The wealth management sector has been in the spotlight recently, firstly because a long-standing industry leader has been acquired by private equity at a large premium, and secondly due to concerns about the impact of evolving government policy, reaching a crescendo in the Budget.
Wealth management is part of the specialist financial sector and deals with active and passive (ie, ‘do it yourself’) financial management and investment, along with advice and planning for savings, retirement, tax and inheritance. Whereas fund managers often deal with large-scale pension fund investments, the wealth management sector’s clients are almost exclusively private individuals. The companies involved are also distinct from trading platforms, which have something of the feel of gambling stocks about them and often focus on geared asset classes such as exchange traded funds (ETFs), currencies, commodities or crypto rather than bread-and-butter investments such as shares or bonds – this encompasses the likes of CMC Markets (CMCX) and Plus 500 (PLUS).
Wealth managers are either standalone specialists, divisions of high-street banks and insurance companies, or a personal investor arm of a larger fund management group such as Fidelity. For investors, the focus is on the first category.