UK High Net Worth Customers 2006

[Amy Cole]

I enclose details of our latest UK High Net Worth Customers Report.   
   
2005 has seen the UK private banking industry enjoying  a turnaround in its fortunes after a prolonged period of flat performance. The painful cost-cutting measures of recent years have meant that the sector has been able to fully reap the benefits of rising equity markets. UK HNW Customers 2006 analyzes the developments in the market to provide an in-depth guide to this industry.    
   
Scope of this title:   

- Comprehensive data from our proprietary Global Wealth Model sizing the HNW market by number of individuals and liquid assets    

- Market sizing data for the period 2000-2005 with detailed splits by age and gender    

- Detailed analysis of competitor trends based on a series of in-depth interviews with top executives in the UK private banking market    

- Forecasts up to 2010 sizing the market for HNWs by number of individuals and liquid assets    
   
Highlights of this title:   

American wealth managers lead the upper high net worth market  in 2005, as Morgan Stanley Private Wealth Management, Merrill Lynch and Goldman Sachs lead in terms of AuM, while Barclays Private Bank and UBS, major players in the upper high net worth field in previous years, have both become lower high net worth competitors.    
   
Identifying and acquiring the right staff is a major concern for many UK wealth managers, partly as a result of business expansion in emerging markets, threatening the cost base and leading managers to initiate staff training programs to create qualified staff from scratch, while non-traditional avenues are also being explored.    
   
Between 2005 and 2010, the total value of liquid assets held by high net worth individuals in the UK will have reached GBP846.7bn, having grown at a compound annual rate of 9.3% over this time. The greatest share of wealth will be held by those with between GBP2m and GBP5m, who collectively will hold GBP133.6bn by 2010.    
   
Reasons to order your copy:   

- Plan your strategies on the basis of detailed market information, with the UK HNW market sized with forecasts to 2010    

- Gain valuable insight into the market trends and discover views and opinions of some of the UKs major wealth managers    

- Benchmark yourself against your competitors and identify niches/opportunities available for future success using the detailed competitive analysis   
   
For a complete index of this report click on:   
http://www.researchandmarkets.com/product/9d3750/uk_high_net_worth_customers_2006   
   
Report Index:   
   
Introduction 4   
What is this report about? 4   
Market context 4   
Competitive dynamics 5   
Trends in UK HNW wealth management 6   
The future decoded 7   
   
Chapter 1.    
   
Introduction    
What is this report about? 20   
Who is the target reader? 20   
How to use this report 20   
   
Chapter 2.    
   
Market context    
Introduction 22   
Key findings 22   
The UK wealth market continued to grow in 2005 23   
The UK HNW population has fallen slightly since 2004 relative to the total population 23   
There were 877,300 high net worth individuals in the UK in 2005 24   
High net worths in the UK were worth a total of GBP541.5bn in 2005 24   
Following a dip in 2003 the number of wealthy individuals in the UK has grown relatively rapidly 25   
The amount of wealth held by high net worth individuals has risen 4.6% since 2000 26   
Wealthy women hold fewer assets than men despite being in the majority 27   
Almost three quarters of high net worth women hold assets worth less than GBP500k 28   
Males holding over GBP1m in assets accounted for 30.3% of all assets held by high net worth individuals 29   
Since 2000 the assets held by male high net worths have grown faster than those held by high net worth women 30   
Older age groups continue to dominate the UK wealth market 31   
Those between 66 and 75 with between GBP200k and GBP250k are the largest client segment in terms of number of individuals 32   
Those with GBP1m+ between the ages of 56 and 65 hold more wealth than any other high net worth segment 33   
The 18-45 age group has been growing the fastest between 2000 and 2005 34   
Assets held by the 18-45 age group have seen the greatest growth over the past five years 35   
Data tables 37   
Gender breakdowns 38   
Age breakdowns 42   
   
Chapter 3.    
   
