Press Release - Industry Report 2006 - 12.07.2006
Press Release, Wednesday 12th July 2006
2005 was a strong year for wealth managers, but sustaining this performance in less benign market conditions will be more challenging, according to ComPeer’s 2006 Wealth Management Industry Report.
Last year was one of significant growth with assets under management up 17% and profits up 74%. £8.6 billion of new money helped increase total assets under management to £308 billion.
However, performance continues to be very dependent on market levels and an average profit margin of 16% does not provide much protection against less favourable stock markets. There is evidence that:
Ø the level of direct participation by clients in the
Ø the affluent client is the least well served but potentially most profitable sector of the market
ComPeer published its UK Wealth Management Industry Report today. The report tracks the key trends in the wealth management industry based on a benchmarking analysis of 160 private client stockbrokers, investment managers and private banks operating in the .
The level of direct participation by clients in the
In contrast with the bull market of the late nineties, the last three years of strong stock market growth have not seen private clients returning to equity investment. Trading volumes have been broadly flat. The proportion of sold trades has increased, suggesting that clients have taken the opportunity of increased market levels to take profits and sell. It is estimated that £14.6 billion has been taken out of equities by private clients during the last three years, mainly be self directed investors.
“Firstly, clients are spending money. Secondly, active traders are moving to CFDs (contracts for difference) and spreadbetting. These provide a lower cost way of accessing and managing market exposure, particularly given their favourable tax treatment compared to direct equity investment. And thirdly, clients are clearly still wary of equity investment after the dotcom bubble. The sale of UK plc has flushed out a large number of small investors who are not returning to the market, their money remaining in cash.”
Although trading volumes increased strongly in the first quarter of 2006, they fell back during the more volatile markets of the last six weeks.
The affluent client is the least well served but potentially most profitable sector
It is estimated that approximately 20% of total private wealth is currently managed by the industry. The balance is held in cash, retail unit trusts, insurance products, shareholdings maintained directly with the registrars or in property and other alternative asset classes.
“Increasingly, wealth managers are targeting the higher net worth client in the . However, the affluent investor is a much bigger market and less well served. Our analysis shows that they are less price sensitive than the higher net worth client and services can be provided on a cost effective basis with good product design. The key to attracting clients in this market is strong distribution, clear marketing strategies and simple, quality products. A number of smaller regional and London-based firms are now growing very strongly by targeting this segment.”
ComPeer
ComPeer provides competitor benchmarking, industry insights and research services for the wealth management market.
Since its establishment in 1993, ComPeer has been tracking the development of the private client stockbroking and wealth management industry. Benchmarking services and research surveys have been initiated and completed with the full cooperation of the private client investment community and the support of its trade association, APCIMS.
This unrivalled experience and depth of information gives ComPeer a unique insight into the wealth management industry, providing clients with critical input to support the development and execution of their business strategies.
ComPeer is a subsidiary of Parkwell Management Consultants.
Contacts
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Alison Malton |
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Business Development Director |
Managing Director |
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020 7648 4830 07930 403257
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020 7648 4838 07990 916150
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