From an entirely selfish journalist viewpoint, I have wondered when it would ever be possible to pick up a phone and speak to a single body that represents the wealth management business. However, this is unlikely to happen anytime soon.

From an entirely selfish journalist viewpoint, I have wondered when it would ever be possible to pick up a phone and speak to a single body that represents the wealth management business. However, this is unlikely to happen anytime soon.

The financial services industry, including the one in which readers of this website toil, is a widely fractured one. That applies also to the sheer range of trade bodies that speak for it. And in this summer season of wealth management industry surveys comes another study that looks at the sheer range of trade associations and whether they give value for money.

Keyur Patel, a journalist, has written a 50-page report for the Centre for the Study of Financial Innovation, called Batting for the City: do the trade associations get it right?

And what does he find? Patel shows that the UK alone has 47 trade associations in financial services, compared with 50 a decade ago. These TAs have an annual turnover of over £160 million ($244 million) and employ around 850 people. The ten largest associations for which information was available generate annual subscription fees of £51.4 million. Meanwhile, at least 20 global professional services groups, such as the Association of Certified Chartered Accountants, have offices in the UK. What all this suggests is that the much-touted consolidation of this industry that experts say will hit financial services has not quite had the same effect on the groups representing it.  

Part of the reason that there are new entrants is that it reflects emerging trends in financial markets. The latest creation is the Peer-to-Peer Finance Association, set up in 2011. UK Business Angels, LPEQ for exchange-listed private equity investment companies, and The London Energy Brokers' Association are other newcomers. The report notes that the need for the City to rehabilitate itself and stress its broader contribution to the economy after the 2008 crisis prompted the creation of TheCityUK (succeeding British Invisibles).

Other developments, such as wholesale banking mergers, led to the formation of the International Capital Market Association (replacing ISMA and IPMA) and the Association for Financial Markets in Europe (from LIBA and the SFMA in Europe).

One of the reasons for the number of these organisations is that it is a lot of work – and requires a bit of political finesse – to consolidate. Also, the plain fact is that the financial world is a finely varied one, so it is not necessary a bug, but a feature, for the industry to have so many groups speaking for it. And this is hardly a small business in total: In 2011, when latest overall figures were available, financial and insurance services contributed £125.4 billion in gross value added to the UK economy – some 9.4 per cent of the UK’s total.

In trying to see how much bang TA members get for their buck, or at least their pound sterling, Patel has this to say: “The only recent attempt I am aware of to quantify the City’s lobbying effort as a whole is a four-month study by the Bureau of Investigative Journalism published in July 2012 (taking the view that the finance sector was disproportionately influential). Using a methodology that seems quite rigorous it estimated that the industry spent more than £92 million lobbying politicians and regulators in the UK in 2011 - defined as spending on public affairs, government relations, policy or political donations. More than a third of this figure, £34 million, was attributed directly to TAs. Of the remainder, £10 million was ascribed to the City of London Corporation, while the institutions themselves were estimated to have spent £9 million directly and a further £25 million indirectly by employing external advisory groups (law firms, consultancies and public relations firms).”

Wealth sector

As for wealth management, there are groups such as New City Initiative, describing itself as “a think tank that offers an independent, expert voice in the debate over the future of financial regulation”; and the Society of Trust and Estate Practitioners (STEP), which as its name implies, speaks for much of the trusts industry in the UK and around the world. The Association of Private Client Investment Managers and Stockbrokers (APCIMS) is another group in the UK. At the investment end, groups that I regularly correspond with are the Investment Management Association and the Association of Investment Companies. 

And the alphabet soup of such groups goes on. It is perhaps, as Patel’s report suggests, naïve or not even desirable for there to be a big consolidation of such bodies, since a varied industry needs a varied segment of organisations to speak on their behalf. Variety can be confusing, but then we live in a complex world, so we should accept it.

Even so, when UK finance minister George Osborne reaches for the phone and wants to dial up one group to speak about his latest tax or regulatory wheezes, it is not obvious whom he should have on speed-dial. Sometimes, that might be a problem when the financial services industry is under attack, as it has been without a break for the past five years.