Over the past decade, wealth managers’ assets under management (AUM) have grown to nearly £1 trillion, in line with a rise in profits and revenue generated, signifying a thriving industry.
You do not need me to tell you how far the wealth management industry has shifted in the past 10 years, impacted by waves of regulation, margin pressures and evolving business models. A number of companies that existed 10 years ago are no longer around, while others have only launched in the past few years, keeping everyone on their toes.
The numbers behind the growth are striking. For example, since the end of 2008, right before Wealth Manager launched, until the end of 2017, total investment assets across investment managers, private banks, full service wealth managers and execution-only stockbrokers, have grown a whopping 2,543% to £957 billion, according to data from Compeer.
Compeer’s annual research, which last year surveyed 25 private banks, 95 private client investment managers, 38 full service wealth managers and 18 execution-only stockbrokers, provides a glimpse into the evolution of the industry. Of the total assets, discretionary still makes up the bulk for wealth managers, investment managers and private banks. For execution-only firms, non-managed assets have been, and still do, account for the majority.
At the end of 2017, total revenue generated reached a record £6.8 billion, compared with £4.3 billion in 2008, while total pre-tax profit rose by 57% to £1.7 billion. Staff numbers increased from 30,000 to nearly 36,000. The smallest increase was seen at execution-only firms, which added 370 staff over the 10 years, compared with private banks, which saw an increase of 2,782 people.
Unsurprisingly, costs have also risen, by 59%, going from £3.2 billion to £5.1 billion. Back in 2008, private banks had the largest cost bases, at £1.4 billion, which was still a higher figure than the costs at the other three types of firms at the end of 2017. Full service wealth managers have experienced the biggest increase, with their costs rising by 65%, compared to 55% for private banks.