Wednesday, July 04, 2007
Wealth managers outstrip the stock market
By Steve Lodge
Published: June 29 2007, FT
Britain’s wealth-management industry has grown at a significantly faster rate than stock markets for the first time in 15 years – highlighting the increasing use of these services by the rich.
Assets under management grew by 22 per cent to £377bn last year, compared with a 13 per cent rise in the FTSE All-Share Index, according to the industry analyst ComPeer.
The number of people with investable assets of £250,000 or more who have become wealth-management clients rose by 15 per cent.
Alison Malton, ComPeer's managing director, said: “Clients' confidence in both stock markets and the wealth-management sector appears to have returned. Firms have succeeded in attracting an increased share of the wealth of existing clients and also, very importantly, succeeded in attracting new clients.”
The past year saw “exceptional” levels of new business, with a net inflow of £33bn of assets. Previously, industry assets have tended to rise and fall in line with underlying stock markets.
Despite the latest growth, the industry still manages only 26 per cent of the wealth of Britain's richest people. ComPeer said much of the rest would be in property, cash or looked after by wealthy people themselves. This left plenty of room for expansion by the sector.
Overall revenues were £3.4bn – less than 1 per cent of assets – while pre-tax profits totalled £817m across the 155 private banks, private client stockbrokers and investment managers surveyed for ComPeer's annual industry report. Wealthy people were increasingly realising they could get “good service and good rates”, it said. “It's a myth the very rich don't care what they're charged.”
Ultra-high-net-worth clients with tens of millions to invest were negotiating hard and getting a “semi-institutional” service.
ComPeer also predicts a squeeze on profit margins in coming years as competition intensifies and new clients shop around.
Self-invested personal pensions (Sipps), which allow more investment flexibility than traditional pensions, have been the fastest growing account type.
Ms Malton said: “The majority of this business has come from investors consolidating existing pension arrangements into a single Sipp wrapper, meaning that wealth managers are taking market share from the life and pensions companies. Sipps provide an opportunity to transform the size of the private client industry in the UK, provided firms can secure their share”
Execution-only stockbrokers, who do not provide advice, also saw an exceptional year, with average profit margins of 18 per cent – on a par with those of advisory and discretionary brokers. ¶ 12:35 AM
Published: June 29 2007, FT
Britain’s wealth-management industry has grown at a significantly faster rate than stock markets for the first time in 15 years – highlighting the increasing use of these services by the rich.
Assets under management grew by 22 per cent to £377bn last year, compared with a 13 per cent rise in the FTSE All-Share Index, according to the industry analyst ComPeer.
The number of people with investable assets of £250,000 or more who have become wealth-management clients rose by 15 per cent.
Alison Malton, ComPeer's managing director, said: “Clients' confidence in both stock markets and the wealth-management sector appears to have returned. Firms have succeeded in attracting an increased share of the wealth of existing clients and also, very importantly, succeeded in attracting new clients.”
The past year saw “exceptional” levels of new business, with a net inflow of £33bn of assets. Previously, industry assets have tended to rise and fall in line with underlying stock markets.
Despite the latest growth, the industry still manages only 26 per cent of the wealth of Britain's richest people. ComPeer said much of the rest would be in property, cash or looked after by wealthy people themselves. This left plenty of room for expansion by the sector.
Overall revenues were £3.4bn – less than 1 per cent of assets – while pre-tax profits totalled £817m across the 155 private banks, private client stockbrokers and investment managers surveyed for ComPeer's annual industry report. Wealthy people were increasingly realising they could get “good service and good rates”, it said. “It's a myth the very rich don't care what they're charged.”
Ultra-high-net-worth clients with tens of millions to invest were negotiating hard and getting a “semi-institutional” service.
ComPeer also predicts a squeeze on profit margins in coming years as competition intensifies and new clients shop around.
Self-invested personal pensions (Sipps), which allow more investment flexibility than traditional pensions, have been the fastest growing account type.
Ms Malton said: “The majority of this business has come from investors consolidating existing pension arrangements into a single Sipp wrapper, meaning that wealth managers are taking market share from the life and pensions companies. Sipps provide an opportunity to transform the size of the private client industry in the UK, provided firms can secure their share”
Execution-only stockbrokers, who do not provide advice, also saw an exceptional year, with average profit margins of 18 per cent – on a par with those of advisory and discretionary brokers. ¶ 12:35 AM
