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Market Research Report

Wealth in the UK: HNW Investors 2018

Published by GlobalData Product code 356913
Published Content info 57 Pages
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Wealth in the UK: HNW Investors 2018
Published: September 12, 2018 Content info: 57 Pages
Description

The UK's wealth market is established and already home to a large number of international and local providers that offer a wide array of private banking products, providing HNW investors with relatively little incentive to offshore their fortunes and, indeed, attracting a great deal of foreign wealth. While the well-developed nature of the UK's wealth market has resulted in few new entrants targeting HNW investors over the past few years, its unique characteristics provide significant opportunities for wealth managers willing to seize them.

Intergenerational wealth transfer will be a big source of new business over the coming years, as will tax planning - with both requiring professional advice and planning. One of the main challenges is an increase in demand for both advisory and automated solutions, indicating a shift away from an industry with a traditionally strong preference for discretionary mandates. Brexit and related volatility are likely to shift HNW asset allocations in the UK, but will have limited impact on the country's cross-border attractiveness as a destination for HNW wealth.

"Wealth in the UK: HNW Investors 2018", report analyzes the investing preferences and portfolio allocation of British HNW investors.

Key Findings:

  • At 14.6%, the UK has a higher proportion of female HNW investors than Europe.
  • Inheritance planning will continue to be big business, but wealth managers can differentiate themselves by adding tax planning to the mix.
  • Demand is increasing for both advisory mandates and automated solutions like robo-advisors.
  • Over the next 12 months, UK HNW investors are expected to move away from equities and bonds in favor of property and commodities.

Scope:

  • Profiles of average British HNW investor in terms of their demographics and looks at the expat opportunity in the UK.
  • Explores which wealth management mandates are preferred among UK HNW investors and how demand will develop going forward.
  • Examines the allocation of British HNW investors' portfolios into different asset classes and how this is expected to develop in the future.
  • Analyzes HNW investors' propensity to invest offshore, their preferred booking centers and asset classes, as well as the UK's standing as an offshore center.
  • Identifies wealth and investment management product and service demand among HNW investors in the UK.

Reasons to buy:

  • Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
  • Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors' preferences for the various styles of asset management.
  • Tailor your investment product portfolio and service proposition to match current and future demand for different asset classes among HNW individuals.
Table of Contents
Product Code: FS0151IA

Table of Contents

1. EXECUTIVE SUMMARY

  • 1.1. Already a mature wealth market, the UK still offers room for growth
  • 1.2. Key findings
  • 1.3. Critical success factors

2. OVERVIEW

  • 2.1. Succeeding in the UK's HNW market requires an understanding of evolving HNW demand patterns
  • 2.2. Demographics: Professionals employed in financial services and technology represent a lucrative target market
  • 2.3. Expats: Providers will have to work hard to make the expat opportunity work
  • 2.4. Lack of expertise drives uptake of advice
  • 2.5. Asset allocation: Commodities are on the rise
  • 2.6. Offshore preferences: A good investment track record and a wide range of products can entice wealth home
  • 2.7. HNW product and service demand: Wealth managers have the opportunity to attract customers with a tax planning offering

3. THE UK IS ONE OF THE FEW EUROPEAN MARKETS IN WHICH WOMEN ARE A MAJOR SEGMENT

  • 3.1. Wealth managers are missing a trick if they ignore female HNWs
    • 3.1.1. Wealthy female investors are growing as an opportunity in the UK market
    • 3.1.2. The female HNW market is poorly serviced both around the world and in the UK

4. UK HNW INVESTORS WANT THEIR WEALTH MANAGED PROFESSIONALLY

  • 4.1. Discretionary mandates have a longstanding foothold with UK HNWs
    • 4.1.1. Wealth managers need to be adept at building trust to win discretionary mandates
    • 4.1.2. Much of the discretionary preference in the UK is due to the busy nature of the typical HNW Brit
    • 4.1.3. UK wealth managers must lead with time-saving and expertise-led messaging to maintain a foothold with discretionary mandates
    • 4.1.4. Demand is increasing for both advisory and discretionary services
    • 4.1.5. Wealth managers in the UK need to address the robo-advice threat and opportunity
  • 4.2. Wealth managers should focus on a hybrid model to attract and retain clients
  • 4.3. Investing in corporate branding will help mitigate outflows as client relationships become less important

5. VOLATILITY IS A KEY DRIVER OF INVESTOR ASSET PREFERENCES

  • 5.1. Investors are looking for a portfolio to shield them from Brexit but still grow
    • 5.1.1. Wealth managers need to clearly communicate their Brexit strategy and the investments that cope best
  • 5.2. Wealth managers should embrace commodities
    • 5.2.1. Commodities provide wary UK HNW investors with hedge and growth opportunities
    • 5.2.2. Diversification, returns, and safety are driving UK HNWs to hold and add to their commodities portfolio
  • 5.3. Property will return to prominence in UK HNW investment portfolios - but not through direct residential investment
    • 5.3.1. The majority of property allocations are in REITS
    • 5.3.2. UK HNWs are unlikely to be affected too much by the current downturn
  • 5.4. Record dividend payment predictions for 2018 are compelling for equity ownership, but should be mixed with growth stocks

