The UK's ten largest wealth management firms have expanded their market presence, now serving nearly nine out of ten discretionary clients. The latest wealth management survey from the Financial Conduct Authority (FCA) indicates these firms served up to 89 per cent of the discretionary client base in the previous tax year.
This represents a notable increase from the 74 per cent market share held by these firms in the 2023/24 tax year. The growth in client numbers is attributed to ongoing consolidation within the sector, as smaller firms are acquired by larger competitors and private equity firms.
However, despite attracting a larger client base, the share of Assets Under Management (AUM) held by these larger firms has decreased. Total AUM for these firms fell by three percentage points to 59 per cent in the 2024/25 tax year, down from 62 per cent the year prior. This decline is suggested to reflect smaller firms being less likely to serve ultra-high net worth clients, resulting in less relative AUM being transferred during acquisitions.
The FCA's report suggests that the trend of market consolidation is expected to continue. Over 40 per cent of wealth firms have indicated plans to acquire another firm, grow revenue, or increase their client base by more than 25 per cent in the next two years. Conversely, nearly 20 per cent of firms are considering winding down or selling parts of their client base due to the effects of a concentrated sector.
The regulator has issued a warning to firms undertaking consolidation, advising against rapid growth that may not align with their current business state. The FCA noted that unmanaged fast growth could lead to poor client service, weaknesses in business continuity, and potentially disorderly failures, emphasising the need for governance and controls to keep pace with expansion.