A stark wealth divide is reshaping Britain’s financial landscape, with just 11% of households now controlling nearly three-quarters of the nation’s investment wealth, according to a major new study released today.
The Ethos Atlas, a report published this week by financial services consultancy Ethos Partners, maps £12.9 trillion in total UK consumer assets and tracks £868 billion in annual flows across pensions, investments, savings and property.
The Atlas reveals that 3.2 million wealthy households control £3.9 trillion in investment assets, while 18.7 million households – representing 65% of the population – hold just 2%.
The research exposes a dramatic “wealth barbell” effect that has accelerated since the 2008 financial crisis, with the pandemic serving as a key inflection point that disproportionately benefited higher-earning households due to a confluence of market, demographic, economic, and regulatory factors.
Over-65s dominate wealth holdings
The study shows households aged 55 and older control 60% of total investment assets, with those over 65 holding £1.7 trillion – representing 32% of all UK household investment wealth. This concentration is set to increase over the next 20 years due to the impact of compounding on large pools of investment assets.
“The traditional concept of ‘retirement’ is becoming obsolete for many households,” says Penney Frohling, Managing Partner at Ethos. “We’re seeing 1 million self-employed people over 60 – a 33% increase in a decade – with 20% of them over 70.”
Wealth inequality accelerated post 2008 financial crisis
The housing boom and strong stock market growth over the past 30 years has favoured those with high incomes and existing wealth; while lower GDP growth, decline in real wages (particularly 2021-2023), high inflation, particularly in household staples, have left the average household with lower disposable income.
The FTSE’s lagging performance relative to the S&P, NASDAQ, and MSCI World index has driven households to re-allocate large portions of their assets to foreign markets and enabled them to benefit from significantly higher returns. The FTSE is only around 20% above its pre-pandemic levels, while the S&P 500 and MSCI are both more than 50% higher.
Crypto adoption going mainstream
12% of UK adults now hold cryptocurrency – almost matching the 13% who use Stocks & Shares ISAs. Half of crypto holders cite portfolio diversification as their primary motivation, challenging assumptions about speculative trading.
“This isn’t just about young people gambling on digital assets,” says Martin Windle, Ethos Atlas co-author. “We’re seeing mainstream adoption of cryptocurrency as a legitimate asset class and portfolio diversification tool.”
Property market fractured
While property remains the largest asset class at £5.6 trillion (43% of onshore wealth), the study reveals fundamental cracks in property’s once pre-eminent status:
· House prices have grown steading since 1995. However, as an asset class, property has underperformed even the FTSE post-pandemic
· Home ownership among middle-income households has fallen “markedly” compared to a decade ago, eliminating a primary source of future wealth creation for large percent of households
· One in 11 buy-to-let landlords have exited the market due to regulatory and tax changes
· Investment property ownership is increasingly concentrated among professional investors
“The property sector is undergoing some fairly fundamental shifts. ‘My house is my pension’ may not necessarily be a winning strategy going forward,” says Penney Frohling.
Cash saving gives opportunity, but with caveats
Despite market volatility, cash has consistently represented 30% of industry assets under management since 1995. The research identifies £1.2 trillion sitting in instant-access accounts as a potentially fertile hunting ground for equity investment, but caution is required given the role of cash as the cornerstone asset class in most household portfolios regardless of age or wealth.
In particular, up to 80% of flows into cash savings accounts represent ‘hot money’ – savvy savers switching between providers to chase higher interest rates.
Employers still funding pensions in the post-Defined Benefit world
The study reveals consumers’ heavy reliance on others for retirement funding, with 75% of 2024’s £116 billion pension contributions coming from employers (£75 billion) and tax relief (£12 billion). The average household saves just 4% of disposable income monthly.
Post-retirement income inequality is stark, ranging from an average of £20,000 a year for the bottom 20% of couples to over £160,000 for the top 1%, with the poorest retirees depending on state pensions for 70-80% of their income.
“It is clear that we are currently in the midst of a transformation of the UK savings and investment sector, with demographic, economic, regulatory, technology and market forces reshaping if, how, and where UK households save and invest” says Penney Frohling.
“What makes the Atlas unique is its combination of breadth and depth of coverage,” she adds. “Most sources either focus on one type of asset or lack the detail you need to see patterns and trends. Bringing them all together, but with the ability to separate out the different asset types, gives new insights.”