Wealth management – What are you doing next?

What a time to be in the wealth management industry… – What are you doing next?

In my work I am confronted daily with clients’ questions on what they can expect next to ‘hit’ them. We read and hear every day about startups, fintechs, robo advice, disruption etc. and I will obviously share my perspectives on these, there is also the logical next question of “what are you doing next?” All wealth managers know too well that their business model is under pressure and that significant change is expected (it has already started). Reality is that in many cases most of their budgets are still allocated to initiatives focussed on legacy technology and regulations. If they are considering top-line growth initiatives these tend to be approached in isolation or as an add-on to the existing practices, instead of being integrated properly into their broader business model and operations. This is interesting considering that there has been a growing emphasis being placed on customer centricity (and contrary to this, legacy technology and regulations are mainly internally focussed initiatives).

SocialFS 21 v2


Change creates opportunities

Some observations to consider before you continue reading… 

  • Established wealth managers cannot change as fast as startups/FinTech’s can…
  • FinTech’s within the wealth management industry focus on a small and very specific part of the overall business and service model of the wealth management industry…
  • The operating cost of traditional wealth managers is increasing (or at least not going down)…
  • There is an increasing wealth management client base which is younger and digital-/tech savvy…
  • Across geographies there is a significant group of individuals looking for financial guidance, but not sufficiently able to access it…
  • Individuals with the ability to get financial guidance are asking different questions than they did 5-10 years ago…
  • Universal financial institutions struggle to comply due to their complicated and large legacy infrastructure (many of these firms have over 2000 infrastructure interaction points!)

…and we could even continue for a bit longer. This shows the actively changing environment wealth managers are operating in and the evident opportunities too!


There is also an increasing worry among investors: investor appetites. A recent paper by UBS (“The conflicted investor”, 2016) addresses the point that uncertainty through market volatility, the amount of global concerns and a negative mindset in media will all significantly influence investors’ appetites for the wealth management industry.

UBS Conflicted investor

Source: UBS – The conflicted investor (2016)

Again this provides an opportunity for advisors ‘to be there’ at times client need you the most. It potentially doesn’t result directly into dollar benefits, but it addresses the point of the existence of relationship managers and the opportunity to differentiate from standardized and low empathy types of services. This is fundamental to some customer experiences too!


It is a significant challenge for established wealth managers to cope with all changes and it is reasonable to say that wealth managers are not able to provide all services themselves. They have to find partnerships to be able to provide the broad range of new services and expectations to their clients. It is a fair call to leverage the knowledge and specialised services of firms that are better positioned and have far more understanding of these services, but the real added value of these partnerships can be delivered when these are well integrated into the service delivery offering!

There are probably more examples of organisations that have failed in integration attempts than those that succeeded. Think of mobile/mobile-app solutions. Having an ‘app’ for the sake of having an ‘app’ doesn’t provide any value, especially if it is not properly integrated with the other channels a client uses to interact with you.

A similar case with social media. I remember doing a presentation on wealth management research at a (not so small) European private bank 4 years ago. For fun I had a look at their social media presence which I shared during the meeting. They had a Twitter account, but the COO wasn’t aware of it. Today the account is much more actively managed and it shares great content and other value adding messages. Putting social media profiles in the air without using them is risky. If you don’t have time to run these: a. hire someone to do it for you, or b. don’t put them out there! At the end of the day, this contributes to your clients’ perceptions and leads their expectations.

It is about Value Exchange…

In a relationship managed business like wealth management and private banking you would expect that relationship managers/financial advisors know what their clients want. But how many times are they really asking their clients what they want? You don’t know what you don’t know and for clients that is not any different.

You can provide more structure by identifying what clients want, identifying patterns among your advisors portfolios through propensity modelling (through leveraging data analytics capabilities) and gaining an understanding of where clients want you to provide value (beyond helping them find clarity in their financial goals). This is likely to be different per individual client.

Wealthy clients understand value and the value you provide to them. It is of utmost importance to understand how your client defines ‘value’. And yes, all of this goes far beyond providing them with the right investment advice! Connecting them to other entrepreneurs, ensuring their children are able to go the best university possible or bringing education to your clients on subjects in which they would like to develop their own understanding/capability.

Possibly this way of looking at client relationships is different from what history has shown us and requires different types of skills. An interesting challenge to current perceptions, if we can believe an article on wealthmanagement.com: today’s financial advisors under 45 are not much different from their older colleagues.

Forrester Research published in 2015 that 86% of the business leaders says that rising customer expectations are top priority. So, the question is: What are YOU doing next …?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s