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The Wealth Management Solution
Industry Overview
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, firms will be required to offer investment/wealth management services that clients are comfortable with and confident that their individual needs are being met.
The Business Challenge
The business challenge for firms today is to develop and deliver an investment/wealth management business solution that will allow them to compete successfully for clients in any market they choose to service. In order to accomplish this, it will need to do the following:
- Develop a firm-wide vision/mission/strategy that will support a successful investment/wealth management culture that meets their client requirements.
- Develop a comprehensive business plan. This requires an assessment of products, technology, and sales/sales support team capabilities to implement any changes in the bank’s processes and sales culture.
- Identify and establish an investment/wealth management philosophy that will become the basis for all client investment/financial advice and recommendations. A clear, well defined discipline for establishing and managing client wealth must also be developed and supported at all levels of the organization.
- Identify and select an investment/wealth management strategy that can readily be used to gather/retain assets, manage compliance and client risk, and improve efficiency/profitability in its operations.
- Build turnkey or modular wealth management solutions that can be implemented with clients in each segment to meet the firm’s business priorities and budgetary constraints.
- Establish a pricing model that is competitive and will allow the firm to offer its investment/wealth management services profitably.
- Develop a comprehensive training curriculum that will advance the business/sales culture and allow client relationship and support teams to effectively implement the investment/wealth management solution with clients.
Getting Started
The following is a summary overview of the steps necessary for implementing a bank-wide investment/wealth management solution for its clients:
- Assess the organization’s readiness to make a transition in business philosophy and practices. This would include senior management buy-in and commitment to develop and implement a business strategy and their agreement with the associated cost (time and money) to manage the change process.
- Evaluate current business strategies and the supporting processes being used to develop and retain bank/investment assets and client relationships.
- Develop a business strategy and list of prioritized action steps necessary to enhance or upgrade the investment/wealth management capabilities of the bank.
- Evaluate and align the technology systems, operations, and support areas with the new business strategy.
- Perform a gap analysis of the bankers’ current business practices and skill sets versus those necessary to execute against the business strategy and the development of investment/wealth management client relationships.
- Upgrade the infrastructure and training of all relevant employees to support the new, more comprehensive investment/wealth management business strategy.
TMC Group Proposition
TMC Group has over 17 years of experience in successfully helping financial services firms to develop or enhance their investment and wealth management business platforms. Our success has come as a result of our experienced professionals providing customized consulting and training solutions specific to each client’s unique needs and the markets they serve. TMC Group offers to meet with senior management of those institutions that are looking for solutions to meet the business challenges for growing their investment and wealth management business.
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