The £2trn Question: Baby Boomers. The Great Recession. And the Future State of UK Wealth

With demographic trends and the current economic downturn working against us, are we entering a sustained period of wealth “leakage”? It is possible that not enough new wealth will be created by those under 55 years old to off-set what retirees are withdrawing to cover their cost of living. It is also possible that the scale and scope of capital growth driven by the markets from the mid-1980s to 2008 are unlikely to be repeated over the short-term—so the industry can’t depend on substantive capital appreciation of UK assets to fill the gap.

If the profitability of the majority of UK clients is set to fundamentally change, then there are some critical questions that members of the UK financial services community need to answer about capacity, clients, growth and operating models going forward. Answers will vary significantly depending on the sector we operate in—life & pensions, private banking, wealth advisory, and retail banking—and the clients we serve and want to serve going forward.

Strategy&’s financial services team has spent considerable time pondering potential solutions to these issues. At the heart of this is our methodology for driving insight into the growth and profitability dynamics of different segments of UK savers and investors—and how this might change over the next 10, 20 and 30 years.

We plan to debate key questions such as:

  • With UHNW clients owning more than 60% of total liquid assets, how much should Private Banks and Wealth Managers really worry about the retirement phenomenon?
  • What actions should you be taking now to lock in the high potential clients of the future? And who are they?
  • How fast will HNW and affluent clients deplete their assets in retirement and what does this mean for overall profitability?
  • Will the pace of capital accumulation really be slowed by current economic conditions? Which segments will be most impacted?
  • What are future value pools? And how do they differ from today’s?
  • Who are the “mass affluent”? Which sectors are best positioned to serve them?
  • What capabilities do you need to develop to future proof your operating model?

The topic and the presentation were so well received that we decided to capture our perspective and key findings in a short viewpoint “Affluent but forgotten”.

36% of the UK’s total liquid wealth—£1.7trn—will be in the hands of retirees over the next ten years.