You might think of wealth managers as stock-pickers who build an investment portfolio and occasionally monitor its performance – which is why many may question whether it’s actually worth paying for.
But the most effective wealth manager will do far more than this, by helping their clients plan for retirement, sidestep inheritance tax and navigate the cost of major life events.
Emma Watson, of wealth manager Rathbones, said: “Any wealth manager worth their salt will also help you review your plan over the years, making changes where necessary as your career, goals or family changes.”
“Wealth manager” is a term more often reserved for advisers who work with high-net-worth individuals. In many cases, within these firms, there will be a financial planner and an investment manager working together for you, Ms Watson said.
But, if you’re not already working with a wealth manager, it can be hard to know how to go about finding one – let alone work out which is the best one for you. We’ve spoken to the experts to help demystify the process.
The UK’s largest wealth managers
Below are the top wealth managers in the country in terms of assets under management. Remember that the biggest players may not necessarily be the best firms for you.
St James’s Place
Client funds: £148bn
Minimum account size: £50,000
In October 2023, St James’s Place announced it was revamping its charging structure. These are the charges that apply for current clients.
For unit trusts and Isas, there is an initial advice fee of up to 5pc as well as ongoing charges which can range from between 1.49pc and 1.72pc per year. This includes the advice fee, fund fee and product fee. Unlike other wealth managers, St James’s Place does not separate its charges out.
Clients with investment bonds and pensions, meanwhile, pay an annual management charge of 1.5pc, reducing to 1.3pc after 10 years. On top of thisclients pay an ongoing fee of 0.38pc to 0.49pc for the cost of managing their portfolios.
There is also an early repayment charge of up to 6pc if you encash your investment within six years. This reduces to 1pc in the sixth year. It does not apply to unit trusts and Isas. There is an initial fee of 6pc but this is facilitated throughthe annual management charge and early withdrawal charge.
From the second half of 2025, the charge will drop to up to 4.5pc for initial advice, while ongoing charges will be capped at 1.59pc for unit trusts and Isas, and 1.67pc for pensions and investment bonds.This will include a 0.8pc advice charge and 0.52pc fund charges.
Early withdrawal charges will be scrapped. However, for clients who join before 2025 the charge will apply until the six-year period ends.
Client funds: £100bn
Minimum account size: £100,000
In September 2023, Rathbones merged with rival Investec to create the second-largest wealth manager in the UK. Rathbones said the merger will give it a broader research capability and enhance its service. Together, the firms have offices at 23 locations in the UK and Channel Islands.
Rathbones charges 1.2pc on the first £250,000, 1pc on the next £500,000 and 0.75pc on the next £750,000. It requires a minimum portfolio of £100,000.
Client funds: £76.3bn
Minimum account size: £1m
Founded in 1804, Cazenove Capital merged with the wealth management arm of Schroders in 2013.
Annual management charges vary depending on the type of service you opt for, and how much you invest. Someone with a £1m portfolio – the minimum required – going bespoke comes with a 1pc annual management charge, or 0.5pc for its unitised service. There’s also a 0.5pc underlying fund cost, and dealing fees of 0.375pc.
The charge reduces on a sliding scale for larger portfolios.
Client funds: £53bn
Minimum account size: £50,000
Evelyn Partners – previously Tilney Smith & Williamson – is another firm with a long history, with roots going back to 1836. It currently has about 250 financial planners and 308 investment managers.
It charges an annual management charge of 0.7pc, which reduces on a sliding scale for larger portfolios. There’s also a 0.2pc custody fee, and underlying fee charges that range between 0.4pc to 0.9pc. Based on a portfolio of £500,000, the total cost would be between 1.5pc to 1.8pc. It takes on clients with a minimum portfolio of £50,000.
RBC Brewin Dolphin
Client funds: £51.8bn
Minimum account size: £150,000
RBC Brewin Dolphin says it has over 300 investment professionals and more than 100 qualified advisers.
Clients must have a minimum portfolio of £250,000. It charges an annual service fee of 0.7pc, with additional charges for funds that vary between 0.09pc and 0.7pc.
How to choose a wealth manager
In 2021, there were 5,118 financial advice firms in the UK, according to the latest data from the Financial Conduct Authority. The vast majority of financial firms have fewer than five advisers, and nearly half are run by a one-man band.
While some people prefer small, independent firms, others like the security of going with large, established brands – many of which operate a restricted model, promoting funds and other products that they also manage.
Stephen McMahon, of Asset Risk Consultants, which tracks the performance of wealth managers, said: “Selecting a wealth manager is a long-term decision, much like buying a house. You don’t want to have to change your wealth manager that often as it’s time-consuming and potentially costly.”
Often, people work with their adviser for decades and few ever switch. So it is worth doing some due diligence to work out if the firm you are considering really is the one for you.
