(Feb 13): UK retail bank NatWest Group plc has for years made most of its income from collecting interest on mortgages and other loans. It and many other banks want to change that by pushing further into wealth management, with its steady flow of fees.
But the tilt comes at a time when investors are hammering wealth manager stocks, as advances in artificial intelligence (AI) have ignited concern over whether such technology will render existing services unnecessary. The effort also hinges on a change in culture in the UK, where most people choose to save extra earnings rather than invest, and regulations.
NatWest said on Friday its private banking and wealth management arm generated £394 million of operating profit in 2025, up almost 50% from the year prior but a mere 5% of its total earnings. The bank this week said it would buy UK wealth manager Evelyn Partners for £2.7 billion, a deal that adds about £69 billion of client assets to its existing £58.5 billion. The bank beat out a bid from Barclays plc.
Both are among firms including Lloyds Banking Group plc and relative newcomer JPMorgan Chase & Co pushing to manage the billions of pounds of cash sitting in UK savings accounts. Many have declared the effort crucial for growth.
“Wealth management provides recurring, fee-based income, which can smooth earnings compared with traditional lending,” said Antonia Medlicott, founder of Investing Insiders.
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The banks are looking to scale in a market dominated by established wealth managers and that’s become increasingly crowded by financial technology firms also searching for customers.
“In an unstable macro environment, where margins in traditional banking are under pressure, long-term advisory income and asset-based revenues provide welcome stability,” said Yana Shkrebenkova, the CEO of wealth and trading in the UK at Revolut Ltd.
About 15 million UK adults held £614 billion of savings to cover at least six months of their expenses, cash that is ripe for investing, according to a Barclays report. UK regulators are also looking at ways to make it easier for firms to give financial advice to groups of people with commonalities, part of a wider government effort to stoke appetite for UK equities. A further incentive is coming from a cut to the annual cap on tax-free ISA savings held in cash.
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With just 9% of adults receiving advice each year, according to the Financial Conduct Authority (FCA), assistance could help convert more savers into investors.
“I’m sceptical of how much people will move money from cash into equities, for example,” said Gary Greenwood, an analyst at Shore Capital Group Ltd. “I’m sure there will be come at the margin but not a wholesale shift.”
Many banks pulled out of financial advice after a major shake-up of the rules on fees more than a decade ago, known as the retail distribution review. Now, after years of strengthening their balance sheets and culture, the same lenders see big opportunities in acquiring a wealth manager, then integrating it and offering its services to existing customers.
NatWest is playing catch-up to its retail rival Lloyds, which has spent the past few years growing its wealth business. Lloyds acquired a remaining 49% stake in Schroders Personal Wealth last year to add 60,000 clients and about £17 billion of assets under administration.
Lloyds is also using thousands of its staff as guinea pigs for an AI financial assistant it has designed to guide customers on spending, savings and investments, a tool set to roll out as soon as this year.
Some are entertaining the idea that Lloyds may pursue another acquisition. Lloyds’ income outside of traditional lending products grew more than 30% from 2022 through fiscal 2025, with wealth a contributor to that uptick.
Despite growth across the industry, shares of many European wealth managers sold off this week in light of AI fears. St James’s Place plc tumbled as much as 13% and Quilter plc also slumped. Swiss firms Julius Baer Group Ltd and UBS Group AG both declined about 4%.
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Quilter is “a particularly attractive proposition” for Lloyds, RBC Capital Markets analysts wrote in an October note. The manager has a national distribution footprint and an adviser base that can cater to mass affluent clients, which is “where we see the greatest cross-selling opportunity,” according to the note.
RBC said Rathbones Group plc and Brooks Macdonald Group plc could also be targets for banks. Representatives for Rathbones and Brooks Macdonald declined to comment.
Barclays is also still open to buying a wealth manager at the right price, chief executive officer CS Venkatakrishnan said on Tuesday.
Venkatakrishnan said wealth was “extremely important” to the bank, which is putting “a lot of resources behind” the effort. Income at Barclays’ private bank and wealth management arm increased 5% in the fourth quarter, driven by an uptick in deposits and invested balances.
‘Welcome stability’
With most established wealth managers in the UK dedicated to high-net-worth individuals, some banks are looking at ways to access middle-income earners.
“There are 30,000 advisers in the UK and a typical financial adviser takes care of 150 people each,” said John-Paul Crutchley, head of investor relations at Quilter. “There’s a lot of discussion around the advice gap — there’s not enough advisers to go around.”
Some fintechs were formed with wealth management or retail investing arms in place, designed to tap people in various income brackets.
Revolut’s revenue from wealth increased 298% to US$647 million in 2024, according to a statement. The fintech offers money market funds and savings accounts to customers, alongside a cryptocurrency exchange, bonds and European investment plans.
Revolut generated fee-based revenue from its inception, while only recently started bringing in interest income from traditional lending products. The fintech is also in the early stages of building out its private markets team as it looks to deepen its wealth offering.
“As trillions move to younger generations, established advisers’ loyalty will be tested,” Shkrebenkova said. “Inheritors are more digitally native, more fee-aware, and more demanding when it comes to transparency and access.”
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