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August 15, 2023

Choosing the right private client wealth management for you

Spear’s profiles the biggest and best-performing wealth management firms in the UK as global economic turmoil and high inflation hit the sector

By Katharine Swindells and Suzanne Elliott

The UK’s private client wealth managers have struggled to deliver returns for their customers over the last 12 months, with net total returns below zero in many cases, new figures show.

The typical balanced portfolio, mixing domestic and international stocks and bonds, fell about 10 per cent, an FT and Savanta survey showed, as jittery markets, global economic turmoil and the chaotic effects of former UK prime minister Liz Truss’s mini budgets played out.

With inflation in the UK staying stubbornly high, it has been much harder to achieve real returns, as the data reflects. The global market is showing more resilience; Goldman Sachs wealth chiefs downgraded the likelihood of a US recession inflation in the bank’s mid-year update.

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The FT/Savanta survey is as close to a standardised ranking of private client wealth management firms and advisory services as is currently publicly available, and the most recent data makes bleak reading for wealthy investors.

Spear’s has visualised the results of the survey of leading UK private client wealth managers to help map this landscape.

The UK's biggest private client wealth management firms

The survey collected data about firms' assets under management (AUM) in three categories: 'discretionary', 'advisory' and 'execution only'.

For the majority of firms included in the survey, the single largest pot of assets were classed as 'discretionary', meaning that wealth managers have permission to make investment decisions on behalf of their clients. Industry giants Evelyn Partners was the largest firm in the survey, with £46 billion of discretionary AUM.

The firm's 591 advisers serve 177, 344 private clients across 30 UK offices. By contrast, Alton-based Murdoch Asset Management has just £7 millions of discretionary AUM, one office and 11 advisers – although the firm does have some £604 million in AUM within the advisory part of its business.

Discretionary wealth managers buy and sell investments on their client's behalf, with advisers steered on desired return, risk appetite, liquidity needs and time horizon before being given freedom to invest the portfolio in different asset classes. These clients usually have between £250,000 and £5 million in portfolio assets.

There has been a wave of consolidation in the industry over the past few months. In April, Rathbones announced a £839 million deal to buy Investec Wealth & Investment UK, creating the biggest discretionary fund manager in the UK in terms of funds under management. 

This follows Raymond James’ takeover of Charles Stanley for £278.9 million in early 2022; Royal Bank of Canada’s acquisition of Brewin Dolphin for £1.6 billion that same year, and Tilney’s acquisition of Smith & Williamson in 2020 for £625 million. And, in a different vein, Swiss banking giant Credit Suisse being subsumed into UBS in March, ending the former’s 167-year history.

[See also: ‘My father’s succession planning took two decades – now I help other wealthy families’]

When it comes to consolidation, ‘operational gearing’ is the goal, said Paul Abberley, CEO of Charles Stanley Group told Spear’s 500 Live in June. ‘The boutique model can work well, but when you get to a certain size, and with fixed costs rising, putting two firms together creates a single platform and higher profit margins – that’s what everyone has in mind.’

The bigger the firm, the larger the number of services offered by wealth managers, the survey showed, although as the panel of wealth managers at Spear's 500 Live noted, big was not always better.

‘You don’t always need a big multi-service office,’ David Scott, Chair of Tribe Impact Capital and Managing Partner at Scott Capital Partners told the audience at Spear's 500 Live.

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‘It isn’t one-size-fits-all in terms of the scale,’ Mouhammed Choukeir, CEO of SG Kleinwort Hambros added. ‘If you are only delivering asset management in a very specific niche market, you don’t need to be big. If you’re a multi-service institution and want to balance banking, wealth planning and any other type of services, then clearly that breadth requires a different size. 

[See also: Bet on bonds, gold and a falling dollar, says top UK private bank]

‘If you’re consolidating, the question comes back to: are we expanding our service, or deepening it?’

Scott agreed that size doesn’t necessarily equate to good service: ‘You don’t always need a big multi-service office,’ he said.

For a full breakdown of the UK’s top wealth managers head to the Spear’s 500 website.

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