The affluent individuals who use our service tell us it is very interesting – and reassuring – to discover what their peers are thinking about when it comes to managing their wealth. Here, we share key investor trends from second quarter of 2017.
Solutions sought across all ages and asset levels
We see a huge range of affluent individuals coming to our site to find a wealth manager for the first time, or to seek a better relationship. The hundreds of users we help every month range from young inheritors or entrepreneurs in their 20s through to those very well progressed into retirement, but who are nonetheless extremely savvy about getting the best possible deal for their wealth: we often encounter users in their 80s who are impressively clued-up about both technology and investing!
We do, however, generally see a lot of traffic driven by retirement concerns earlier in life – unsurprisingly, considering the huge changes to the pensions regime in recent years and ever-rising life expectancy. Over the second quarter, our average user was 52 years of age.
Similarly, the amounts users are looking to deploy varies hugely. The minimum investment for traditional wealth management is generally around £150,000 (although several leading firms offer streamlined services at far lower levels), but most are looking to invest a few million pounds with their new firm – at least a first. While last quarter our average user wished to open their account with around £1,850,000, the range of institutions on our panel means we can assist those with tens (and sometimes even hundreds) of millions with ease. If you have complex financial needs, you can read more about the specialist capabilities on offer here.
Feeling cash heavy (or soon to be)? You are certainly not alone
Stubbornly low – and generally rock-bottom – savings rates have led to a huge jump in the proportion of users indicating that they are (or soon will be) sitting on too much cash and urgently need to find alternatives to make their money work harder.
In the second quarter of this year a massive 44% of affluent individuals said they were holding cash, compared to an already high 29% in the first quarter. Similarly, we saw almost a trebling (from 10% to 28%) in the proportion of users who indicated they were the recipients of large sums of money that they were unsure what to do with for maximum gain – either through inheritance, bonuses, property sales or other windfalls.
The parlous state of savings rates in the UK currently easily accounts for these jumps. The number of accounts available continues to swell, but all the while interest rates continue to slide. While there are now a mind-boggling 1,700 savings accounts on offer, Bank of England figures suggest the average easy-access account yields only 0.15% today (compared to 0.47% at the start of 2016). Even the highest-paying yield only around 1.5%.
With inflation running at 2.6% (as at June 2017), the vast majority of those keeping their money in simple savings accounts are seeing their wealth dramatically erode. This is bad enough with “rainy day” money, but when the funds are for education, retirement or something similarly important, savers really need to seek alternatives. Leaving your wealth languishing at rock-bottom rates will mean effectively losing a lot of money year after year.
More and more unhappy clients “looking elsewhere”
The number of affluent individuals using our smart online tool to find a more suitable relationship or a better deal for their investments continues to rise. Last quarter 24% of users told us they were an “unhappy client”, rising from 17% saying the same in the first three months of the year.
There are a great many excellent wealth managers available who can offer robust investment performance and financial planning, along with high-quality service for often very competitive fees indeed. Yet equally, there are many that investors should really avoid.
Plugging the “information gap” to help affluent individuals easily find reputable firms which exactly suit their needs is the reason findaWEALTHMANAGER.com was launched back in 2012.
If you are actively unhappy with the relationship (or terms) you have with your wealth manager you should certainly make use of our smart online tool to see what other providers can offer.
Even if your relationship is “fine”, you have nothing to lose from looking at alternatives. Periodically reviewing your situation is healthy and these Seven Questions to Ask When Evaluating Your Wealth Manager are a great start.
Delegating decisions increasingly de rigeur
Demand just keeps rising for discretionary services, where the investor delegates day-to-day investment decisions to a professional. Last quarter, an overwhelming 88% of users indicated that they preferred to set the parameters and let the experts take care of the minutiae of portfolio management, compared to 72% in the first three months of the year.
It is little wonder that the numbers for advisory or execution-only services are falling when the current economic and geopolitical environment are taken into account (for an explanation of the differences between advisory, discretionary and execution-only services see here.)
In these unpredictable times, it seems that fewer and fewer people have the time or nerves to manage and constantly monitor an investment portfolio of any appreciable size.
As our recent article on the Seven Deadly Investing Sins illustrates, there are many common – and potentially very costly – mistakes that must be avoided.
Your next steps
findaWEALTHMANAGER.com’s sophisticated yet simple matching service is certain to have a solution, whatever your situation – whether you are a DIY investor looking to hand over the reins to a professional or someone who is completely new to investing and has cash to maximise.
Our streamlined questionnaire generates a 15-point profile and then we have the most suitable firms come to you. With like-for-like comparisons on service, costs and performance made possible, you can then focus on the personality factors that foster long-term relationships.
If you are ready to explore your options, put our smart online tool to work and start the process of meeting the right wealth manager for your profile and needs.
We are always keen to hear any feedback investors might have on their wealth management experiences, so please do get in touch with anything you might like to share via [email protected]