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Celebrating the best in wealth management


It’s been another interesting year for those in the wealth management sector. And not interesting as in the ancient Chinese curse, but as in a gentle year of evolution for the industry which brings with it new and exciting developments.

The annual PwC Asset & Wealth Management Report this year – their 20th – found that 65 per cent of Asset & Wealth Management (AWM) CEOs believed that technology is significantly reshaping or significantly impacting competition within the sector. This has to be laid at the door of the robo-advisers, whose use of technology to take out much of the routine of simple portfolio management has had a huge impact on the industry, leading to a rise in model portfolio use and increased employment of the ubiquitous ETF.

Even those firms who have a very traditional offering for high net worth investors are re-examining how technology can help with their businesses. 

And of course, in a particularly timely comment, there is growing concern about cyber security within the wealth management sector, with PwC writing that this sector is slow to innovate and adapt.

“Technology is a disruptive force and I am amazed by how low the sector’s survey responses are around digital and cyber security. This industry is not thinking as agilely around technology and disruption as it should. How do customers interact with these firms and how will they want to in the future?” says Barry Benjamin, PwC’s Global Asset & Wealth Management Leader.

Putting this aside, and on a cheerier note, the survey finds that 92 per cent of AWM CEOs are confident or very confident about 2017 revenue growth. And this chimes with the views of some of our winners in the 2017 awards, interviewed in these pages. 

Wealth is almost not the problem in many cases as the baby boomer generation has had the benefit of house price inflation, inheritance and DB pension plans, as pointed out by St. James’s Place’s Iain Rayner. 

The problem is that wealth is needed for future care as we live longer and the cost of care gets greater. 

A recent study from international advisory and accountancy firm Mazars, conducted by OnePoll, found that the millennials (those born between 1982 and 2000) will need a GBP1 million pension pot to fully retire.

The survey found that around a third of millennials believe they are facing a future where they will never have the opportunity to give up work completely. 

It also suggests young adults’ views of finance in later life put far less emphasis on saving and much greater emphasis on continuing to earn a living than any other age group. 

The expectation of working in retirement is 50 per cent higher among 18-24 year olds than those who are nearing, or already in, retirement, which means up to four million over 65s in the workplace by 2056.

The UK currently has 1.2 million `working retired’; adults employed over the age of 65, which is approximately one in 10. Using the government’s own population estimates, the number of over 65s is set to rise by almost a half to 18 million by 2039. Based on a similar rate of `working retired’, there would be 1.8 million over 65s in the workforce in the next 20 years.

And of course, there are the health statistics, which find that improvements in healthcare mean life expectancy in the UK has never been higher and consequently the number of years in retirement that have to be financially supported is at its highest too. 

The Mazars survey finds that life expectancy at age 65 has increased markedly. “We now expect those hitting 65 in 2040 to live another 24 years on average, almost double what it was in 1981. However, the ability to actually work all these years is another matter. 

“The number of people living with three or more long-term health conditions is expected to reach 2.8 million by 2018. This is a 50 per cent increase in just 10 years. The over 60s are most likely to suffer from a long-term condition, with 58 per cent suffering compared to 14 per cent of under 40s. 

“Data from across Europe suggests that even before reaching retirement age, most of us are likely to suffer from a condition that limits our activities in some way. On average, by the age of 62 for men and 60 for women, our ability to conduct our lives as before will be limited by health issues.”

The result is that the need for sound financial planning has never been stronger and, again, here we can congratulate the winners of our awards who demonstrate the skills needed.

And the demand is driving corporate change. Many firms in this sector are planning some sort of corporate activity to drive profitability and to deal with all the work coming across their desks.

The PwC report found that 52 per cent of the sector’s CEOs are looking to strategic alliances or joint ventures, while 41 per cent are plotting a merger or acquisition.

And such activities are not just for the CEOs of wealth management firms. News came earlier this year that two UK trade associations in the investment management and financial advice sector, the Wealth Management Association and the Association of Professional Financial Advisers, are to merge, resulting in a new body, the Investment Management & Financial Advice Association, IMFA.

Combining a representation of the wealth management and financial advice industries in this way demonstrates another evolution in the sector in the UK. 

The combined IMFA membership will represent UK firms offering a range of financial solutions, including investment advice and portfolio management, as well as investment and execution services, financial planning and advice for private clients.

The combination represents a move to a more holistic approach to wealth management and one that is arguably much needed in the face of the challenges ahead. 

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