Wealth in the UK: Sizing the Market Opportunity; Sizing the wealth market in the UK and its growth potential.

Wealth in the UK: Sizing the Market Opportunity; Sizing the wealth market in the UK and its growth potential.

Code: VF-VF0011CI | Published: Mar-2016 | Pages: 54 | Verdict Financial
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The UK savings and investments market is dominated by deposits, which account for more than half of all liquid assets in the country. However, the growth of the market is fueled mainly by mutual funds, which have performed well even in times of capital market unsteadiness. Mutual funds have consequently attracted a constant flow of new money. Thanks to this, UK liquid assets have been growing since the end of the financial crisis, although a slowdown in recent years has been apparent

Key Findings
- Affluent individuals represent just over a quarter of the UK population but hold 91.7% of the UKs liquid assets.

- UK wealth is concentrated mainly in London and the South East, but other regions should grow faster in the near future.

- 52.2% of UK savings are held in deposits (most of it in instant access accounts), but the solid performance of mutual funds has been attracting inflows to this asset class.

- Despite holding 12.1% of their investment portfolios in commodities, property, and alternatives, the UKs wealthiest individuals show a strong preference towards liquid products.

- Tax efficiency remains the main driver for high net worth (HNW) individuals opting to offshore wealth.

Synopsis
Wealth in the UK: Sizing the Market Opportunity analyzes the UKs wealth and retail savings and investments markets, with a focus on the HNW segment. The report is based on our proprietary datasets.Specifically, the report:

- Sizes the affluent market (both by the number of individuals and the value of their liquid assets) using Verdict Financials proprietary datasets.

- Analyzes which asset classes are favoured by UK investors and how their preferences impact the growth of the total savings and investments market.

- Examines HNW clients attitudes towards non-liquid investments, such as property and commodities.

- Identifies key drivers and booking centers for offshore investments.

Reasons To Buy
- Benchmark your share of the UK wealth market against the current market size.

- Forecast your future growth prospects using our projections for the market to 2019.

- Identify your most promising client segment by analyzing the penetration of affluent individuals in the UK - both at the country and regional level.

- Evaluate your HNW proposition by understanding how the ever-changing UK tax system affects your HNW clients.

- Review your offshore strategy by learning about the HNW motivations for offshore investments and their preferred booking centers.

Table of Contents

EXECUTIVE SUMMARY
Growth in the UK wealth market will be moderate
Key findings
Critical success factors
SIZING AND FORECASTING THE UK WEALTH MARKET
The UK is primarily an onshore market, but has a notable offshore business
Growth in the onshore market is driven by the HNW segment
The UK affluent market remains the fourth largest in the world
Affluent individuals represent 27.7% of the adult population
The affluent population holds 91.7% of retail liquid assets, with the wealthiest set to record the strongest growth
The UKs onshore wealth is concentrated in London and the South East
DRIVERS FOR GROWTH IN THE UK WEALTH MARKET
Retail savings and investments growth is slowing but will remain positive in the future
The total value of savings and investments in the UK will exceed Pound2.5tn in 2017
Allocations in mutual funds have been increasing
Direct equity holdings will continue to decrease
Retail deposits have outperformed GDP and average nominal wages
Net inflows have been the primary driver for standard deposit growth
Retail bond investments account for only a fraction of UK retail savings, but growth is being aided by low inflation
Uncertainty regarding future stock market performance is restraining equity holdings but has a positive impact on mutual funds
The FTSE 100 is now struggling with growth after posting a new record level
The performance of the stock market has had a direct impact on equities, while mutual funds are an alternative to stock holdings
Mutual funds are relatively well diversified, which shields performance from the vagaries of the stock market
HNW INVESTMENT PREFERENCES
UK HNW individuals show a strong preference for liquid investments
The wealthiest UK individuals are once again turning their attention to hedge funds
UK HNW investors have switched from direct property to funds
In addition to their onshore portfolios, UK HNW individuals hold 23.5% of their wealth offshore
Tax efficiency remains the number one motivation for offshore investment
The Isle of Man is a primary booking center for UK HNW offshore wealth
APPENDIX
Abbreviations and acronyms
Supplementary data
Definitions
Affluent
Domicile
DTA
FATCA
HNW
Liquid assets
Mass affluent
Net inflows
Onshore
Performance/interest growth
Residency
TIEAs
Methodology
Verdict Financials 2015 Global Wealth Managers Survey
Global Wealth Model methodology
UK Retail Savings and Investments Methodology
Exchange rates
Bibliography
Further reading
About Verdict Financial
Disclaimer

