Small wealth management firms grow faster than big firms - report - 17.07.2006
Wealthnet, 17/07/2006, Ian Orton
So much for the claim trumpeted by so-called wealth management experts (such as the analysts at Bridgewell Securities) that small wealth management firms trade at both a relative and absolute disadvantage to their larger peers.
This is not the case in the UK, according to the data contained in the 2006 ComPeer report on the UK wealth management sector.
"The large firms have slightly increased their market share in 2005 at the expense of the mid-sized firms," it concludes. "This has largely been the result of major recruitment campaigns of both teams and individuals.
"…however, the fastest growing firms have been the smaller firms with assets of less than £1 billion. This group includes both regional and London based players including several newer firms.
"Their claims of personal service and a bespoke offering perhaps ring more true with clients. They have also been innovative in their investment propositions to embrace either on the one hand, a clear open architecture, multi-asset class offering or on the other, an investment style with conviction."
ComPeer found that firms with between £500 million and £1 billion grew client assets by 25.3 percent during 2005. For firms with less than £500 million the growth rate was even faster at 28.0 percent.
This compared with the 19.1 percent enjoyed by the 10 biggest wealth management firms, all of which had at least £8.2 billion of client assets. The next 10 biggest firms, which had between £2.75 billion and £8.2 billion, increased client assets under management by just 14.9 percent. The next 23 firms, which had assets of between £1 billion and £2.75 billion, increased assets by 17.8 percent.
"The second tier firms including many traditional names and regional larger players have not secured the same levels of growth. They enjoy neither the access to clients from branch networks nor the strong national brand presence of the larger players. Equally they appear to be struggling to reposition their businesses to compete against the more innovative market positioning and local presence of some of the smaller players."