product shortage forces High-net- worth individuals to create their own portfolios
Products and services on offer from private banks and private client investment managers still fail to attract most of the target market, according to Market Dynamic Research and Consulting's (MDRC) report on the UK high-net-worth (HNW) market.
Richard Williams, managing director at MDRC, said: "HNW individuals are changing their aspirations and expectations. More individuals are now seeking improved investment performance and are questioning the value derived at many wealth managers. Despite the introduction of a wider range of wealth management products, HNW individuals remain largely disappointed with products and services available from the major wealth management firms."
According to Richard Thornton, executive consultant for wealth management at Cap Gemini, HNW individuals were becoming a lot smarter in their choices of funds. He said private banks and wealth managers needed to offer more than just products and services from their own offerings, by looking at external funds.
Thornton said: "Over the past 10 years fund managers have done a bad job at protecting client's capital and investors are beginning to wonder why they are paying a wealth manager if they are not beating the index and beginning to create their own portfolios themselves."
Williams warned the cost of operating in the HNW sector continued to increase and many of the smaller wealth management firms remained under pressure.
He said for a business to succeed in the future, it must align its business strategies to manage and develop the client relationship and adapt rapidly to the changing business environment.
However, Greg Horton, managing director at Fairbairn Private Bank, said this was not the case for all private banks. He said: "At Fairbairn Private Bank we have not experienced disappointment from our clients in our wealth management offering.
"In our last client survey 98% of HNW clients were more than satisfied with Fairbairn and 87% have already or would consider recommending us. However, we are aware that 8% of our clients opened their account with us because of dissatisfaction with their previous bank."
HNW individuals disappointed by product offerings by private banks and wealth managers
Private banks, wealth managers need to offer more than own funds
HNW individuals have been creating their own portfolios
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