Why the wealth management industry is different, or not?

Are the current challenges seriously different?

My passion for the wealth management industry is undisputed and so is my believe in wealth managers. I seriously have the believe that most of these front end advisers serve the goal of helping HNWI’s in managing their wealth.

We all know the challenges the industry is facing; increased regulatory pressure, pressure on traditional income models, changing client behaviors, digital technology and the need for a revised business model.

At the same time I am very keen to collaboratively come up with solutions that might fit some of these challenges. But instead of making this wealth management specific people should be fair in understanding that these challenges are not the issue of the day for wealth managers only. Other financial services companies face similar challenges and this evenly is the case for other industries. The only difference is that wealth managers have a (long) personal relationship with their clients.

The ability to cope with these challenges and translate this into the necessary change therefore is the actual question to be answered. Apparently this turns out to be a sensitive subject. The subject of cultural change. I remember the first organizational change I experienced. I was an intern at a large Dutch private bank and the HQ decided to change some procedures in the way investment advisers had to provide investment advice to their existing customers. This turned out to be difficult task especially for the advisers already on their job for years. Why change, I am used to work like this and happy to do it this way? At the end the organisation changed, because the leadership decided to do so.



Years later we are facing the same change management questions. Front end advisors who are not willing to change. At least that is what is said, heard and seen. I can’t disagree with these thoughts, but on the other hand I am wondering why big universal wealth management firms with powerful leaders apparently are not able to establish this change and manage their resources in this change. From that perspective it doesn’t really matter which of their resources we are discussing. During a session I had yesterday with several bankers the same challenge arose.Changing Technology and digital implementations are not the actual challenge. In fact no one disagrees with the fact that it is disrupting the way we do business with our clients. But when it comes close to people’s daily job it becomes a sensitive subject. It is about the people that have to accept a change in a way of working they have done for years.

Reality is that front end advisers have a lot of power. The power of being a trusted adviser to some of the clients they are serving. This power is the potential reason of why the required change in the wealth management industry isn’t taking place with the speed it should be. Reason? The Assets under Management (AUM)? The AUM are a key performance indicator for wealth managers and analysts. So front end advisers move to competitors where they are not demanding certain changes (yet) and taking a lot of clients and their assets with them.

What if an organisation doesn’t change?

Others do! The current operating model and business model are not sustainable! Besides that, these models are largely structured around internal silo’s and not around the clients they actually servicing. The growing under 50 generation demands other ways of interactions and services which are not automatically aligned to what the wealth management firms offer and even more important the way wealth managers prefer to interact. I start counting today and I am sure I will not reach the 500 days before we see the first well known wealth management firm making a shift. Why wait?

I am still surprised. Developments and evolvements (think about cars, planes, phones etc) always take place based on certain amount of leadership. It is a given fact that with every change you got supporters and people who don’t like to change, but without a certain level of leadership there is no way to improve the banking environment.  I am not disputing the need for front end advisers and relationship managers and the fact that a lot of HNWI’s or Mass Affluents need advice. Actually I think this is undoubted the truth. I am challenging the resistance to change as a fact of uncertainty.

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