…
Figure 12: Value of assets managed, by type of wealth management firm, 2011-14
but full-service wealth managers brought in the most clients
Figure 13: Number of accounts/portfolios, by type of firm, 2013-14
Private banks saw revenues fall in 2014
Figure 14: Wealth manager revenues, by type of firm, 2011-14

Channels to Market

Most clients use discretionary services…
Figure 15: Number of client accounts/portfolios, by mandate type, 2010-14
which achieved 10% growth in assets in 2014
Figure 16: Investment assets held by wealth managers, by mandate type, 2011-14

Market Drivers

Volatility on the stock market
Global markets slow and show signs of decline
Figure 17: Market capitalisation of global stock exchanges, by region, 2009-15
Legislative and regulatory environment
Introduction of MiFID II nears
Pension freedoms create new opportunities
Summer Budget ends permanent non-dom status and cuts tax relief on pensions
Reduction to deposit protection

Key Players – What You Need to Know

St James’ Place is the UK’s largest wealth manager
Innovation or tradition?
Above-the-line advertising expenditure cut by 45%

Market Share

St James’ Place is the UK’s largest wealth management firm
Figure 18: Largest 15 wealth managers, by assets under management – UK, 2013 and 2014

Competitive Strategies

Product and regulatory developments in digital innovation…
but traditions remain important
Focus on higher-value clients

Advertising and Marketing Activity

Above-the-line advertising spend fell by 45% in 2015
Figure 19: Top ten recorded above-the-line, direct mail and online display advertisers of wealth management products and services, 2011-15
Press and outdoor advertising dominate advertising channels
Figure 20: Recorded above-the-line, direct mail and online display advertising expenditure on wealth management products and services, by media type, 2013-15
Nielsen Media Research coverage

The Consumer – What You Need to Know

Investment ownership increases with wealth…
while most investors have diversified assets
Two thirds make their own investment decisions
Retirement is the biggest saving and investment goal
IFAs are the top choice for advice
Investors favour a long-term, cautious approach
A fifth are more save to invest in pensions since pension freedoms

Segmenting the Target Wealth Market

Segmentation of wealth tiers
Figure 21: Segmentation of total sample, by investable assets, July 2015
Panel composition

Saving and Investment Product Ownership

Wealthier individuals are more likely to invest
Figure 22: Saving and investment product ownership, July 2015
Most clients have diversified assets…
Figure 23: Repertoire of currently owned savings and investment products, July 2015
especially Affluent and HNW clients
Figure 24: Repertoire of currently owned savings and investment products, by wealth tier, July 2015
Property appeals to diversified investors, but only to a point
Figure 25: Repertoire of currently owned savings and investment products, by saving and investment products owned, July 2015

Investment Management Approach

Two thirds make all their own decisions
Figure 26: Approach to investment management and decision making, July 2015
All groups turn towards self-directed investing
Figure 27: Approach to investment management and decision making, by wealth tier, 2012-15

Saving and Investment Priorities

Retirement is the top priority for the next year
Figure 28: Saving and investment priorities for the next 12 months, July 2015
Priorities change with age
Figure 29: Selected saving and investment priorities for the next 12 months, by age, July 2015
Over-65s prioritise looking after what they have

Sources of Financial Advice

IFAs are the top source of advice
Figure 30: Sources of financial advice when taking out an investment product, July 2015
Online platforms fail to achieve growth in interest…
but adventurous investors are willing to use their services
Figure 31: Sources of financial advice when taking out an investment product, by attitude towards investment risk, July 2015

Attitudes towards Investing

Long-term gains are more important than anything else
Figure 32: Attitudes towards investments, July 2015
Cautiousness is most common among the Aspirational
Figure 33: Agreement with the statement “I’m fairly cautious” towards investing, by wealth tier, July 2015
Green and ethical issues make little impact
Under-45s have shorter-term ambitions
Figure 34: Agreement with attitudes towards investments, by age, July 2015

Impact of Pension Freedoms on Saving and Investing

Most investors feel unaffected by pension freedoms…
Figure 35: Impact of pension freedoms on saving and investing, July 2015
but 30% of under-45s are now more likely to save in a pension
Figure 36: Impact of pension freedoms on saving and investing, by age, July 2015

Appendix – Market Size and Forecast

Figure 37: Best- and worst-case forecast of total UK wealth management industry revenues, 2015-20
Forecast methodology

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Key sources

List of Table

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