Understanding markets, investors and clients

As previously established, asset managers connect investors with parties seeking investment. Asset managers provide investors – their clients –with access to capital markets, meaning that they can invest in financial assets such as stocks, bonds and alternatives, often through buying investment funds.

However, in the context of the work we do, the term ‘investor’ often doesn’t refer to a single person buying a financial asset. Investors can be grouped into different categories:

Institutional Investors: These are major organizations that invest large amounts of capital on the behalf of others. Institutional investors include pension funds, endowments and insurance companies. They have significant resources and investment expertise, and typically invest for the long term. They often have the ability to negotiate lower fees and access to exclusive investments that are not available to retail investors.

Wholesale Investors: These investors are similar to institutional investors in terms of investment expertise and the amount of capital they manage, but they invest on behalf of smaller groups of individuals, such as high-net-worth individuals or family offices. Like institutional investors, they often have access to exclusive investments and can negotiate lower fees.

Retail Investors: These are individuals who invest their own capital, typically through mutual funds, exchange-traded funds (ETFs) or individual financial assets, such as stocks or bonds. Retail investors generally have less investment expertise and invest smaller amounts of capital than institutional and wholesale investors. They often pay higher fees and have limited access to exclusive investments.

Discover more information on institutional investors here.

Domestic and foreign clients

Asset management is a global industry. As a consultancy working with asset managers, it’s important that we understand the differences between the domestic and foreign clients they work with.

Domestic clients are based in the same country as the asset management firm and are subject to the same regulatory requirements. This makes it easier for the firm to communicate and collaborate with them.

It can also benefit White Marble – for example, as a UK-headquartered business, we are familiar with the market and regulatory environment of the UK. If both the asset management firm and its clients are based in the UK, we have an opportunity to leverage our expertise in this area.

A foreign client, on the other hand, is based in a different country to the asset management firm. As market and regulatory environments differ from country to country, the asset manager will have to familiarise itself with the country its client is based in. Working with foreign clients may require more effort and resources from the asset manager, but it also provides opportunities to expand the asset management firm’s reach and diversify its client base.

Overall, understanding the differences between domestic and foreign clients is essential for effective communication and collaboration with asset management firms, and for providing tailored advice and support that meets clients’ needs and regulatory requirements.

The impact of Brexit

Prior to Brexit, asset managers in the UK could offer services freely to clients across the EU under the EU’s single market passport system. However, after Brexit, the UK is no longer part of the EU’s single market and passporting regime.

As a result, UK asset managers are now subject to different regulations when providing services to clients within the EU. To continue providing services to these clients, a UK asset manager must comply with the EU’s regulatory framework and potentially establish a presence within the EU.

This has led some UK asset managers to focus on domestic clients, as they may face fewer regulatory barriers and operate in a more familiar market. Additionally, some asset managers may choose to focus on clients outside of the EU, such as those in Asia or the Americas.

Take-away statistics

  • The UK is bigger than the next three European financial centres combined (France, Germany and Switzerland).
  • Whereas in most European countries the majority of assets are managed for domestic clients, in the UK 43% of assets are managed on behalf of overseas clients.
  • 38% of all European assets are under UK management.

Source: The Global City, The UK: a top global centre for asset management, 2021