Half the clients of UK wealth management firms hold balances below the
minimum stated size required by the service provider, says a report from
the Boston Consulting Group.
Regardless of the size of desired minimum balance, the management
consultancy says it is likely that at least 50 per cent of the accounts
considered to be in the wealth management bracket are undersized.
The study, Richer Prospects in Wealth Management Global Wealth 2001, says
many investment advisers targeting the high-net-worth market may either
have clients with too little or too much money to match their business
The findings may be especially relevant for the UK market as a number of
players such as Abbey National, Barclays, HSBC Merrill Lynch and IFA
Lighthouse have all recently entered or have plans to enter the HNW market.
BCG says in the UK, there are two million investors who would classify as
HNW clients. Collectively, they hold £1.7 trillion in assets and
generate £23bn in revenue for wealth management firms.
BCG says it is can be difficult to truly define what a high-net-worth
investor as banks often set their thresholds at different levels.
The study also shows the wealth management industry is highly fragmented,
with the top 20 players in the market holding just over 12 per cent of the
total wealth assets. The study suggests this means there is considerable
opportunity for consolidating market share through mergers or alliances.
Boston Consulting Group vice president Andrew Dyer says: “There is a
popular belief that wealth management is a very attractive business with
high returns. But our experience with clients and our research suggest that
many competitors are not nearly as profitable as they should be.”