List of Tables


Table 1: UK income tax rates
Table 2: Tax on dividend rates
Table 3: Capital gains tax rates (%), 2015-16 and 2016-17
Table 4: Stamp Duty Land Tax rates (%), 2016
Table 5: Land and buildings transaction tax rates in Scotland (%), 2016
Table 6: Annual tax on enveloped dwellings rates (%), 2015-16
Table 7: Total retail resident and non-resident deposits (Poundbn), 2006-15
Table 8: Total retail resident and non-resident deposits($bn), 2006-15
Table 9: Total UK adult population by pound sterling asset bands (000s), 2009-15
Table 10: Forecast total UK adult population by pound sterling asset bands (000s), 2016f-19f
Table 11: Total UK adult population by US dollar asset bands (000s), 2009-15
Table 12: Forecast total UK adult population by US dollar asset band (000s), 2016f-19f
Table 13: Total UK onshore liquid wealth by asset band (Poundbn), 2009-15
Table 14: Forecast total UK onshore liquid wealth by asset band (Poundbn), 2016f-19f
Table 15: Total UK onshore liquid wealth by asset band ($bn), 2009-15
Table 16: Forecast total UK onshore liquid wealth by asset band ($bn), 2016f-19f
Table 17: Total UK onshore liquid assets by region and affluent segment (Poundbn), 2015
Table 18: UK retail savings and investments by asset class ($m), 2009-15
Table 19: Forecast UK retail savings and investments by asset class ($m), 2016f-19f
Table 20: Net inflows and interest performance of UK retail deposits excluding cash ISAs (Poundm), 2007-15
Table 21: Net inflows and performance gains of UK retail equities (Poundm), 2007-15
Table 22: Net inflows and performance gains of UK mutual funds (unit trusts, OEICs, and investment trusts) (Poundm), 2007-15
Table 23: Pound sterling-US dollar exchange rate, December 31, 2014 and December 31, 2015

List of Figures


Figure 1: Non-resident deposits accounted for 43.2% of the total deposit market in the UK in 2015
Figure 2: HNW individuals account for 0.66% of the UK adult population
Figure 3: The affluent population hold 91.7% of retail liquid assets in the UK
Figure 4: London and the South East account for almost a third of onshore liquid assets in the UK
Figure 5: UK savings and investments will grow only slightly in 2016
Figure 6: Deposits account for half of the UK retail savings and investments market
Figure 7: Equities will show negative growth through to 2019
Figure 8: Retail deposits have shown strong growth, outperforming GDP
Figure 9: Since 2012 growth in deposits has been supported by strong inflows
Figure 10: 2014 saw extraordinary growth in retail bond investments
Figure 11: The oil and gas industry is one of the top three industries represented in the FTSE 100 index
Figure 12: Retail mutual fund and equity investments correlate strongly with the performance of the UK stock market
Figure 13: Stock market volatility has had a negative effect on direct retail equity investments
Figure 14: UK mutual funds have been continuously attracting new money
Figure 15: Mutual funds in the UK are predominantly invested in equities
Figure 16: Outside traditional assets, property funds and hedge funds are the most notable components of UK HNW portfolios
Figure 17: UK HNW individuals hold 23.5% of their portfolios offshore
Figure 18: Tax is the key driver of offshore investment among UK HNW individuals
Figure 19: The Isle of Man hosts more than a quarter of UK HNW offshore wealth
Figure 20: The UK has DTAs and TIEAs with a number of global offshore centers
Lloyds Bank

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