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Tuesday, 14 November, 2000, 13:53 GMT
Abbey targets the 'mass affluent'
A house
More people are inheriting wealth in the form of property
Where once it was the "wealthy few" now it is the "mass affluent".

Higher salaries and the growth in owner occupation mean many people have more spare cash to invest.

At least that is according to the mortgage bank Abbey National, which believes there are four million people in the UK with 50,000 ($71,750) or more spare to invest.

They see their money as a means to do things that previous generations could only dream of

Inscape managing director Malcolm Parker

And like many other institutions, the Abbey - the UK's fifth biggest bank - is now hoping to boost its profits by offering to manage this new wealth.

Democratic wealth

Inscape, as the Abbey's new investment management service is called, "responds to the fact that we have a much more democratic distribution of wealth in the UK now," Abbey chief executive Ian Harley said.

The Abbey says members of this "very diverse" group do not consider themselves to be conventionally wealthy but want more sophisticated banking services so their assets may better fund and preserve their "ideal lifestyles".

"They see their money as a means to do things that previous generations could only dream of," said Inscape managing director Malcolm Parker.

Inherited wealth

"Quite a lot of [that money] is actually coming from income," Mr Parker told the BBC.

Earnings have risen substantially and people are being paid bigger bonuses, which they are not always spending.

Also, growth in owner occupation in the 1950s and 1960s means that "more people are inheriting wealth as a result of property owned by their parents," Mr Parker said.

A number of other factors - including windfall gains from demutualisation of building societies, not least Abbey National itself - also mean that the UK's population have more substantial sums of cash to tuck away than ever before.

By 2003, well-off investors will hold assets worth more than 1,000bn, compared with about 600bn now, the Abbey says.

For those with the readies, Abbey is offering face-to-face advice (backed up telephone and the internet) and services such as cash management accounts, access to specialist tax and estate planning and execution-only share dealing.

The annual fee for a 50,000 investment will be 600, rising to 5,100 for those handing over 1m.

Banks queue up

Analysts say many banks are now queuing up for this business, attracted by a fee-based activity at a time when increased competition in commission-based products is squeezing margins ever tighter.

"It is sensible for the banks to try and attack this market," said JP Morgan banking analyst Simon Price.

"The difficulty is trying to pick which one of them will be a winner and there are no obvious reasons why it should be Abbey National."

Among others, Barclays and Halifax already offer wealth management services.

Rivals including Alliance & Leicester, HSBC, Merrill Lynch and Credit Suisse are also planning similar products aimed at the well-off.

Mr Parker said he expected a fifth of Abbey National's customers to qualify for "mass affluent" status and these people would be targeted first.

However, he said he expected that, in five years time, a majority of Inscape's clients would come from outside Abbey National.

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