Competitive dynamics    
Introduction 50   
Key findings 50   
The upper HNW competitive landscape in the UK has changed significantly in the past year 51   
American wealth managers lead the market in terms of assets under management in 2005 51   
Merrill Lynch also has the greatest number of private client accounts among the upper HNW competitors 52   
Dalton Strategic Partnership has the largest average AuM per client account 53   
Baring Asset Management has the highest average number of client accounts per client relationship staff member 54   
While Morgan Stanley Private Wealth Managements relationship staff manage the largest average sum each 55   
The lower HNW competitive landscape is dominated in most aspects by the largest wealth managers in the UK 56   
Barclays Wealth Management leads the market in terms of private client assets under management 56   
Barclays has far more private client accounts than its lower HNW competitors 58   
Clients of Jupiter Asset Management have the largest average portfolio 58   
Raymond James Investment Services has the lowest average number of client accounts per client relationship staff member 59   
While UBS Wealth Management relationship staff manage the largest average sum each 60   
The market penetration of the major competitors has risen since 2004 to represent almost half the total market 61   
Data tables 63   
Upper HNW competitors 63   
Lower HNW competitors 68   
   
Chapter 4.    
   
Trends in uk hnw wealth management    
Introduction 73   
Key findings 73   
M&A activity has slowed in the UK while growing across Europe 74   
Consolidation has been widely discussed but rarely effectively actioned in the UK market over the past year 75   
Although consolidation has been slower over the past year, there is less distinction between wealth related financial services 76   
Entry into the UK market without an existing base is now extremely challenging 76   
Branding and capital are vital for new entrants to the UK high net worth market 76   
Identifying and acquiring the right staff is a major concern for many UK wealth managers 77   
Staff training programs are being put in place to create qualified staff from scratch 77   
Non-traditional avenues are also being explored to find potential staff 78   
The search for qualified staff is a potential threat to the cost base 78   
Business expansion into emerging markets has affected senior staffing levels within UK firms 78   
Regional expansion in the UK market is likely to evolve as the challenge is now to provide integrated and comprehensive regional offerings 79   
Targeting clients outside of London is a strategy that is bearing fruit for many wealth managers 80   
Regional targeting has often concentrated on trying to attract a particular group in the area 80   
Wealth managers are seeking to develop sophisticated targeting strategies to attract regional clients 80   
Compliance with new regulation has raised several issues for wealth managers 81   
There are significant levels of dissatisfaction with the changes that have occurred and their impact on businesses 81   
Despite dissatisfaction, principles-based approaches are appreciated by wealth managers 81   
Regulatory changes have had an effect on the way businesses are structured and run 82   
MiFID will open up new opportunities across Europe, but it is already placing extra demands in terms of compliance 82   
Changing IT needs have increased the level of outsourcing within the industry 83   
Outsourcing is partly driven by increasing cost levels 83   
While some firms seek to improve efficiency and client service in their use of technology 83   
Offshore wealth management faces a number of barriers to growth 84   
Repatriation of wealth from offshore centers is a growing international trend that impacts strongly on UK based players 84   
Some wealth managers have bucked the trend and developed their offshore business 85   
Changes in the profile of wealthy individuals in the UK are shifting strategies for targeting and acquiring clients 85   
Segmentation strategies are not universally popular as a form of client targeting 86   
Lateral segmentation of clients is a key way of developing targeting strategies 86   
Business owners, entrepreneurs, women and ethnic groups are all viewed as lucrative segments that are currently underserved 86   
Increasingly bespoke solutions for clients are becoming standard 87   
UK clients expect more from their wealth manager 87   
Raised client expectations are also part of the increasing sophistication of the average wealth management offering 87   
Product development has been steered by changing regulations 88   
Wealth managers have been developing SRI or ethical products and services. 88   
Several products tackling the problem of inheritance tax have been launched over the past year 88   
Property has been a focus both as an asset class and as an area of interest for wealthy individuals 89   
UCITS III products continue to be launched in the UK 90   
The trend towards the development of increasingly complex products continues 90   
In uncertain times clients are looking for guarantees and limited risk from their investment products although some are venturing back to equities 91   
Although some feel that equities are making a comeback others see a shift towards continental attitudes among clients 91   
Alternative investments continue to develop and increase in popularity 91   
Various forms of investment in real estate and property have been the subject of keen interest among clients 91   
Service trends have developed to meet client demands 92   
A holistic approach to service is becoming more prevalent among UK wealth management 92   
A multi management approach in investment management is becoming more common 93   
   
