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Greater interest in savings and investment products
UK private banking and wealth management sector calls for ‘a measured and appropriate regulatory regime’ to ensure London remains a global centre of excellence
February 2, 2017: The Private Banking and Wealth Management (PBWM) industry has experienced significant growth in assets in recent years, boosting broader UK economic growth and helping individuals and families plan for the future, according to the latest joint research from the British Bankers’ Association (BBA) and the Wealth Management Association (WMA).
Data from the second Wealth of Opportunities report highlights the sector’s substantial social and economic contributions to UK plc, with around £825 billion of client assets currently managed or administered – comparable in value to around 40% of GDP.
The report is based on a survey of 13 CEOs who run firms that manage and administer assets worth approximately £230 billion in the UK in 2016.
The WMA is a trade association that represents 180 wealth management firms and associate members. These firms run over 5.5 million client portfolios and carry out over 20 million trades a year.
The BBA is the leading trade association for the UK banking sector with 200 member banks headquartered in over 50 countries with operations in 180 jurisdictions worldwide.
The UK is a global centre of excellence for PBWM. In 2016, the industry, which helps over 2.2 million people plan for the future, generated an aggregate turnover of £6 billion and directly employed over 27,000 people across the UK.
Much of the recent growth in client assets comes from greater interest in savings and investment products, highlighting the importance of tax incentives in encouraging customers to save.
Investment, primarily in stocks and shares ISAs, increased by 143% over the past five years from £60 billion in 2011 to £146 billion in 2016. Over the same period, investments in SIPPs rose by 116% from £37 billion to £80 billion.
Over 2.2 million individuals and families from across the UK are helped by PBWM professionals at crucial points in their financial life journeys: from saving for mortgage deposits and expenses for children, through to borrowing for home purchases, longer-term financial planning for tax-efficient investing, as well as retirement and maximising their inheritance for the next generation.
The sector enables savers to plan for their futures with confidence, helping them realise future goals and maximise returns on their investments. Firms across the industry work hard to offer a range of financial solutions for everyone: an execution-only trading account can be set up with as little as £100.
Anthony Browne, Chief Executive of the BBA, said, “The Private Banking and Wealth Management industry makes an important contribution to the UK economy, helping individuals navigate the changing savings and investments landscape to meet their long term financial goals. In recent years, the sector has experienced significant growth in assets, boosting broader UK economic growth. Around 27,000 people are currently employed by PBWM across the UK, with firms operating in major cities such as Liverpool, Manchester and Edinburgh as well as London. Continued regulatory change and implementation deadlines can impact resource and servicing costs. A ‘measured’ approach to regulation, with workable timelines would allow firms adequate time to prepare for implementation and help ensure customers continue to receive maximum benefit.”
Liz Field, Chief Executive of the Wealth Management Association, said, “As well as making a sizeable economic contribution to the country, the PBWM sector remains committed to helping support individuals and families plan their financial future with confidence. We continue to work with the government to help develop a framework that encourages the everyday investor to utilise tax-efficient instruments like ISAs and SIPPs to their advantage. As the impact of Brexit on the financial services industry becomes clearer, we remain committed to ensuring this success story continues. We are working with all stakeholders to ensure an orderly transition that protects clients from unintended consequences. Allowing the industry to continue to support individuals and families to better manage their savings and investments for the future remains our number one priority.”
To ensure that London remains the global centre of excellence in private banking and wealth management, senior industry leaders interviewed for the report called for a ‘measured and appropriate regulatory regime that delivers the ultimate goal of client protection, while avoiding potential negative unintended consequences’.
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