Wall Street investment banks declining in influence in the UK fund management industry

Wall Street investment banks declining in influence in the UK fund management industry

Wall Street investment banks declining in influence in the UK fund management industry
The UK's Investment Management Association released an overlooked report recently that suggests Wall Street losing its grip on asset management in that country.

According to the latest figures, big Wall Street investment banks and retail banks are looking after significantly less UK client money than was the case just a few years ago. According to the report big U.S. investment banks looked after 18% of all UK clients' money in 2003. That number fell to just 11% last year. Over the same period the share of fund management undertaken by retail banks fell from 19% to 5%. Increasingly, independent asset managers are stepping in and taking up the slack.

According to the report, several large players in the sector either collapsed during the financial crisis or were forced to curtail their fund management operations. Eventually some of these major players retreated to home shores. Stepping in to pick up the business has been the independent asset management industry. "What we now see emerging is a far more independent asset management industry, less characterized than it has been in the past by large in-house investment management companies owned by banks and insurance companies,” reads the report. According to the numbers, “independent fund managers” and those categorised as "others", including custodian banks, have seen their share of the market rise from 15% to 37% and 6% to 15% respectively, over the past decade.

The main drivers have been a shift in the nature of the asset management industry, which is now “much more clearly defined as a discipline in its own right, as opposed to a port of another financial services set.” As well, some companies have backed away from non-core functions after the financial crisis in 2008. Custodian banks are also finding more business in terms of fund management as retail banks fade from the sector. 

Speaking of funds: Today is the last day to have your say on Canadian fund managers. Take a few few minutes to fill out the WP Advisors on Fund Providers 2014.