Tag Archives: Segmentation

Resistance to change to a Needs Based Segmentation Strategy cannot be the advisor anymore…

Last year I spend two blogs around the need for adjusted segmentation models and adjusted pricing and of business models for the private banking industry.

In the first blog I detailed the importance of a Needs Based Segmentation Strategy, but also outlined some of the challenges organisation faced:

“Changing your segmentation strategy impacts the complete way a firm needs to think and should operate. It is not only operational (cross business unit thinking) it is also a cultural shift in the organizational thinking and the position of the client in the operating model. While the relationship manager was in the middle of the operating model for years, the HNWI client wants to be at the center of the operating model now and uses the different facilities around them (e.g. branch, advisor, call center, online, mobile, social media, …). The HNWI expects these facilities to be available, because these clients have personal preferences and want to make the decision themselves. -“I would like to use the channel I want to contact my bank, not the channel I have been asked to use”. – Not all clients want to be fully in control, because they like to have everything managed for them, but even this group seems to be increasingly involved in managing their own wealth. These examples, again, show the different clients and the different way of being serviced (with a different price tag that should be expected from a cost to serve perspective)”. Continue reading

Wealth Management and the ‘The importance of a needs based segmentation strategy’

The Segmentation Discussion in Wealth Management (part 1/2)

In the traditional thinking of a wealth management firm or private bank there are certain products only available to a wealth management or private banking client that are not available to non-HNWI’s. As personal banking client (other definitions might be applicable as well) you are not able to buy it, because your assets size is not big enough. That is pretty strange right? A client wants to buy a product, but the ‘sales person’ says no. My point of view is clear:

“Every client should be able to buy the products they want, but everything comes with a price”

The segmentation discussion in the wealth management discussion is very actual, but also not easy to grasp. Last week I had a great conversation with two wealth management experts from our beloved Switzerland and there was clear consensus that the industry business model is going to change (because it needs to, due to regulatory pressure, need for transparency and changing client behavior), but we also agreed there is no a one-off solution. The industry is looking around.

In this first of my two blogs I will focus on the way to define the right segmentation that is different from the traditional AUM (Assets Under Management) based segmentation. In the second blog I will discuss the impact on products, services, channels and pricing!

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How a cost driven solution becomes a differentiator for wealth managers…

… About the important role of digitisation in the segmentation strategy for wealth managers and their clients…

Segmentation

In the past I have written about the importance of the right segmentation strategy for wealth management firms and private banks. The segmentation subject sometimes has a negative undertone. Reading quite some angry comments on blogs that are discussing the impact of digitisation on levels of service from the negative side or what they call ‘reduced services’. I would like to use this blog to discuss the important role digitisation has in a segmentation strategy for the wealth manager and the added value to their clients.

Historically wealth managers (and banks in general) segment their clients primarily based on Assets Under Management. Advisers look into CRM systems and refer to conversations they previously have had (although this probably is captured in the CRM systems), to define the strategy how to approach the clients. Is the client an entrepreneur, a doctor or politician? This is how their segmentation is done. Of course I describe this very ‘black and white’, but Scorpio Partnership highlighted this recently as well. ‘Too rigid’? Oh Yes!

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Why real Customization should be a customer’s pull instead of a banks push…

…Joseph Pine II knew it 22 years ago!

These days we are experiencing an increased focus of banks to communicate what they call their customized approach towards their customers. Banks are using the term customization most of the times to refer to their ‘tailored approach’. But after reading an article (non-financial services related) I started thinking about what customization really means.

Note: If you are not interested in definitions please scroll down to the part on ‘The customers are deciding for themselves’,  but in my opinion the definitions are important in the broader discussion of my blog.

To ensure I was not misleading myself I had a look at the Oxford Dictionary which describes customization as: ‘To modify (something) to suit a particular individual or task.’

This sounds quite straight forward, but makes no distinction on who is modifying something (what is actually spot-on, but I get to that point later).

opponent

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