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The UK wealth landscape in 14 graphs
by Dylan Lobo on May 15, 2014 at 12:20
Stephen Wall of independent research outfit Aite recently published a detailed report into the shape of the UK wealth management industry. We highlight some standout features.
The report identified 81 banks which contained some kind of distinct wealth management offering.
To arrive at the number Aite stripped out multiple entitities within any one group, unless within their group they offer a distinct wealth management service from different bank entitities - for example RBS through Coutts and Adam & Co.
The 81 banks come from 25 different countries, with the largest proportion, 32 banks (or 40%), domestic UK banks.
Aite has divided the 81 banks into categories. Foreign commercial banks at 21% (17 banks) are the dominate force, reflecting the international nature of the UK market.
65% of the banks identified are present only in London, a reflection of the City's importance as a wealth management centre.32% of the 81 banks are present in both London and at least one other location.
Once again London's dominance is reflected by accounting for 33% (or 76) of the total 229 branches.
Overall banks' wealth management locations stretch across 50 destinations with Edinburgh, Birmingham, Manchester, Glasgow, Bristol, Leeds, Liverpool and Newcastle the most likely locations.
Lloyds is the bank with the most number of branches across the UK with presence in 25 locations, followed by Barclays, Coutts, Investec and Rathbone Brothers.
The data does not include the branch network numbers of certain major retail banking names such as Bank of Scotland, HSBC Bank and Metro Bank, where Aite could not separate the wealth management presence from the retail banking presence.
Aite moves on to inspect asset management firms which distribute wealth services directly to private clients. These firms sell products (alongside advice and possibly their own in-house product manufacturing).
Aite uses the 183 members of the Wealth Management Association (WMA) as a benchmark, of which around 106 are wealth managers. Of this 106, a total of 17 are also banks so counted in the 81 banks.
These leaves 89 asset managers that are wealth managers in the UK. Aite has identified an additional 47 firms wealth firms, lifting this number up to 136, although it estimates there could be as many as 150-200 asset manager firms in the UK which serve private clients.
Based on Aite's list of 136, 91% are of UK origin, a big shift from the banks which have a far higher international orientation.
To underline this domestic orientation, 80% of the 136 firms have no overseas presence at all. While they may service overseas clients, they do so purely from a UK base.
Aite goes on to categorise asset managers into four different types: bank, private client, stockbroker or execution-only asset manager, and financial adviser asset manager.
It has boiled these categories down to 125 firms and once again London dominates the UK presence of asset managers, although not as extensively as in the banks.
75% of the managers which fall into these classifications have a presence in London, with 44% located only in London. While this is far higher than the bank reading, 25% don't have any presence in London.
Across the 125 firms, Aite found a total of 376 branches spread across 135 locations. London was again top place for operations with 97 branches, followed by Edinburgh, Manchester, Birmingham, Bristol, Leeds, Glasgow, Exeter, Liverpool and Norwich.
In terms of coverage, the joint leading firms by number of branches are Bestinvest and Redmayne Bentley, each with 39. They are followed by Brewin Dolphin and Charles Stanley, who both have 30 offices.
The third and final wealth manager type is the family office.
Based on Aite's conversations, the UK is home to an estimated 1,000 family offices, with 90% of these single family offices.
Meanwhile, according to data from the Association of Professional Financial Advisers (APFA), as of September 2012 there were 5,123 (36%) directly authorised financial advice firms in the UK, with a further 9,086 (64%) appointed representatives for a total of 14,209 financial advisory firms.
It's important to note these figures were before RDR and numbers are likely to have changed. However, it illustrates how the number of financial advice firms far outweighs the number of banks and asset managers.
When looking across the number of IFAs working across these 14,209 firms, APFA cited 23,865 at the end of 2012, which represented a fall of almost 27,080 on 2009 numbers.