1st February 2017

Wealth of Opportunities II

The Private Banking and Wealth Management (‘PBWM’) industry, at its core, helps customers to invest their savings and manage their finances, while empowering them to look forward and build their futures with confidence.

The sector has experienced significant growth in assets in recent years, boosting broader UK economic growth. This report highlights the important contribution the industry makes to the UK. The PBWM industry managed or administered £825bn of assets in 2016, equivalent in value to more than 40% of the UK GDP. However, this sector is not only important economically. This report shows the sector’s important social contribution, creating jobs, providing financial education and support for small businesses and entrepreneurs, while helping many in our demographically ageing society to save for their future.

In recent years, the industry has undergone significant transformation. Changes in legislation have contributed to renewed product innovation in the savings arena with increased consumer interaction. This has resulted in substantial growth from investments in tax-incentivised savings and investment products. Assets invested primarily in stocks and shares Individual Savings Accounts (‘ISAs’) and Self-Invested Personal Pensions (‘SIPPs’) experienced a rapid 133% growth over the past five years from a

combined £97bn in 2011 to £226bn in 2016, as consumers engaged with pension reforms and increased ISA limits . As the retirement landscape continues to adapt to the needs of an aging population, the importance of tax incentives for savers to put money aside for their futures will only grow. Extending these long-term savings and pensions incentives will help encourage people to save for their future.

Clients are now better protected than they have ever been. However, it is important to calibrate new regulation with the intended client benefits to avoid cost and resources dedicated to regulatory compliance adversely impacting investor choice and delivery costs.

Financial advice can play an important role in helping consumers make informed choices when planning and managing their savings and investments. Demand for regulated advice and guidance is on the rise, especially following the recent pensions freedom reforms. The Financial Advice Market Review (‘FAMR’) report recognised that Government and regulators need to do more to tackle this ‘advice gap’ by helping the industry to develop and bring new advice models to market. We encourage the Government and regulators to maintain momentum on their part in delivering the FAMR recommendations.

Following the vote to exit the European Union (‘EU’), the UK and the EU27 must now work together to agree a new, successful partnership that works for UK and EU customers, businesses and economies. All EU member states have a mutual interest in ensuring that there is a smooth exit. This will mean retaining free trade in financial services and must be underpinned by a strong bilateral agreement between the UK and EU27. It will also require an orderly transition to ensure no cliff-edge effects when the UK leaves the EU. In doing so, the interests of customers including UK investors should be taken into account. Delivering service excellence in the industry requires access to skilled staff. Furthermore, it will be important to ensure that any potentially adverse impact on clients’ investment choices is minimised.

This is the second edition of the Wealth of Opportunities report. This edition sets out why it is in all our interests for the sector to continue its success story, and in doing so help many more consumers secure their financial future.

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