More predictable regulation, clearer tax policies and improved financial literacy will help drive growth and innovation in the UK’s private banking and wealth management sector, a new report has found.
The report, UK Private Banking and Wealth Management: Harnessing the Sector to Deliver Economic Growth, was released today by PIMFA, KPMG and UK Finance.
There are about 5,000 firms in the UK providing wealth management and financial advice, and 90% of them are small, employing five or fewer advisers. As a whole, UK wealth management oversees £1.6 trillion in assets and supports more than four million clients.
Private banking and wealth management firms also contribute significantly to economic growth, accounting for £8bn, or 7%, of the £110bn in annual tax revenues from UK financial services.
The sector is undergoing consolidation as interest grows from private equity, and firms seek economies of scale. However niche, smaller businesses remain attractive to clients, the report said.
Researchers spoke to chief executives and board-level representatives from 19 firms in the private banking and wealth management sector. They found different strategies and growth ambitions among these leaders. While some firms will chase growth by increasing market share, hiring more advisers and onboarding new clients, others will focus more on deepening existing client relationships, enhancing their service offerings and differentiating themselves in the marketplace. Technology such as AI will help with this, improving personalisation and automation.
The report identified four key areas in which government support could significantly enhance the wealth management sector and UK growth. These are:
- Fairer and more proportionate regulation: Policymaking and supervision should be more predictable, consistent, and supportive of the industry, along with closer collaboration between the FCA, FOS and FSCS, and further promotion of the sector’s positive contribution.
- Embracing innovation and smarter compliance: The sector is increasingly focused on how emerging technologies like AI can enhance client outcomes. With further support to manage compliance costs and strengthen firms’ investment capabilities, there is significant potential for growth. The government can play a key role by supporting incentives that boost investment and broaden retail participation in financial markets.
- A clearer, more stable tax environment: There is a valuable opportunity to build greater confidence by providing more certain and predictable tax policies and clearer direction. A well-signposted tax roadmap and targeted incentives would encourage long-term saving and wealth-building, attract global capital, and support early-stage UK business growth.
- Strengthening financial literacy: A persistent and critical gap in financial literacy remains a key concern for industry leaders. Improving financial literacy can unlock greater engagement with advice and better decision-making. This can involve embedding financial education across the curriculum and promoting public awareness.
Liz Field, chief executive at PIMFA, said: “We welcome recent signals from government and regulators around growth and competitiveness, but there’s a concern across our sector that without a more stable, proportionate, and joined-up policy environment, we risk missing a vital opportunity to unlock investment, drive innovation and promote greater financial resilience across society. Now is the time to go further, faster, and unlock the potential within the wealth management, financial advice and planning sector to unlock the growth we all want to see.”
Eric Leenders, managing director of personal finance at UK Finance, said: “This report provides a clear roadmap for how the wealth management and private banking sector can partner with government to drive growth. It also makes clear that if we want more people to benefit from financial advice and long-term investing, we need to remove barriers, modernise regulation and really invest in improving financial literacy.”
Daniel Barry, partner at KPMG UK, added: “While recent government and regulatory initiatives to promote the sector’s growth and competitiveness are welcome, the report highlights the need to do more. But this isn’t just about driving economic growth, it’s about supporting individuals to achieve their financial goals. As risks to the UK’s financial stability are rising, the government has a significant opportunity to instil greater confidence among sector leaders at a time of great uncertainty and geopolitical volatility. Policymakers, supervisors and the sector must work together to both safeguard it and deliver growth.”
Read the full report here.