UK Wealth Management: HNW Investors 2019

Most HNW individuals in the UK earned their wealth through earned income, and are showing strong demand for planning and lending products. However, a multi-service proposition is a must as demand is expected to increase across all planning services and mandates, especially advisory services, as HNW investors want more control over their wealth. Wealth managers must remain acute to changes surrounding Brexit and slower economic growth, as this will affect investments. HNW investors are also looking to bulletproof their portfolios against increased volatility.

This report analyzes the investing preferences and portfolio allocation of the UK’s HNW individuals. It profiles HNW investors in terms of their demographics; examines the allocation of HNW investors’ portfolios; analyzes their propensity to invest offshore; and explores product and service demand among UK HNW investors.

Scope

– 30.4% of female investors are 50 and under, as opposed to 21.6% of male investors.

– 12.4% of HNW individuals in the UK are expats, compared to the European average of 16.9%.

– HNW individuals are showing strong demand for all services, particularly advisory mandates at 67.8%.

– UK HNW individuals hold over a third of their portfolio offshore. A quarter of this wealth is in the US.

Reasons to buy

– Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.

– Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors’ preferences for the various styles of asset management.

– Tailor your investment product portfolio to match current and future demand for different products, services, and asset classes among HNW individuals.

Companies mentioned

Fidelity

St James’s Place Wealth Management

Hitachi Capital UK

Morgan Stanley

ONS

Nutmeg

Table of Contents

Table of Contents

1. EXECUTIVE SUMMARY

1.1. Meeting the changing needs of existing and future HNWs is key

1.2. Key findings

1.3. Critical success factors

2. DEMOGRAPHICS

2.1. Introduction

2.2. Targeting HNW entrepreneurs would be beneficial to UK wealth managers

2.2.1. The young female cohort are a growing market

2.2.2. HNW wealth is predominantly sourced through earned income

2.3. The financial services industry is the leading HNW wealth generator

3. HNW EXPATS

3.1. UK HNW expats are below the European average

3.1.1. Expats make up

12.4% of the local HNW market, which is low compared to other European countries

3.1.2. HNW expats from the US represent an attractive segment

3.1.3. Better lifestyle conditions and tax efficiencies are the largest drivers of expatriation

4. HNW INVESTMENT STYLE PREFERENCES

4.1. Better returns through advisors drives demand for professional wealth management

4.1.1. Relationship building with clients is key in times of uncertainty

4.1.2. UK HNW investors spread their wealth across

4.1 wealth managers

4.1.3. The largest proportion of HNW wealth is currently kept in discretionary mandates

4.1.4. Introducing automated services is becoming a must

4.2. Demand for advisory and automated investment services are the only avenues expected to increase in the future

4.2.1. UK HNW individuals will be more keen to have the final say on investment decisions

4.2.2. Automated investment platforms will further cement themselves in the UK wealth market

5. HNW ASSET ALLOCATION

5.1. UK HNW investors continue to look for capital appreciation opportunities in the equity space

5.1.1. Equities dominate the typical HNW portfolio

5.1.2. Funds are more popular than direct investments for equities and bonds

5.1.3. Equity and alternative investments are expected to see the largest increase in demand over the next year

5.1.4. The majority of investments are driven by capital appreciation opportunities or asset diversification benefits

6. OFFSHORE INVESTMENT DRIVERS AND MOTIVATORS

6.1. HNW offshore holdings are slightly above the European average

6.1.1. 37% of UK HNW wealth is booked abroad

6.1.2. The US and UK Crown dependencies are popular among HNWs who offshore wealth

7. HNW PRODUCT AND SERVICE DEMAND

7.1. HNW investors show strong demand for all planning services

7.1.1. Financial, inheritance, and pension planning services are sought after

7.1.2. Long-term thinking is influencing demand for lending services

8. APPENDIX

8.1. Abbreviations and acronyms

8.2. Definitions

8.2.1. Affluent

8.2.2. HNW

8.2.3. Liquid assets

8.3. Methodology

8.3.1. Demographic data from GlobalData’s WealthInsight

8.3.2. GlobalData’s 2019 Global Wealth Managers Survey

8.3.3. Level of agreement calculation

8.3.4. Service level of demand score

8.3.5. Forecast level of demand calculation

8.4. Secondary sources

8.5. Further reading

List of Figures

List of Figures

Figure 1: The overwhelming majority of UK HNW individuals are males

Figure 2: Fidelity introduced an initiative focused on educating women about investing

Figure 3: HNW individuals accumulate most of their wealth through earned income

Figure 4: The leading industry HNW individuals have derived their wealth from is financial services

Figure 5: A quarter of expats in the UK originate from the US

Figure 6: Better lifestyle conditions is the leading reason for expatriation

Figure 7: The expectation of greater returns through advisors drives service demand

Figure 8: HNW individuals place more of their wealth with their main wealth manager than the European average

Figure 9: Discretionary mandates are used for almost a third of HNW wealth

Figure 10: All asset management services are in demand, led by advisory mandates

Figure 11: A lack of trust in technology is the leading reason to not use robo-advice services

Figure 12: Almost a third of the onshore portfolio is placed in equity investments

Figure 13: The strongest preference is for equity funds

Figure 14: Demand is expected to decrease for both cash and commodities

Figure 15: Asset diversification and capital gains drive asset demand

Figure 16: The UK’s offshore holdings surpass the European average

Figure 17: Tax efficiencies are the leading reason HNW individuals offshore their wealth

Figure 18: The demand for lending secured on the investment portfolio is particularly strong

Figure 19: Demand for all services is expected to increase in the future

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