6. WEALTH MANAGERS THAT RAMP UP THEIR TAX, RETIREMENT, AND INHERITANCE PLANNING WILL GAIN

  • 6.1. Demand is increasing for pensions and retirement planning
    • 6.1.1. Broad government policy changes have prompted a rethink of investors' investment plans in most areas
    • 6.1.2. Just over half of wealth managers in the UK offer tax advisory services, making this a point of differentiation
    • 6.1.3. Tax services will also help capture and retain HNW expats
    • 6.1.4. Providing tax advice can help bring offshored holdings back to the UK
  • 6.2. Wealth managers can do more to capitalize on inheritance planning demand
    • 6.2.1. Inheritance planning needs to be seen as a means for retaining AUM as it passes to heirs
    • 6.2.2. Only focusing on the next generation limits earning opportunities
  • 6.3. The UK wealth market is not yet ready to embrace blockchain as part of HNW service offerings
    • 6.3.1. Wealth managers need to educate overly enthusiastic clients regarding cryptocurrencies
    • 6.3.2. Blockchain is not yet considered secure enough for use as a tool for investing
    • 6.3.3. Blockchain will most likely not be used in customer-facing settings

7. BREXIT IS NOT A THREAT TO OFFSHORE WEALTH MANAGEMENT - BUT THE UNCERTAINTY IS

  • 7.1. The UK is the world's second-largest offshore booking center
    • 7.1.1. Wealth managers need multiple country desks to accommodate the offshore market
    • 7.1.2. Concerns about Brexit's impact on the UK's appeal as an offshore center are overstated
    • 7.1.3. The UK is yet to see the impact of CRS on offshore inflows
  • 7.2. UK wealth managers will continue to find Asian and Russian offshore investors a lucrative target market
    • 7.2.1. Russian offshore wealth is unlikely to diminish post-Brexit, despite security threat claims
  • 7.3. Wealth managers should focus on diversification benefits to attract a wider range of investments

8. APPENDIX

  • 8.1. Abbreviations and acronyms
  • 8.2. Supplementary data
  • 8.3. Definitions
    • 8.3.1. Affluent
    • 8.3.2. HNW
    • 8.3.3. Liquid assets
  • 8.4. Methodology
    • 8.4.1. GlobalData's 2017 Global Wealth Managers Survey
    • 8.4.2. GlobalData's 2016 Global Wealth Managers Survey
    • 8.4.3. Level of agreement calculation
    • 8.4.4. Service level of demand score
    • 8.4.5. Forecast and projected level of demand calculation
  • 8.5. Bibliography
  • 8.6. Further reading

List of Tables

  • Table 1: Cash and near-cash products: importance of asset allocation drivers
  • Table 2: Equities: importance of asset allocation drivers
  • Table 3: Bonds: importance of asset allocation drivers
  • Table 4: Property: importance of asset allocation drivers
  • Table 5: Commodities: importance of asset allocation drivers
  • Table 6: Alternatives: importance of asset allocation drivers

List of Figures

  • Figure 1: Female HNW investors tend to be younger than their male counterparts
  • Figure 2: Expats represent just 5.6% of the UK HNW population, down from previous highs
  • Figure 3: UK HNW individuals are seeking expertise in the face of an uncertain economic future
  • Figure 4: Investors' significant allocation to equities requires hedging and risk mitigation
  • Figure 5: Tax efficiency is the number one offshore driver, highlighting the need for efficient local tax strategies to keep money in the UK
  • Figure 6: The growing tax planning need is not currently being met
  • Figure 7: There are more HNW women in the UK than all the countries of Central and Eastern Europe
  • Figure 8: Wealthy women in the UK are busy running companies and need wealth managers that can offer convenience
  • Figure 9: Discretionary mandates are the preferred style of asset management
  • Figure 10: The bulk of UK HNW investors are still very active, with severe time constraints that make convenience a major selling point
  • Figure 11: Trust is a major driver behind converting clients to discretionary mandates in the UK
  • Figure 12: Demand in the UK for discretionary asset management is strong and growing
  • Figure 13: UK wealth managers are worried about losing business to automated platforms
  • Figure 14: Brand, performance, and good relationships are the key to retention
  • Figure 15: Schroders sees the stars aligning for strengthening commodities prices
  • Figure 16: Hedging is a clear driver for UK HNWs in the commodities market
  • Figure 17: Price growth is still a driver for property investment in the UK
  • Figure 18: Demand is increasing for pensions and retirement planning
  • Figure 19: UK wealth managers should consider adding tax advisory services to their offering
  • Figure 20: Wealth managers should add tax planning to their offering where possible
  • Figure 21: Expats book in the UK to take advantage of tax breaks
  • Figure 22: Tax efficiencies are the main reason HNW expats leave wealth offshore
  • Figure 23: Intergenerational wealth transfer represents a significant opportunity in the UK
  • Figure 24: BNP Paribas has a strong next-generation program
  • Figure 25: St. James's Place Wealth Management offers a large suite of intergenerational wealth planning
  • Figure 26: UK wealth managers are polarized in their views on blockchain security
  • Figure 27: UK wealth managers are still comparatively conservative about blockchain technology
  • Figure 28: The UK is the world's second-largest offshore booking center and one of its most diverse
  • Figure 29: Most of the strengths of the London offshore market will endure even a messy Brexit
  • Figure 30: The UK is currently a popular booking center among Asian and Russian HNW offshore investors
  • Figure 31: Offshore wealth is more likely to be held in sophisticated investments
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