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Competition ‘heating up’ in UK wealth market

As firms continue to open hubs and regional offices across Britain

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The British economy is contracting. Living costs are rising. But the UK wealth management industry is continuing to expand.

Over the past few years, companies in the sector have been bolstering their presence across the country and outside the traditional wealth capital of London.

One of these businesses is Cazenove Capital, the UK and Channel Islands wealth arm of Schroders. The firm recently opened an office in Birmingham and, prior to that, set up a Manchester base.

According to the Schroders’ subsidiary, the UK regional push is due to “internal and external reasons”.

Karan Sejpal, team head of business owners and entrepreneurs, and the UK regions at Cazenove Capital, told International Adviser: “With new wealth being created across the business owner and entrepreneurial community outside of London and the south east, and government policies aimed at refocusing attention on the regions as part of the ‘levelling up’ agenda, it makes sense for Cazenove Capital to focus on our UK regional growth.

“As a business, we have been very successful in London and the south east – the traditional hotspots for wealth creation in the UK. Our exposure to the rest of the UK was, as a result, fairly limited, with only a small percentage of our assets based in the regions.

“Over time, as centres of business excellence have emerged in regional hubs like Manchester, Birmingham, Bristol and Edinburgh, we have identified a significant runway for growth outside London and the south east, which we are actively pursuing.

“The joint venture between Schroders and Lloyds was another trigger event to our regional commitment. Lloyds already has significant market share with business owners and high-net-worth clients around the country. Through our relationship with Lloyds, we have enjoyed greater access to the top end of their client base.

“It really has been a no-brainer to double down on our regional efforts in the past few years.”

Expansion plans

Cazenove’s plans for regional expansion is not finished with Manchester and Birmingham.

Sejpal added: “The regional market is generally underserved. When I joined the firm, we set out our intentions to complement our existing offices with four new regional offices in Manchester, Birmingham, Bristol and Leeds. The board has been very supported of this plan and shown a desire to see it carried out.

“We’re making good progress on that commitment. In the past year, we have opened new offices in Manchester and Birmingham. Assuming we have the right talent, we hope Bristol and Leeds will be our next office launches.”

Competition

There are wealth managers and financial advice firms all across the UK. There may not be as many as in London and south east – but still enough to make it hard to take full control of a region.

Sejpal said: “There are benefits to having long-term relationships within a certain region. Recognition of your brand around the city will be higher; you’re more likely to encounter prospective clients through personal introductions or recommendations from other financial services providers.

“You can’t compensate for time spent in a city. That said, having the right talent can help you catch up with more established players, enabling you to hire others who are well-known in the region already. As you can imagine, competition to recruit local talent at a regional level is heating up.

“Having the support of a strong, globally recognised brands like Schroders and Cazenove Capital, and a long-term approach to regional presence, is undeniably helpful. It’s also reassuring to see the pace at which wealth has been created at a regional level in the past few years; there is opportunity for all firms, which takes the pressure off a bit too.”

Going against the status quo

The rise of the UK regional offices is going against the grain. The pandemic helped see the rise of virtual meetings and showed what could be the future of the advice sector with technology.

But Sejpal believes satellite offices are still a useful tool.

“While hybrid working is very much ‘the norm’ post-pandemic, there is still strong appetite for in-person meetings. This is something that has long defined how wealth managers service their clients, and not something we foresee changing too significantly in the new world of work.

“Technology is fundamental to our ability to offer clients a service that best suits their needs, wherever they are based. Not only does it enable us to meet virtually if desired, but it also provides an environment for collaboration, whether with the London office, between regions, or simply with clients and other advisers.

“A physical office space is a strong indicator of long-term commitment to a region, too. Clients want to know they’re dealing with a firm that won’t vanish overnight, and that has the on-the-ground resources to meet the spectrum of their needs.

“I’d expect to see more wealth managers opening offices across the country going forward. Not only because wealth creation in the region shows no signs of slowing, but also because advisers themselves will be drawn to a working model that means they can live outside of cities, while still doing the job they enjoy.”

Diverse talent and clients

One unspoken consequence of the wealth push outside of London is the potential for diversity.

With firms opening offices in places such as Bristol, Newcastle, Cardiff and Leeds, it can spread the world of wealth management to the masses – boosting client numbers as well as bringing in staff from all walks of life.

“The industry desperately needs diverse talent,” Sejpal said.

“We’re already seeing positive steps in that direction. The more that high quality wealth management firms are present in the regions, the greater public trust in the sector becomes. This, in turn, makes wealth management a more attractive sector for young people looking to build a career in.

“There was a time when clients felt they had to come to London to get proper advice. I think as a new breed of entrepreneurs has emerged in the past 20 years, there has become a greater expectation for good quality advice where they are – which is often in the regions.

“There is a feeling among regional wealth creators that they shouldn’t have to travel to London for advice on their assets. Advisers need to be coming out to the regions and meeting new and prospective clients where they are.

“As firms like ours continuing to expand in the regions, others will have to up their game to retain clients. At the end of the day, everyone benefits through enhancing their regional offering.”

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