The level of long-term mergers and acquisitions activity in the UK wealth management sector is set to increase significantly as firms pursue scale ups and the digitalisation of their delivery models.
According to behavioural finance fintech firm Oxford Risk, the combined value of assets under management of UK wealth managers acquired in 2022 was £137bn, compared to £87bn for those acquired in 2021.
The wealth management sector is facing "huge disruption" from the growth of potential new customers to new delivery models and increased regulation, the firm said.
Wealth managers are looking to take advantage of these changes by scaling up and investing in digital and analytical capabilities to offer "differentiated and market-leading services", it added.
More acquisitions by large financial services companies are set to come to fruition as they search for entry points into the growing wealth management sector, Oxford Risk stated.
As the demand for alternative investments grows, the firm is predicting that wealth managers will be making more acquisitions or strategic partnerships in this area.
Head of behavioural finance Greg Davies said: "One of the key challenges for any post-merger integration is to ensure investors across the combined entities are getting a consistent high-quality experience and robust suitability assessment.
"We are therefore seeing significant growth in demand for our services from wealth managers to help them assess the drivers of inconsistency in their adviser population, understand their investors better, and offer them the best fit in products and services."
