Channel Islands Wealth Management Insights 2024

Wealth managers in the Channel Islands are at a pivotal juncture as the intergenerational transfer of wealth accelerates the shift in investor expectations, market democratisation opens up access to potentially higher yielding asset classes and technology makes it possible to deliver more for less to a broader client base. As a wealth manager, what are the pressing strategic choices you’ll need to make? Are you ready to capitalise on the fast-unfolding opportunities ahead?

In September 2024, we carried out a survey of executives from 32 Channel Islands wealth managers, being those firms that provide discretionary investment management, advice, custody or execution. The findings offer valuable insights into their outlook, strategic
priorities and ability to realise their objectives. The results have also enabled us to compare costs, capabilities and pricing strategies, with respondents able to benchmark their businesses against market peers.

The findings reveal cautious optimism as the global economy begins to stabilise after the inflationary and interest rate spikes of recent years. But the survey also raises questions about where growth is going to come from and the level of change needed to thrive in a fast-evolving market.

Key findings

Optimism tinged with uncertainty

More than half of the respondents in our survey are somewhat optimistic about the economic environment over the coming 12 months, suggesting that the worst of what has been a difficult decade is behind us. But none are highly optimistic, reflecting continued uncertainty in areas ranging from geopolitical instability and the outcomes of 2024’s ‘super year’ for elections to the timing of interest rate reductions and the UK’s downbeat fiscal outlook.

Further uncertainties centre on the UK regulations for non-domiciled investors, which make up a significant proportion of Channel Islands wealth managers’ UK clients. Changes could encourage more UK non-doms to choose the Channel Islands, though the local growth potential could be offset by possible reductions in the tax benefits for assets held in foreign trusts.

How would you describe your outlook on the economic environment over the next 12 months?

Seeking out opportunities for growth

Revenue growth is respondents’ number one priority, with more than 90% confident about their ability to achieve it – 52% being strongly and 40% moderately confident.

Respondents see the Channel Islands market as offering the greatest revenue growth potential. The question is how achievable this is in an already saturated domestic market. Seeking to attract investors from the UK and overseas could increase the openings for growth. But wealth managers will need to make a convincing case for why international investors should switch their mandates to the Channel Islands.

Which markets do you believe offer you the greatest growth potential in your client base over the next 12 months?

Diversifying into potentially higher yielding asset classes

Many respondents are targeting a significant increase in private markets’ allocations by 2030, along with moves into digital assets. This reflects the importance of these newly accessible asset classes in differentiating their offering and attracting new clients. Right now, however, private markets investment still makes up only a fraction of respondents’ AuM. This leaves the field open to wealth managers who can get ahead of the pack, while slower movers could be left behind. The first step may be engaging with investors and regulators to seek their approval for new private markets offerings.

How do you anticipate your asset allocation evolving by 2030?

Attracting a new generation of investors

Investor expectations are shifting as wealth is passed through the generations. Respondents highlight the increased importance of market leading tech solutions in attracting and retaining younger investors, along with low costs, greater transparency and access to alternative asset classes. But these younger clients still value personal service, with technology augmenting rather than replacing the human touch.

Seizing the tech potential

Technology is the common thread running through all the trends and opportunities explored in our survey. Respondents see strengthening operational efficiency as the greatest potential benefit of emerging technologies. But as technology advances and the shifts in investor expectations accelerate, tech-enabled operational capabilities could quickly become table stakes rather than differentiators. Harnessing technology to deliver a compelling client experience in areas such as more effective communication, enhanced portfolio optimisation and the personalisation of financial advice could help wealth managers to stand out from the pack. But these potential differentiators are at the bottom of the list of respondents’ anticipated benefits. This leaves the market open to wealth managers who can get ahead in developing innovative and attractive tech-enabled client offerings.

Where do you anticipate the greatest benefit of emerging technologies?