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Equiniti publishes its annual Wealth Management Report

24 July 2014

Survey reveals priorities and concerns of both the wealth management and investor communities.

Equiniti, a market leading business process services provider, has published its annual report providing insight into how the wealth management industry is likely to evolve based on the views of senior executives and investors.

The survey compiles responses from 100 senior level executives in UK wealth management firms and more than 800 private investors, a quarter of whom currently use a wealth manager.

Investor insight: key findings

  • A quarter of unadvised investors regarded wealth managers as “ too expensive”, but advised investors did not regard cost as primary concern
  • Despite substantial media coverage, 55% of all investors were not familiar with RDR
  • 78% of advised investors consider the impact of internal costs on investments
  • More than a third of unadvised investors has previously used a wealth manager or adviser
  • Wealth managers’ fee structures are well-received, with 92% of advised investors generally regarding them as easy to understand
  • Over half of the advised investors named email as their preferred communications channel, with only 16% choosing a phone call and none choosing a mobile device application

Mark Taylor, Managing Director Equiniti Investment Services, commented:

“With the media spotlight firmly on the new flexibility around annuities, it is understandable why the generation of income should be the chief priority for investors, both advised and unadvised.  This in turn suggests this should be a key focus for wealth managers both when servicing existing clients and when pitching for new business. The fact that almost 6 in 10 seek advice from the media or online sources underlines the growth in DIY investors willing to strike out on their own, and it is up to wealth managers to illustrate the value of advice for those who would benefit from it.”

Wealth managers’ views: key findings

  • Cost of regulation and rising operational costs represent two of the greatest threats to opportunities over the next 3-5 years 
  • 40% of respondents ranked “penetrating new customer markets” as the greatest area of opportunity, although “developing customer communications and relationships” was also ranked highly
  • Clients with at least £250,000 in assets represent the greatest opportunity for revenue growth, implying there may be a proliferation of ‘orphan clients’ at the lower end of the market creating an opportunity for those willing to service them
  • More than a third of respondents prioritised “creating operational efficiencies” as the primary way to capitalise on the opportunities available to them, whilst building brand value was considered as important as customer loyalty (both 22%)

Mark Taylor, Managing Director at Equiniti Investment Services, commented:

 

“Much like the rest of the financial services industry, wealth management firms are facing increasing scrutiny from the FCA.  As such, it is not surprising that the cost of complying with regulation is weighing heavily on the minds of the senior executives who participated in our survey.

 

“Linked to this is a growing appreciation of the need for operational efficiencies.  Whilst rising operational costs are an increasing concern, wealth managers are keenly aware of the need to improve in this area and see new technology as playing a key role in this. And of course, efficient systems leave greater time to focus on client relationships and generating superior returns – factors which continue to lie at the heart of successful wealth management.”