The Wealth Management Solution
Financial/investment firms globally are redefining the wealth management business by expanding the scale and scope of their financial/estate/tax planning services and product offerings. This new business strategy is allowing more and more firms, through the use of advanced technology, to profitably capture revenues that were not viable just five years ago. Firms are now able to deliver to lower levels of the affluent client spectrum, the sophisticated investment/wealth management services typically reserved for ultra high net worth individuals. The new focus is on acquiring core clients that match the firm’s capabilities and on ensuring the retention and growth of their assets.
In line with the evolution of this business, financial services firms will need to meet tougher business requirements (shareholder profitability), will be exposed to increased regulatory/compliance oversight, and will need to be able to manage liability exposure related to offering more sophisticated and complex services/products to clients. This will necessitate that firms carefully evaluate their current sales practices and business culture to make sure that they are able to support a more robust investment/wealth management product and service offering.
Investment management, financial/estate/tax services, and “Wealth Management” for fee, rather than commission, is not new but is quickly becoming a mandatory requirement to acquire and retain higher net worth clients and their assets. This trend is forcing firms to shift away from service and/or transaction based sales practices to fee based relationships.
The biggest challenges facing financial services firms today and their client advisors or relationship managers are how to move from their current business practices to a “Wealth Management” philosophy/discipline that offers more comprehensive service/product capabilities and to remain profitable both short and long term. An additional challenge is the need to change the firm’s business culture from a transaction and/or passive approach to being proactive and “truly” client centric. In most cases, as a function of being too focused on the need to produce current revenues, senior management has found it very difficult to rationalize the investment (time and resources) necessary to make a change and realize the longer-term benefits (profitability, predictable growth).
Increased competition in all major markets (U.S., Canada, Europe, Asia, Latin America) has commoditized financial products/services, minimizing points of differentiation for most firms. To be competitive today will require firms to offer investment/wealth management services that clients are comfortable with and confident that their individual needs are being met.