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Choosing a Wealth Manager: the Decision-Making Process in the UK

  • ID: 4703757
  • Report
  • Region: United Kingdom, Great Britain
  • 52 pages
  • GlobalData
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FEATURED COMPANIES

  • Betterment
  • Credit Suisse
  • Ellevest
  • HSBC
  • Investec
  • Miss Kaya
  • MORE
Choosing a Wealth Manager: the Decision-Making Process in the UK

Summary

While triggers for seeking advice differ across segments, the need for advice is centered on events where the consumer is gaining access to substantial funds, such as retirement or inheritance. Individuals in higher income bands are unsurprisingly more willing to pay for advice, but uptake can be boosted through education and the promotion of a trusted brand. Given HNW investors’ tendency to spread their assets across multiple providers, becoming a one-stop shop is critical as it means investors are less likely to spread their wealth. Given that 70% of the UK HNW population is above the age of 50, wealth managers need to have a strategy in place to appeal to the next generation of investors. Inheritance and estate planning services that include current HNW clients’ children in the planning process are the most straightforward solution.

This report provides a comprehensive analysis of key factors affecting investors’ choice of financial advice and investment services providers in the UK. The report is primarily based on our proprietary surveys.

Specifically the report -
  • Uses insight from our surveying of wealth managers and independent financial advisors to learn how competitors target and acquire clients, while assessing the effectiveness of different methods.
  • Analyzes key triggers prompting investors to seek advice and the factors affecting their choice of provider.
  • Examines the research process undertaken by individuals before making financial decisions.
  • Compares investor attitudes towards different communication and onboarding channels.
  • Provides recommendations on how to deal with changing investor preferences and how to stay relevant to the next generation.
Scope
  • Almost half of UK HNW investors opt for professional advice due to lack of time.
  • More than a fifth of UK HNW investors chose their wealth manager based on the provider’s trusted brand image.
  • UK HNW investors allocate almost three quarters of their wealth to discretionary mandates.
  • Almost a third of UK HNW investors who self-direct do so to save on management fees.
Reasons to buy
  • Identify events prompting investors to seek advice in order to better understand your clients.
  • Learn about UK consumers’ willingness to pay for advice.
  • Identify how investors research investment services providers to evaluate your client acquisition strategy.
  • Understand how UK individuals choose their financial advisors to tailor your targeting approach.
  • Review your digital strategy by learning how different channels are used by different demographics.
  • Explore differences between key client segments and demographics to evaluate your marketing efforts.
READ MORE
Note: Product cover images may vary from those shown
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FEATURED COMPANIES

  • Betterment
  • Credit Suisse
  • Ellevest
  • HSBC
  • Investec
  • Miss Kaya
  • MORE
1. EXECUTIVE SUMMARY
1.1. Intergenerational wealth transfer is big business in the UK
1.2. Key findings
1.3. Critical success factors

2. THE CUSTOMER PURCHASING CYCLE AND INVESTMENT MANAGEMENT IN THE UK
2.1. All consumers undergo a similar buying process, understanding of which increases client acquisition
2.1.1. Aligning an investment proposition to customer needs drives customer acquisition
2.1.2. The increasing digitization of wealth management is complicating an already complex financial service

3. TRIGGERS PROMPTING INVESTORS TO SEEK FINANCIAL ADVICE
3.1. Retirement is the most important driver for seeking financial advice
3.1.1. Offering pension and inheritance planning is a must
3.1.2. Decisions regarding lump sums prompt consumers to seek advice
3.2. As investors’ income doubles so does their willingness to seek financial advice
3.2.1. Seeking financial advice is a logical move for those with a personal pre-tax income of more than £75,000
3.2.2. Income levels are a strong determinant of the fee investors are willing to pay

4. RESEARCH CHANNELS AND OUTREACH
4.1. Investor education requires constant attention by wealth managers
4.1.1. A section of investors are disengaged with investment and do not even research partners
4.1.2. The brand needs to be kept front and center at key financial publications
4.2. Targeting the next generation of HNW investors early is paramount
4.2.1. Almost a third of HNW clients’ children move their parents’ assets to a different provider when inheriting
4.2.2. Reaching out to the next generation early on is critical, but wealth managers are not doing a good job
4.2.3. Wealth managers should review their digital channel strategy
4.2.4. Inheritance planning needs to be seen as a means for retaining AUM as it passes to heirs

5. PROVIDER SELECTION CRITERIA
5.1. Cost and reputation are the key factors when selecting an advisor
5.1.1. Investors want a cheap and cheerful investment expert
5.1.2. Mass affluent investors place greater importance on specialist knowledge than costs
5.1.3. Millennials place greater importance on convenience than other segments
5.1.4. Women value face-to-face contact, while a positive track record is more important to their male counterparts
5.1.5. Convenience must feature strongly in a wealth manager’s marketing campaign when reaching out to the HNW segment
5.1.6. Convenience to a HNW investor is using up less of their time managing their portfolio
5.2. Recommendations are critical in the decision-making process, but the effectiveness of acquisition channels varies across segments
5.2.1. Generating positive word of mouth is paramount in the HNW space
5.2.2. There are only a few segmental differences when it comes to the effectiveness of targeting strategies
5.3. A brand image conveying trust and expertise is paramount in the HNW space
5.3.1. A strong brand image allows a wealth manager to stand out from the crowd
5.3.2. A strong brand image is also one of the most effective means of improving client retention