THE FUTURE DECODED   
Introduction 94   
Key findings 94   
There will be 1.34 million high net worth individuals in the UK by 2010 94   
Onshore liquid assets held by UK HNWs will be worth GBP846.7bn by 2010 95   
The industry is expected to become polarized while client profiles and services will change in the near future 96   
A combination of factors will cause the UK wealth management industry to continue to polarize 97   
An aging client base will lead to the introduction of a new generation of clients 97   
Increased volatility in markets will generate demand for multi management and even greater diversification 98   
Data tables 99   
Data tables 99   
   
APPENDIX    
Definitions 101   
AuM 101   
Assets under management. 101   
Advisory portfolio management 101   
Aggregate 101   
CAGR 101   
Discretionary portfolio management 101   
The family office 102   
Hedge fund 102   
HNW 102   
IFA 102   
Liquid assets 102   
Lower HNW competitor 102   
Mass affluent 103   
SIPP 103   
Upper HNW competitor 103   
Research methodology 103   
Global Wealth Model Methodology 103   
The UK sub model 103   
Forecasting methodology 104   
Continuous refinement to the understanding of liquid wealth distribution 104   
Our wealth numbers compared with other wealth numbers 105   
Customer information 105   
Competitor information 106   
Further Reading 106   
Global Wealth Management SPP 106   
Interactive Databases 106   
Market Reports 106   

List of Tables   
Table 1: HNWs as a proportion of the UK adult population, 2005 37   
Table 2: Number of HNW individuals by liquid asset band, 2000-2005 37   
Table 3: Value of HNW individuals by liquid asset band, 2000-2005 38   
Table 4: Number of HNW individuals split by gender, 2000-2005 38   
Table 5: Value of HNW liquid assets split by gender, 2000-2005 39   
Table 6: Number of HNW individuals by gender and asset band, 2005 39   
Table 7: Value of HNW liquid assets by gender and asset band, 2005 40   
Table 8: Indexed historic growth by gender, 2000-2005 40   
Table 9: Number of HNW males by liquid asset band, 2000-2005 41   
Table 10: Value of HNW liquid assets held by males, 2000-2005 41   
Table 11: Number of HNW females by liquid asset band, 2000-2005 42   
Table 12: Value of HNW liquid assets held by females, 2000-2005 42   
Table 13: Number of HNW individuals by age band, 2000-2005 43   
Table 14: Value of HNW liquid assets by age band, 2000-2005 43   
Table 15: Number of HNW individuals by age and liquid asset band, 2005 44   
Table 16: Value of HNW liquid assets by age and liquid asset band, 2005 44   
Table 17: Number of HNW individuals aged 18-45 by liquid asset band, 2000-2005 45   
Table 18: Value of HNW liquid assets held by 18-45 year olds, 2000-2005 45   
Table 19: Number of HNW individuals aged 46-55 by liquid asset band, 2000-2005 46   
Table 20: Value of HNW liquid assets held by 46-55 year olds, 2000-2005 46   
Table 21: Number of HNW individuals aged 56-65 by liquid asset band, 2000-2005 47   
Table 22: Value of HNW liquid assets held by 56-65 year olds, 2000-2005 47   
Table 23: Number of HNW individuals aged 66-75 by liquid asset band, 2000-2005 48   
Table 24: Value of HNW liquid assets held by 66-75 year olds, 2000-2005 48   
Table 25: Number of HNW individuals aged 75+ by liquid asset band, 2000-2005 49   
Table 26: Value of HNW liquid assets held by those over 75, 2000-2005 49   
Table 27: Upper HNW competitors by private client assets under management, end of year 2005 63   
Table 28: Upper HNW competitors by number of private client accounts, 2005 64   
Table 29: Upper HNW competitors by average AuM per client account, 2005 65   
Table 30: Upper HNW competitors: number of client accounts per client relationship staff member, 2005 66   
Table 31: Upper HNW competitors: AuM per client relationship staff member, 2005 67   
Table 32: Lower HNW competitors by private client assets under management, 2005 68   
Table 33: Lower HNW competitors by number of private client accounts, 2005 69   
Table 34: Lower HNW competitors by average AuM per client account, 2005 70   
Table 35: Lower HNW competitors: number of client accounts per client relationship staff member, 2005 (of top 25 competitors in terms of number of client accounts) 71   
Table 36: Lower HNW competitors: AuM per client relationship staff member, 2005 72   
Table 37: Forecast number of HNW individuals by liquid asset band, 2005-2010 99   
Table 38: Forecast value of HNW liquid assets by liquid asset band, 2005-2010    