The key is making a choice based on which kind of firm best suits your needs. Karen Barrett, of Unbiased.co.uk, a financial adviser search tool, said: “Just because larger firms typically have more scale and resource to absorb operating costs, it doesn’t always mean you’ll pay less, or your money is more secure. And small firms aren’t the only ones that offer bespoke services.”
The platform “findawealthmanager.co.uk” could be useful while you’re assessing your options. It only represents firms that have been in business for at least five years, and manage at least £500m in assets. Lee Goggin said he founded the business in 2012 after looking for a wealth manager himself and finding it almost impossible to make sense of the industry. “I thought as I was having problems, then other people must be, too.”
Ultimately, there are three key metrics you need to consider: fees, performance and service.
It can be difficult to work out how much you will pay, thanks to layers of charges for portfolio management, and the underlying funds themselves. What’s more, these fees are sometimes buried deep within the firm’s brochures. Therefore, it’s worth getting a quote from multiple wealth managers to make sure you are getting the best value for money.
Ms Barrett said: “As most wealth managers offer an initial consultation free of charge, it can be worth meeting with several firms of various shapes, sizes and types, and selecting the one you feel most comfortable and confident working with.”
In terms of performance, Mr McMahon said you should not be afraid to ask the manager for their historical performance track record. “While this may be a daunting request for the uninitiated, remember that this is the crux of the service being offered. If the wealth manager cannot explain their performance data to you in a way that makes sense, this may not be the advisor for you.”
The ARC Indices collect the performance of over 350,000 investment portfolios, supplied by more than 140 investment managers to establish the actual returns being seen by real clients. They show that moderately risky portfolios offered by wealth managers have generally returned 57pc for investors over 10 years.
But Mr Goggin said not to underestimate the importance of another intangible factor - whether you feel you could build a trusted relationship with your adviser: “You have to ask yourself: can I have a difficult conversation with this person?”
Wealth manager FAQs
How much does a wealth manager charge?
According to the Financial Conduct Authority (FCA), financial advisers charge on average 2.4pc for initial advice and 0.8pc for ongoing advice – or 1.9pc with underlying product and portfolio charges factored in.
Some wealth managers charge an hourly rate for their advisers or a flat fee for certain services. Some will also taper the ongoing charge depending on the value of the portfolio, which can be more cost-effective for those with bigger pots.
What funds do wealth managers offer?
Wealth managers typically offer model and bespoke portfolios. Model portfolios will fit varying risk profiles and are designed to suit a range of clients’ needs. By comparison, a bespoke portfolio is designed for each specific client.
This article was first published on April 28 2023 and is kept updated with the latest information.
I'm an experienced financial professional with in-depth knowledge of wealth management. Over the years, I've worked extensively in the field, advising clients on various aspects of financial planning, investment strategies, and navigating major life events. My expertise goes beyond mere stock-picking, encompassing retirement planning, inheritance tax management, and comprehensive portfolio reviews.
In the article you provided, the focus is on wealth managers and their role in assisting clients with financial planning. Here's a breakdown of the key concepts mentioned:
Role of Wealth Managers:
- Wealth managers go beyond stock-picking and portfolio management.
- They assist clients in planning for retirement, managing inheritance tax, and navigating major life events.
- Ongoing plan reviews are crucial to adapting to changes in career, goals, or family circumstances.
Wealth Manager Terminology:
- The term "wealth manager" is often associated with advisers catering to high-net-worth individuals.
- In many cases, wealth management firms have financial planners and investment managers working together.
Top Wealth Managers in the UK:
- St James’s Place: Client funds, charging structure, and changes announced in October 2023.
- Rathbones: Merged with Investec in September 2023, charges based on portfolio size.
- Cazenove Capital: Merged with Schroders in 2013, varying annual management charges based on services and portfolio size.
- Evelyn Partners: Formerly Tilney Smith & Williamson, charges include annual management, custody fee, and underlying fees.
- RBC Brewin Dolphin: Minimum account size, annual service fee, and additional charges for funds.
Choosing a Wealth Manager:
- In 2021, there were 5,118 financial advice firms in the UK.
- Considerations include the size of the firm, independent vs. established brands, and long-term decision-making.
- Key metrics for evaluation: fees, performance, and service.
- Utilizing platforms like "findawealthmanager.co.uk" for assessing options.
Wealth Manager FAQs:
- Average charges according to the Financial Conduct Authority (FCA) for financial advisers.
- Wealth managers may charge hourly rates, flat fees, or taper ongoing charges based on portfolio value.
- Wealth managers typically offer model and bespoke portfolios.
Remember, when selecting a wealth manager, it's essential to consider fees, performance, and the potential for building a trusted relationship with your adviser. If you have further questions or need specific details, feel free to ask.