6. UK INVESTORS ARE CHOOSING FROM A SATURATED MARKET
6.1. UK HNW investors are a promiscuous bunch, but efforts to become the main wealth manager will pay off
6.1.1. HNW clients work with a range of wealth managers
6.1.2. The primary wealth manager gains the bulk of client AUM
6.1.3. Becoming a one-stop shop means investors are less likely to spread their wealth
6.2. Few investors have moved all their products to their main wealth manager
6.2.1. Investment management companies have to up their game in the insurance space
6.3. To compete with robo-advisors, wealth managers should highlight the benefits of a considered investment strategy
6.3.1. Robo-advice users are more prone to switching than their peers
6.3.2. An increased focus on the gamma factor is a must to compete with robo-advisors
6.3.3. Security and trust remain essential, making brand a key consideration

7. ADVISOR INTERACTION AND CLIENT INVOLVEMENT
7.1. With a foundation of trust, UK HNW clients opt for discretionary mandates
7.1.1. Busy UK HNW individuals clearly prefer the convenience of discretionary mandates
7.1.1. UK wealth managers must lead with time-saving and expertise-led messaging to maintain a foothold with discretionary mandates
7.1.2. Even in non-discretionary mandates, UK HNW investors are more likely to outsource decisions to their advisor
7.1.3. UK investors check their investments on a monthly basis
7.1.4. Face-to-face remains the preferred channel when arranging or altering investments, but this is changing
7.1.5. Female investors prefer direct channels, while males and younger generations are more willing to use digital and newer channels
7.1.6. In need of more handholding, first-time investors tend to rely on multiple channels

8. APPENDIX
8.1. Abbreviations and acronyms
8.2. Definitions
8.2.1. Affluent bands
8.2.2. Generations
8.3. Supplementary data
8.4. Methodology
8.4.1. 2018 Global Wealth Managers Survey
8.4.2. 2017 Global Wealth Managers Survey
8.4.3. 2018 UK IFA Survey
8.4.4. 2017 IFA Survey
8.4.5. 2018 UK Investor Survey
8.4.6. 2018 Retail Banking Insight Survey
8.4.7. 2017 Retail Banking Insight Survey
8.5. Further reading

List of Tables
Table 1: Frequency investors check their portfolio by segment

List of Figures
Figure 1: All consumers undergo a similar process when making any purchasing decision
Figure 2: Retirement is a key trigger for seeking advice
Figure 3: Receiving a lump sum of money is a key driver to seek advice
Figure 4: Investors in higher income brackets are more willing to pay for advice
Figure 5: Investors in higher income brackets are willing to pay more for financial advice
Figure 6: Investors rely upon the media for insight into their investment partners
Figure 7: The majority of UK HNW individuals are approaching or have reached retirement age
Figure 8: Providers should build direct relationships with clients' children in adolescence
Figure 9: Digital channels are a must to appeal to the next generation of investors
Figure 10: Inheritance planning means client retention
Figure 11: Cost control is becoming a critical element of the wealth management business
Figure 12: Retail investors are the most cost-conscious
Figure 13: Younger generations are more likely to feel time pressure
Figure 14: Female investors place greater importance on face-to-face contact
Figure 15: Lack of time drives uptake of financial advice, making convenience an implicit part of a wealth service
Figure 16: The bulk of UK HNW investors are very active, with severe time constraints that make convenience a major selling point
Figure 17: Recommendations are the number one driver for choosing a wealth manager
Figure 18: Referrals need to be incentivized as the core means for acquiring HNW clients in the UK
Figure 19: Brand building is paramount in the UK
Figure 20: ROI and brand are the two most effective means of retaining HNW clients in the UK
Figure 21: Winning the primary position in the portfolio is critical for achieving significant AUM
Figure 22: HNW investors show strong demand for most auxiliary services
Figure 23: Banks are the go-to provider when it comes to protection products
Figure 24: Investors favor financial planners when looking for investment advice
Figure 25: The average robo-advice user in the UK is male, aged between 25 and 34, and married
Figure 26: Advisors should emphasize the extra returns that can be gained from a portfolio that has been optimized by an investment professional
Figure 27: Wealth managers need to be able to present a clear fee structure
Figure 28: Discretionary asset management is the default option for the UK market
Figure 29: Trust is critical to convince HNW investors of the benefits of discretionary mandates
Figure 30: Portfolio adjustments are less likely to be client-driven even in non-discretionary mandates
Figure 31: Males are more involved with their investments
Figure 32: Direct contact continues to dominate
Figure 33: Female investors show greater reliance on direct channels
Figure 34: Inexperienced investors make use of a greater number of communication channels
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  • Credit Suisse
  • Investec
  • SheCapital
  • WorthFM
  • Ellevest
  • Miss Kaya
  • Betterment
  • Optymyze
  • HSBC
Note: Product cover images may vary from those shown
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