List of Figures   
Figure 1: Only 1.8% of the UK population was high net worth in 2005 23   
Figure 2: 90% of HNW individuals hold liquid onshore assets worth less than GBP1m 24   
Figure 3: Almost half of HNW onshore liquid assets are concentrated in the hands of those with assets of GBP1m+ 25   
Figure 4: Between 2000 and 2005 the total number of HNWs has grown by 2.8% compounded annually 26   
Figure 5: In 2005 assets held by UK HNWs rose above GBP500bn for the first time 27   
Figure 6: There are slightly more wealthy women than men but HNW men hold a greater proportion of HNW assets 28   
Figure 7: Females with assets between GBP200k and GBP250k represent the largest HNW customer segment 29   
Figure 8: More than half of the wealth held by male high net worth is held by those with over GBP1m in liquid assets 30   
Figure 9: HNW males have seen their numbers and their assets grow faster than those of HNW women since 2000 31   
Figure 10: The majority of UK HNWs are above the age of 65 while the majority of HNW assets are controlled by those older than 55 32   
Figure 11: The largest single segment is made up of those with between GBP200k and GBP250k who are aged between 66 and 75 33   
Figure 12: Over half of all wealth held by those below the age of 66 was held by those with GBP1m or more 34   
Figure 13: There has been a compound annual increase of 5.8% in the number of high net worths aged between 18 and 45 since 2000 35   
Figure 14: Assets held by high net worths aged 18-45 have grown at a compound annual rate of 12.5% between 2000 and 2005 36   
Figure 15: In 2005, Merrill Lynch became the player with the greatest amount of UK-based assets under management among the upper HNW competitors 52   
Figure 16: Merrill Lynch takes over as the competitor with the most UK private client accounts in 2005 53   
Figure 17: Dalton Strategic Partnership had the highest average assets per client account among the upper HNW market competitors in 2005 54   
Figure 18: Among upper HNW competitors the number of client accounts per relationship staff member varies widely 55   
Figure 19: Morgan Stanley Private Wealth Managements client relationship staff manage an average of GBP268.5m on behalf of its clients 56   
Figure 20: Barclays Wealth Management led the lower HNW competitive field in terms of AuM in 2005 57   
Figure 21: Barclays has by far the largest number of private client accounts among the lower HNW competitors 58   
Figure 22: There was relatively little variation between average private client account values among lower HNW competitors in 2005 59   
Figure 23: James Brearley & Sons had by far the highest client account loading ratio among lower HNW competitors in 2005 60   
Figure 24: UBS Wealth Managements client relationship staff manage more of their firms AuM each than any other lower HNW competitor 61   
Figure 25: Just over half of all HNW liquid assets were not managed by the major wealth managers in 2005 62   
Figure 26: The UK HNW population will grow to 1.34 million by 2010 95   
Figure 27: HNW liquid assets in the UK will grow to be worth GBP846.7bn by 2010 96   
   
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Thank you for your consideration.   
Best Regards,   
   
Amy Cole
   
Senior Manager
   
Research and Markets Ltd
   
amy.cole na researchandmarkets.com   
   
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