Wealth Management

Current Outlook

Wealth Management firms worldwide are currently going through challenging times as they lag behind other sectors within the financial services industry in terms of technology innovation. Concurrently the global wealth clientele has become ever more demanding for hi-tech experience and solutions. Increasing regulations across global markets are also adding to the pressure on operations and revenue models. With the exponential growth of Fin-Tech companies, the brand values or longtime client associations are no longer going to help traditional wealth managers in sustaining or growing business. In order to overcome the challenges, it is absolutely necessary that firms invest their time and money in fundamental changes in their business models with a future-oriented and sustainable approach towards business and technological innovation.

Business Drivers and Opportunities

Wealth Management firms are now at crossroads and they need to decide on whether to reevaluate and restructure their business approach or to continue with traditional ways of conducting business. The change in client needs, changes in global wealth distribution, wealth transfer to next generation and tightening regulations continue to test the business operations and the profit margins. There are also new opportunities to be identified among each of these challenges and it is only a matter of acknowledging them in order to make the right investment decisions with long term vision rather than continuing to focus on business as usual. Four of the most impactful factors driving the current wealth management business are mentioned below.

• Changing Client Needs: Global wealth clientele has become increasingly self-directed, less trusting and more price sensitive since the last decade. The new generation receiving wealth transfer from the generation of baby boomers as well as the new wealthy from the emerging economies prefer modern digital channels over traditional advisory processes. Furthermore, the demand for new service models and performance based fee structures are also on the rise among existing clients. There is a fundamental shift in the way clients are approaching wealth managers and the firms need to adapt their applications and business processes accordingly to satisfy these changing client needs. This is essential not only to grow, but, also to sustain existing business.
• Regulatory Pressure: Regulators worldwide are driving wealth managers towards transparency over prices and processes (MiFID II in Europe, Retail Distribution Review in the UK, and DOL Fiduciary in the US). The DOL Fiduciary is the latest in the list and is expected to have major impact on the US wealth market next year. This is expected to be followed by other regulators as well. The pressure on revenue is rising due to restrictions on fees and inducement. The operational complexity and the cost of IT implementation also adds to the pressure on margins. Wealth Managers should identify this as an opportunity and focus on increasing their advisory share of revenue by providing strong, transparent investment advice through research and systematic planning. Firms also need to revise and customise their strategy for different wealth segments for continued financial viability.
• Digital Innovation: While Fin-techs are reaping benefits from the demand for digital and automated services by focusing on specific aspects of the business, traditional firms are struggling to create value out of digitisation even if they cater to all aspects of the business. Firms need to first fully understand the potential of big data analytics and start to provide captivating investment proposals to clients based on predictive analytics data of their investments, behaviors as well as lifestyle. Combination of smart analytics and advanced digital experience could prove to be the x-factor that clients are looking for. At the same time, firms should look into digitisation as a fundamental change rather than the creation of a new business line or channel. Middle and back office process efficiency and strong data security are also essential considerations for building a strong digital foundation.
• Robo Advisory: While the future of Robo / Automated advisory is still being debated by wealth managers, there is no denial of the fact that Robo advisory business has continued to flourish in the past five years. Even though the model is currently attracting investors mostly from the lower wealth strata, higher segments are also increasingly considering automated portfolios due to cost and convenience considerations. As the low cost B2C might prove to be non-profitable for Fin-Tech firms in the longer run due to higher client acquisition cost than income, traditional wealth managers should start looking for B2B collaborations with Fin-Techs in order to grow their business. Providing automated services to lower wealth segments and hybrid services to higher segments could prove to be beneficial to tap into both breadth and depth of the wealth pyramid.

Our Services

Be Shaping the Future GmbH can partner with you to resolve challenges and drive the business growth of your Wealth Management business. We operate in different phases of a change program and are driven by our core competency areas. Our key offerings for Wealth Management clients are:

• Business Transformation Programs
  • With our strong business knowledge combined with technical capabilities and project management expertise, we can help you achieve the objectives of transformation programs by partnering from project inception to completion.
• Regulatory Compliance
  • Our expert team proactively studies and keeps up with regulations, the potential impact on business and the specific compliance requirements in order to help our clients achieve compliance for their business and IT in the most efficient manner.
• Drive Digital Innovation
  • We will help you gain benefits from digital innovation through conducting an as-is study of your business systems, devising a future-oriented design and managing the implementation of the projects through realistic planning and precise execution.
• Fin-Tech Partnerships
  • For faster go to market approach through Fin-Tech partnerships in order to create Robo advisory or other bespoke digital solutions, we can help to short list and identify the right partner, conduct due diligence and manage the program and partnership.

Be Shaping the Future GmbH – Key Competences

• Strong business knowledge and understanding of the industry, latest trends, drivers and opportunities
• In depth knowhow on technologies and application architectures, extensive design and development skills
• Proven expertise in project and test management processes through effective application of methodologies