Some 89% of wealth management clients are represented by the 10 largest firms in the industry, according to a recent report from the Financial Conduct Authority (FCA), pointing to an increasingly consolidated sector.
In a report published earlier today (August 18), the regulator surveyed more than 400 wealth management firms to investigate changes in the sector over time.
In this study, the 10 largest wealth managers captured almost 90% market share, a 15-percentage-point rise on the last study for 2023/24. However, these asset managers’ market share of assets had dropped slightly compared with the last study, falling to 59% from 62%.
In total, the report found that portfolio management clients in the sector have grown by 20% since 2022.
Looking forward, many wealth management firms were increasingly confident in their expansion goal, with 41% planning to acquire another firm, grow revenue, or increase their client base, compared with just 18% considering winding down.
“Consolidation can support efficiency and growth by helping firms pool resources, expertise and technology,” the report noted.
“However, we have also seen that if fast growth of these businesses is not managed effectively, it may create poor outcomes,” it continued. “These could include poor client service, weaknesses in business continuity and in some cases disorderly failure.”
Going beyond this, the report noted that while the overall use of third-party or in-house AI tools remained low at about 13%, at least 45% were considering using it in the next 12 months.
“Although overall use remains limited, firms adopting or considering AI represent a large share of the market,” the report noted. “However, it is also moving quickly, and adoption may now be higher, given our data only represents submissions captured at the time of collection.”
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Rob Hillock, head of personal financial planning at Broadstone, said: “The real test will be whether larger platforms can use their scale to deliver a better, more consistent client experience without losing the personal service and responsiveness that many investors value.”
That said, the report also found room for improvement in the sector, particularly on fair value and representation.
For example, about 29% of wealth managers also offered financial advice to provide a more joined-up service, but responses were mixed on whether investors were getting fair value for money.
Some firms make detailed fair value assessments, while others may not have fully considered how pricing, including fixed fees, can affect clients with smaller portfolios, the FCA noted.
Meanwhile, the report also found more to be done on gender representation. In total, women made up about 17% of investment manager roles, dropping to just 11%-12% for those aged over 50.
With the FCA’s 2025 adviser survey finding 60% of client relationships included a woman, the report argued addressing this underrepresentation would better serve the population and increase the sector’s resilience.
“We want a competitive, innovative and resilient wealth market that supports sustainable growth and consistently delivers good client outcomes,” the report said. “That means firms need to understand our expectations clearly, use technology responsibly, maintain strong financial crime controls and make sure their governance and oversight keep pace as they grow.”
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