There's plenty of wealth management potential outside the M25 corridor. The government's much-vaunted "levelling up" agenda, as well as the high-profile HQ moves of groups such as the BBC, the national broadcaster, to Manchester, suggests that London's grip isn't what it was. What does the map look like?
(Editor's note: This publication is starting a series of articles on regional strategy, talking to firms about how they approach building business and brands in their regions.)
It is all too easy to assume that all the most important wealth management conversations happen in capital cities, with the regions barely making up the numbers. And when there’s a pandemic and everyone is chatting over video rather than visiting an office, the need to be physically present across a country isn’t the same.
But the UK government’s much-trumpeted “levelling up” agenda to boost business in areas such as the Midlands and the North helps focus minds on life outside London and the Southeast. In certain cases, some of the big players have a regional strategy, based in their history, and a local retail footprint.
When the Conservative Party won a host of “Red Wall” seats in the North and other areas in the UK in 2019, political pundits may have missed that these areas aren’t all the clichéd picture of post-industrial angst as depicted in TV dramas or political speeches. There’s plenty of entrepreneurial vigour and wealth outside London, which is getting noticed now.
UBS, Julius Baer, Barclays, HSBC, Coutts, St James’s Place, Schroders Personal Wealth, Brown Shipley, Weatherbys, Tilney Smith & Williamson and JM Finn have plenty of “footprint.” UBS, the world’s largest wealth manager, to take just one example, has offices in Birmingham, Manchester, Leeds, Newcastle and Edinburgh. In the case of Brown Shipley, the organisation also has Leeds, Manchester, London and Birmingham offices, and a presence in Cambridge and Norwich. Those discreet entities such as family offices tend to be London beasts, but at least one – Sorbus – is run from Manchester. Maybe more of them will sprout.
Greater use of two-way video to chat with a relationship manager might have reduced the need for a bank to be as close to clients on the ground, but where HNW and ultra-HNW clients are concerned, proximity to an advisor still counts. After all, it is part of the value proposition that comes with the fees. Firms that have RMs and other professionals who “know their patch” are better placed to find new clients, understand and retain them.
There also appears to be an element of marketing and brand promotion here, although it can be an expensive way of achieving it for firms that don't already have an established retail presence. In the case of Schroders Personal Wealth, the JV between Lloyds Banking Group and Schroders, it can tap into the extensive Lloyds bank branch presence, but can simultaneously build a new identity. Barclays’ wealth and private banking business has the same advantage, as does HSBC, while Coutts, being part of NatWest, has the coverage value of its parent. (Even so, digital banking is making inroads leading to some bank branches being closed. The surrounding retail footprint advantage isn’t what it was.)
Comparing which players are going after regional markets, and how they stack up, isn’t easy. Foreign-based groups such as Swiss players UBS and Julius Baer, for example, rely on their ability to reach clients via intermediaries i.e. accountants and lawyers as well by the word of mouth. There are no UBS or Julius Baer ATMs in Birmingham or Oxford. Barclays, Lloyds or HSBC have had a long-running retail presence to put their brands in the forefront. Coutts has 14 offices, including London, making it the most “spread-out” of the private banks across the UK.
Some bank clients who reside in the UK regions might prefer a large, international bank such as UBS or HSBC Private Banking if they have significant global investment and business exposures; another HNW or UHNW person living a few miles away might have purely UK-based concerns and go for a more domestic house such as Coutts. It is also worth noting that among the ranks of HNW Britons, there is a large cohort of immigrants who might prefer a more international offering and the brand associated with it.
It appears at this stage that it is more common for wealth management houses such as Schroders Personal Wealth and Brewin Dolphin, for example, to have a large regional footprint than is the case with private banks, notes Caroline Burkart, associate partner, client insight for Human Capital Solutions at Aon.
So how much sense does it make for big banks and other players to spend money on regional build-outs? One source, who asked not to be named, told this news service that he isn’t sure how wise it is for banks to invest millions in teams of RMs and personnel to run regional offices, particularly as the pandemic and the increased use of digital tools has weakened the need for in-person contact. In the case of the most exclusive private banks, many of their ultra-wealthy clients prefer to visit London for big meetings. “They like to see people and they tend to travel a lot anyway.”
Some of the regional offices make money serving HNW and ultra-HNW individuals who have had liquidity events or who have retired. In the latter case, they tend to be relatively “sticky” clients in terms of turnover, the person said. For younger HNW individuals and those rising up the ranks, it is unclear how much use they’ll make of regional offices, the person added.
The benefits of having a wide regional office footprint might be debated, and as the lockdowns have shown, old assumptions about how a business must interact with clients are being torn up. Boasting a range of offices around the country might not appear wise unless they can generate a decent return. Heads could roll if big numbers don’t roll in. But even in this digital age, and when the structure of the UK economic landscape appears to be shifting, having one’s brand dotted around the country might be a necessary investment, even if it takes time to bear fruit. Banking and wealth management is, so its practitioners say, about the long haul, not the quick fix.