The author of this article, a CEO at a wealth management house, argues that there are plenty of reasons for wealth advisors and financial services in the UK to embark on more international expansion.

As part of our continuing examination of international financial centres, (see a previous article here), we carry the following piece by Peter Clark (pictured), CEO of Bentley Reid, a wealth manager. Thanks to the author for this article; the usual editorial disclaimers apply. If you want respond, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

A record number of wealthy people have left the UK in recent months with New World Wealth, an analytics firm, estimating that one millionaire has been departing every 45 minutes since last summer's General Election (source: The Times).

Andrew Amolis, head of research at New World Wealth is on record as saying: “Over 60 per cent of centi-millionaires are entrepreneurs and company founders, which makes them key when it comes to wealth creation. The businesses they start up have a significant positive spillover effect on the middle class as they create large numbers of well-paying jobs in their base country. It is also worth noting that most of the companies on the FTSE 100 were started by individuals who went on to become centi-millionaires.”

With a growing number of high net worth individuals pursuing a friendlier business environment and favourable tax regimes in places like Asia, the Middle East and even parts of Europe, it begs the question: should UK wealth managers follow suit?

Exploring overseas opportunities is not a new phenomenon for HNW service providers.

Offshore jurisdictions such as Hong Kong, Singapore and Dubai have long appealed to firms catering to both high savers and those already with material wealth. However, it looks as though this trend will intensify as tax hikes and general quality of life issues in many Western nations (particularly the UK) encourage more families to relocate overseas. 

For wealth managers, the business case for an international footprint is often as simple as pursuing the higher fees and larger portfolio sizes that typically emerge from overseas markets, but an expansion into offshore territories is seldom straightforward. 

One consideration is that the more prosperous regions can quickly become a victim of their own success; often attracting an influx of new entrants that fosters greater competition and leads to the type of fee pressure and margin compression that has challenged domestic UK wealth managers in recent years. 

The Dubai example
Take the UAE as an example. In 2024, it attracted more HNWs than anywhere else in the world with a net inflow of almost 7,000 millionaires eclipsing the tallies in both the US and all Asian nations (source: VisualCapitalist.com). However, the region is also witnessing a record increase in financial service providers. In the first half of 2024 alone, the Dubai International Financial Centre’s (DIFC’s) – the leading global financial centre in the Middle East, Africa, and South Asia (MEASA) region – regulatory body, the Dubai Financial Services Authority DFSA), authorised 61 new firms; a 22 per cent increase from the year before (source: DFSA). 

Another challenge is the race to secure skilled and experienced professionals, which can be easier said than done, especially in areas suffering from local issues, such as an extreme climate or elevated political risk. Cost of living pressures can also be acute in these growth ‘hotspots’, often mitigating the perceived benefits of moving to a so-called "tax haven."

Despite this, human talent residing in established markets like the UK is in particularly high demand. Speak to any recruiter now and they are almost certainly busy filling roles in Asia and especially the Middle East.

Interestingly, workers are not the only British export being sought by overseas markets. 

Any firm that is able and willing to share its learnings from major regulatory frameworks, such as Consumer Duty and Retail Distribution Review (RDR), will quickly differentiate themselves in offshore markets, where unscrupulous fee models and other sharp practices can be commonplace. 

For a host of reasons, we should expect to see more UK wealth managers embark upon an international expansion over the coming years, but Britain is far from a lost cause.

It is vital to remember that its financial services sector remains amongst the best and most trusted in the world. This hard-earned reputation stands it in good stead to weather whatever challenges the broader UK economic and political backdrops brings over the coming months and years. 

Disclaimer
The content of this communication is for information purposes only. Bentley Reid believes that, at the time of publication, the views expressed are a matter of opinion but cannot guarantee replication of depicted performance. Viewers intending to act based upon the content of this communication should first consult with the professional who advises them on their financial affairs. Capital invested will be at risk, and you may get back less than you invest. The past is not a reliable indicator of future performance. Neither the publisher nor any of its subsidiaries or connected parties accepts responsibility for any direct or indirect loss suffered by a recipient as a result of any action or inaction, in reliance upon the content of this communication.