September 7, 2021

Cost and fee pressures help push more wealth manager mergers

Author:
David Barks, Director
In this highly competitive marketplace, there is clear pressure not to raise fees. Regulatory moves over the past 10 years have increased fee transparency and clients are finding it ever easier to see exactly where their portfolios are.

Since 2017, fees have reduced markedly for those with larger portfolios pushing wealth managers to continue to search for efficiencies and creating a ripe environment for mergers and acquisitions.


The results from the 15th annual Private Client Wealth Management survey run by Savanta in partnership with the Financial Times, revealed the changes in fees as a proportion of assets under management (AUM).

Over the past five years, fees have on average risen only for the smallest discretionary portfolios. For most portfolios, they’ve remained very similar or even reduced for the wealthiest clients. More recently, most wealth managers inform us that over the past year their fees have remained the same. No wealth manager has increased fees and one has even reduced them further.

In this highly competitive marketplace, there is clear pressure not to raise fees. Regulatory moves over the past 10 years have increased fee transparency and clients are finding it ever easier to see exactly where their portfolios are.

Small wealth managers are finding it tougher to be price competitive and deliver on ever increasing client expectations around digital servicing. Cost to income ratios remain high and this has forced many mergers and acquisitions to continue. But these don’t just include sub-scale providers. Efficiencies and complementary niche’s have led Tilney and Smith & Williamson to merge. Canaccord has acquired most of the Adam and Company investment book from NatWest Group. Close Brothers have acquired PMN Financial Management, and Rathbones are purchasing Saunderson House.

Given the fee and cost pressures faced by all in the sector, mergers and acquisitions will likely continue to gain scale and increase efficiencies. But with inflationary pressures likely to impact costs further in the coming months, could industry leaders bite the bullet and raise fees in 2022 for the first time in years?

For more information about our work across the wealth sector please get in touch with one of our experts here.


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