For our final event in 2018, we looked at the state of wealth management in the UK and what firms can do in times of demographic changes. Alex Reidegeld provides a summary of the event.
Trends in Wealth Management
- Assets held in the UK are fast approaching £1 trillion, mostly held in Private Banks, with a year on year growth of 13.3%
- 2017 saw a £6.78bn (6.8%) growth in revenues. With that comes a cost increase of £5.07bn (5.4%)
- Majority of cost increase is driven by the need for increased spending on IT & Operations to meet rising technological demands. This is also reflected in the higher number of In-House IT staff (6.1% increase year on year)
- Profitability remains an issue for many firms and only 1 in 5 firms might be scalable if revenues continue to grow
The Investor’s View
Stats based on ComPeer investor research conducted in 2018
- Average investor is male (61% vs 39% female) and 49 years old with £705k investable assets
- Key criteria when selecting a wealth manager are investment performance (23%), followed by levels of service (1% and level of bespoke service (13%)
- Availability of technology only ranked 9 out of 12 important criteria. A social media presence is also not rated as important, but negative comments on social media will impact decisions.
- 45% of participants thought the value for money their wealth manager provides has stayed the same in the last 12 months, 40% it has improved. Only 3% thought it has worsened
- Politeness of staff and overall reputation of the firm are seen as very important
- 45% of investors rate the digital offering of their wealth management provider as “Good”, with 26% rating it as “Excellent”
The Wealth Managers Perspective
- People always want to speak to a person in the first instance
- Don’t neglect younger generations – they know they don’t have much money to invest due to rising housing costs and stagnant wages but might do in future
- Technology is essential, apps and client portals are greatly appreciated but be careful they are not stranded in a technological desert and continue to offer personal services – especially also with view to older clients
- As automation in client on-boarding and reporting becomes the norm, make sure to talk to clients about cyber security and how to stay safe online
- The FCA places a focus on transparency, so make sure you abandon jargon so that clients can understand what they are investing in
- Prepare your customer service team to talk to clients about Ongoing Charges Figures (OCF) once these fees must be disclosed for the first time
2019 Horizon
- Getting net new money coming in is a challenge and wealth managers can’t keep relying on referrals for new clients
- Attracting younger generations is important to keep up with the mortality rate of existing clients
- Only 1 in 4 younger people have ever spoken with their parents’ wealth manager
Tips for Marketers to Take Away
- A social media presence isn’t that important but if you have one make sure you get it right. Negative reviews can be combated by addressing the complaint directly
- Start to engage younger people even though they don’t have much to invest now
- Prepare your customer service team to have difficult discussions with clients who will start to find out more detail about fees that they previously didn’t know about
- Have a solid digital offering, either app or client portal that gives comprehensive financial reporting
- Despite increasing technology, make sure people can still talk to a person for advice
