Within the wealth management sector, the 10 largest firms by client numbers now account for 89 per cent of all UK clients, according to a Financial Conduct Authority market study.
Covering the 2023/4 financial year, this figure is up by 19 percentage points from 70 per cent in 2022/23.
According to the study, a further 41 per cent of wealth managers intend to acquire another firm, increase revenue, or increase their client base by more than 25 per cent over the next two years. By contrast, 18 per cent are considering winding down or selling all or part of their client base.
Around 29 per cent of wealth managers also offer financial advice, which in theory can help give clients a more joined-up service. However, the FCA found mixed outcomes on fair value and whether the price a client pays is reasonable relative to the benefits of the service they receive.
Rob Hillock, head of personal financial planning at consultancy Broadstone, says: “The FCA’s findings show how quickly consolidation is reshaping the wealth management market, with the largest firms now serving a much greater share of discretionary clients.
“Greater scale can support investment in technology, compliance and client service, but consolidation must ultimately translate into better outcomes for clients. As firms grow through acquisition, maintaining service quality will be critical to expanding in a sustainable and effective way.”
Firms overseen by the FCA study of the wealth management portfolio support more than 5.5 million retail clients, and collectively manage almost £1 trillion of assets.
