Choosing a Wealth Manager: the Decision-Making Process in the UK

Table of Contents

1. EXECUTIVE SUMMARY 2

1.1. Intergenerational wealth transfer is big business in the UK 2

1.2. Key findings 2

1.3. Critical success factors 2

2. THE CUSTOMER PURCHASING CYCLE AND INVESTMENT MANAGEMENT IN THE UK 9

2.1. All consumers undergo a similar buying process, understanding of which increases client acquisition 9

2.1.1. Aligning an investment proposition to customer needs drives customer acquisition 9

2.1.2. The increasing digitization of wealth management is complicating an already complex financial service 10

3. TRIGGERS PROMPTING INVESTORS TO SEEK FINANCIAL ADVICE 11

3.1. Retirement is the most important driver for seeking financial advice 11

3.1.1. Offering pension and inheritance planning is a must 11

3.1.2. Decisions regarding lump sums prompt consumers to seek advice 12

3.2. As investors’ income doubles so does their willingness to seek financial advice 13

3.2.1. Seeking financial advice is a logical move for those with a personal pre-tax income of more than £75,000 13

3.2.2. Income levels are a strong determinant of the fee investors are willing to pay 14

4. RESEARCH CHANNELS AND OUTREACH 16

4.1. Investor education requires constant attention by wealth managers 16

4.1.1. A section of investors are disengaged with investment and do not even research partners 16

4.1.2. The brand needs to be kept front and center at key financial publications 17

4.2. Targeting the next generation of HNW investors early is paramount 17

4.2.1. Almost a third of HNW clients’ children move their parents’ assets to a different provider when inheriting 17

4.2.2. Reaching out to the next generation early on is critical, but wealth managers are not doing a good job 18

4.2.3. Wealth managers should review their digital channel strategy 19

4.2.4. Inheritance planning needs to be seen as a means for retaining AUM as it passes to heirs 20

5. PROVIDER SELECTION CRITERIA 22

5.1. Cost and reputation are the key factors when selecting an advisor 22

5.1.1. Investors want a cheap and cheerful investment expert 22

5.1.2. Mass affluent investors place greater importance on specialist knowledge than costs 23

5.1.3. Millennials place greater importance on convenience than other segments 23

5.1.4. Women value face-to-face contact, while a positive track record is more important to their male counterparts 24

5.1.5. Convenience must feature strongly in a wealth manager’s marketing campaign when reaching out to the HNW segment 25

5.1.6. Convenience to a HNW investor is using up less of their time managing their portfolio 25

5.2. Recommendations are critical in the decision-making process, but the effectiveness of acquisition channels varies across segments 27

5.2.1. Generating positive word of mouth is paramount in the HNW space 27

5.2.2. There are only a few segmental differences when it comes to the effectiveness of targeting strategies 28

5.3. A brand image conveying trust and expertise is paramount in the HNW space 29

5.3.1. A strong brand image allows a wealth manager to stand out from the crowd 29

5.3.2. A strong brand image is also one of the most effective means of improving client retention 30

6. UK INVESTORS ARE CHOOSING FROM A SATURATED MARKET 32

6.1. UK HNW investors are a promiscuous bunch, but efforts to become the main wealth manager will pay off 32

6.1.1. HNW clients work with a range of wealth managers 32

6.1.2. The primary wealth manager gains the bulk of client AUM 32

6.1.3. Becoming a one-stop shop means investors are less likely to spread their wealth 33

6.2. Few investors have moved all their products to their main wealth manager 34

6.2.1. Investment management companies have to up their game in the insurance space 34

6.3. To compete with robo-advisors, wealth managers should highlight the benefits of a considered investment strategy 37

6.3.1. Robo-advice users are more prone to switching than their peers 37

6.3.2. An increased focus on the gamma factor is a must to compete with robo-advisors 38

6.3.3. Security and trust remain essential, making brand a key consideration 38

7. ADVISOR INTERACTION AND CLIENT INVOLVEMENT 40

7.1. With a foundation of trust, UK HNW clients opt for discretionary mandates 40

7.1.1. Busy UK HNW individuals clearly prefer the convenience of discretionary mandates 40

7.1.1. UK wealth managers must lead with time-saving and expertise-led messaging to maintain a foothold with discretionary mandates 41

7.1.2. Even in non-discretionary mandates, UK HNW investors are more likely to outsource decisions to their advisor 41

7.1.3. UK investors check their investments on a monthly basis 42

7.1.4. Face-to-face remains the preferred channel when arranging or altering investments, but this is changing 43

7.1.5. Female investors prefer direct channels, while males and younger generations are more willing to use digital and newer channels 44

7.1.6. In need of more handholding, first-time investors tend to rely on multiple channels 45

8. APPENDIX 47

8.1. Abbreviations and acronyms 47

8.2. Definitions 47

8.2.1. Affluent bands 47

8.2.2. Generations 47

8.3. Supplementary data 48

8.4. Methodology 48

8.4.1. GlobalData’s 2018 Global Wealth Managers Survey 49

8.4.2. GlobalData’s 2017 Global Wealth Managers Survey 49

8.4.3. GlobalData’s 2018 UK IFA Survey 49

8.4.4. GlobalData’s 2017 IFA Survey 50

8.4.5. GlobalData’s 2018 UK Investor Survey 50

8.4.6. GlobalData’s 2018 Retail Banking Insight Survey 50

8.4.7. GlobalData’s 2017 Retail Banking Insight Survey 50

8.5. Further reading 50