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HSBC (LSE:HSBA) has set an ambitious goal to double the assets under management (AUM) in its British wealth division, aiming to reach £100 billion ($131 billion) within the next five years. This strategic move aligns with the bank's objective to become a top five player in the UK wealth management market, according to Jose Carvalho, the head of HSBC's wealth and personal banking division in the UK.
Carvalho emphasized HSBC's competitive advantage through its international connectivity, which is expected to drive growth by attracting customers who engage with the bank across multiple markets or who are based overseas. The bank's global asset management business currently stands at $712 billion, and as part of this expansion, HSBC plans to increase its team of advisors, although specific hiring targets have not been disclosed.
In the UK's wealth management sector, St James's Place leads with £168 billion in AUM as of the end of the previous year. The major UK banks collectively generated $12 billion from wealth management in 2023, marking an 11% increase from the previous year. St James's Place forecasts a 7% growth in the overall wealth market.
HSBC's rivals, Barclays (LSE:BARC) and Lloyds (LSE:LLOY), have also unveiled plans to increase their focus on the 'mass affluent' segment, defined by Lloyds as individuals with deposit balances ranging from £75,000 to £250,000. This market segment represents approximately £4 trillion, or half of the UK's wealth market.
The push by major banks into this sector reflects a broader strategy to diversify revenue streams away from areas heavily impacted by falling interest rates. Advances in technology have made it easier for banks to compete with independent providers in wealth management. However, experts note that the market is becoming increasingly crowded.
Nigel Moden, EMEIA banking & capital markets leader at EY, highlighted that while the demand for wealth management services is growing, the competition is fierce, with nearly every major bank aiming to capture a larger share of the market. Historically, large banks have focused on the ultra-wealthy, leaving the mass affluent to independent advisors like St James's Place.
