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Those creating significant wealth today face an unexpected conundrum: planning advice and digital capabilities have never been so indispensable, yet the HNW wealth management landscape remains ill equipped to deliver. What does the journey to wealth look like and how can we avoid the pitfalls?
Closing the gap
When we first thought about setting up an independent firm, we were certain of one thing. With at least 400 high-net-worth focused wealth managers in the UK today, the last thing that private clients needed was another wealth manager.
But beware the illusion of certainty. The more we looked, and the more we drew on our own experience in the field, an interesting paradox emerged.
The ‘advice-haves’
The so-called “mass affluent” community in the UK – meaning professionals, high earners, and the somewhat bizarre and highly subjective term ‘HENRYs’ (High Earning, Not Rich Yet) – is relatively well-served for financial advice. The IFA community as a whole does a good job of helping you plan for retirement, for example. Prior to that, there is generally little need for formal ‘financial advice’, save for a nudge every so often to use one’s pension and ISA allowances, ensure adequate insurance provision is in place, and around certain life events, such as receiving an inheritance from a relative. In most cases, advisors are delivering advice; they are in the parlance of the industry, ‘advice-led’.
And whether you’re in the hands of the IFA community, DIY online-only platforms, or so-called ‘robo-advisors’, you can also get access to some rather compelling technology. The emergence of start-ups and businesses in the ‘wealth-tech’ space over the past few years has allowed clients to add genuinely useful apps to their home screens, and open banking has led to a whole raft of providers enabling you to see multiple account feeds in one place. Consolidation creates simplicity.
A change on the horizon
But should you – during that rather long period of life prior to retirement – sell your business, or part of one, or come into significant wealth through another route, some interesting things start to happen.
The first, is that your inbox immediately fills up with solicitations from wealth managers. Some will be embarrassingly formulaic (we’re looking at you ChatGPT), some will be fairly sophisticated and well-researched, and some will simply have all-out stalker vibes. Almost all of them will be from relationship managers at major global banks, along with a handful from independent firms.
Perhaps one of the company names resonates with you for a specific reason, a particular email tickles you, or you receive all three ingredients for a negroni in the post, having once mentioned your cocktail of choice in an interview five years ago. For any of these reasons and more, you meet with and appoint a wealth manager.
There’s a risk that you can stop feeling seen as a person, and just become the bottom line.
The second thing that happens is that conversations about your wealth quickly cease to be about advice, and instead become about investments and debt. Most banks are manufacturers, and like any manufacturer, they create products and sell them to customers. Being sold a product, however, is very different from receiving advice: there’s a risk that you stop feeling seen as a person, and just become the bottom line. While banks are still trying to work out how to solve this, achieving it will require them to rethink their existing business models and overcome the complications that come from housing competing divisions.
The third is perhaps the least expected. Rather than your access to wealth-tech growing in line with your balance sheet, and/or the prestige of your chosen wealth manager, it shrinks. The big banks are good at many things, but being technologically innovative is generally not one of them. Complaints by private clients made to some of the biggest and well known names in wealth management today are more often than not, about their lack of visibility over their financial picture. We have all become so accustomed to getting information immediately, at the touch of a smartphone, that being plunged back into 2010 feels irrationally – but understandably – enraging. Especially when it’s about that most emotive of subject: your personal wealth.
The paradox
Here then, lies the paradox: the more wealth one creates, the harder it is to receive sound planning advice and to see with full transparency what your wealth is doing. It is this inverse correlation, which has led to a problem that we call the ‘HNW Advice Gap’.
We have committed ourselves to addressing this issue. Closing the gap by delivering an independent and advice-led wealth management offering allows us to sit on the same side of the table as our clients, and enables them to benefit from some of the outstanding technology entrepreneurs and platforms with whom we have partnered.
Our mission? We plan to bring the industry along with us.
This blog is for information purposes and does not constitute financial advice, which should be based on your individual circumstances. The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
