Sizing the UK wealth management 'gap' by client segment - 14.07.2006
Wealthnet, 14/07/2006, Ian Orton
One of the illuminating aspects of the latest ComPeer report on the UK wealth management is its attempt to analyse the nature of the 'gap' between market potential, as estimated by Tulip Financial Research, and the portion of this currently served by wealth management firms in terms of client segments.
Tulip estimates that overall that affluent and rich individuals owned around £1.433 trillion of financial assets in March 2006. But ComPeer calculated the amount of wealth actually held at wealth management firms at the end of December to amount to just £308 billion.
According to Tulip there are 1,880,000 so-called "affluent" individuals that collectively own around £271 billion of assets and hold average liquid assets of around £144,000. Around 1,813,000 have a relationship with a wealth management firm. But according to ComPeer wealth managers only held £22 billion of their assets at the end of December 2005.
The 335,000 of so-called high net worth individuals, who had average financial assets of £665,000, owned a total of £223 billion in March 2006. But only 219,000 had a relationship with a wealth management firm, who managed just £55 billion of their assets.
The top 0.3 percent of the UK population hold average liquid assets of £6.4 million. There were around 135,000 or these individuals in March 2006 who collectively owned £870 billion. Of these 98,000 had an account with a wealth manager at the end of 2005 and £169 billion of assets under management.
The gap between potential and financial assets under management at wealth management firms appears much smaller in the "super Rich" segment, who command financial assets of more than £10 million. Here the gap amounted to just £9 billion, or the difference between the £70 billion owned by this client segment and the £61 billion managed on their behalf by UK wealth managers at the end of 2005.
Clearly there is lots of potential for wealth management firms across the entire wealth spectrum!