The ten largest wealth management firms in the UK served 89% of clients in 2024/25, up from 70% in 2022/23, new analysis from the Financial Conduct Authority has revealed.
The findings came as the FCA published its latest Wealth Management Survey, covering 400 firms within the sector.
It showed that the retail client market for discretionary management has become more concentrated since the FCA conducted its first survey in 2022.
In total, firms supervised within the FCA’s wealth management portfolio support more than 5.5 million retail clients and manage almost £1 trillion of assets.
There are around 5,400 investment managers across firms offering portfolio management, broadly unchanged from 2022 levels. However, portfolio management clients have grown to 1.3 million, up 20% since 2022.
Looking ahead, the FCA said firms are confident about their growth prospects. More than two in five (41%) surveyed plan to acquire another firm, grow revenue or increase their client base by more than 25% over the next two years. By contrast, 18% are considering winding down or selling all or part of their client base.
While consolidation can support efficiency and growth, the regulator warned that if fast growth is not managed effectively, it may create poor outcomes. These include poor client service, weaknesses in business continuity and in some cases, disorderly failure.
The FCA said that going forward, wealth managers will need to strengthen standards around fees, fair value and financial crime controls.
Lucy Castledine, director of consumer investments at the FCA, said: “A stronger wealth management sector can support growth, build trust in investing and help more clients make better-informed decisions about their financial futures and get better outcomes.
“But growth must be matched by strong standards. Firms need clear governance, strong financial crime controls and they should provide fair value, effective support for clients as well as responsible use of technology, including AI.”
Fair value
The survey identified fair value as an area where further improvement is needed, noting that client outcomes remain mixed.
It said that while some firms make detailed fair value assessments and act when a different service would be better for a client, others may have not fully considered how pricing, including fixed fees, can affect clients with smaller portfolios.
The FCA’s Financial Lives 2024 survey showed that 71% of adults with investible assets of more than £100,000 who used a named wealth management firm had no areas of concern or dissatisfaction with the service they received.
However, 17% were concerned that fees were high, hidden or complex, suggesting pricing is not always clear, easy to compare or applied consistently across different services and client groups.
The FCA also urged firms to keep the frequency of their buying and selling within a portfolio under consideration and assess whether this is providing good outcomes for their clients.
Financial crime weaknesses
The FCA said weaknesses also remain across financial crime controls. Although it acknowledged progress being made within Know Your Client checks, with all firms confirming they were refreshing their checks, the regulator said weaknesses persist.
Some firms do not refresh checks for higher-risk clients after a trigger event or at least once a year, while others have gaps in client and transaction data. More than a quarter (26%) do not collect expected transaction frequency, 13% do not record expected investment amounts and around 10% do not verify source of wealth.
The FCA said checks are also weaker for some higher-risk relationships. Around 6% of firms do not check whether clients are politically exposed persons, meaning people in prominent public roles who may carry higher financial crime risk.
It warned that that “these gaps matter”, making it harder to spot suspicious activity, identify higher-risk clients and meet legal duties.
Vulnerable clients
The FCA said firms have made good progress in identifying and supporting clients with characteristics of vulnerability. In 2024/25, 83% of portfolio management firms reported identifying at least one such client, up from 68% in the first survey. Around 36% of these clients had their services adjusted by firms such as tailored communications.
However, the watchdog warned that practices are still inconsistent. It said some firms do not have policies, processes or training that are tailored to their services, which can make it harder to respond consistently and proportionately.
As client needs can change over time, the FCA said firms should not treat vulnerability as a one-off assessment and this will become more important as firms grow and adopt more complex models.
Digital engagement
The survey found the sector remains strongly relationship-led, with face-to-face contact important for onboarding, supporting clients and client decisions. However, firms are making greater use of contact centres and digital channels for tasks such as investing, withdrawing funds and sending instructions.
Looking ahead, the regulator said AI will transform retail financial services by 2030 and beyond. It will help clients make better decisions, access more suitable products and services and manage their finances more effectively.
The survey found 13% of firms already use in-house or third party AI tools, but this rises to 45% when including the number of firms that were considering using AI in the 12 months following the survey.
Main image: martin-martz-wWW9acEqiw0-unsplash
