Wealth Management: "Top 5" Trends
Recently, I was studying and evaluating the wealth management trends worldwide. In the course of my research I was surprised that barring few regional differences the challenges faced by WM firms are more or less similar globally. Customers are demanding products which are not just "off the shelf types" and at the same time are cautious of investing in anything new! Which only adds to the dilemma of the WM firms.
Of course, one fact which no one can deny is that, the last 18 months have been truly transformational for the industry as whole in terms of its operations and assets under management (AUM). Coming back to trends, the following are my "Top 5":
1. Regaining Client Trust
Failure of a number of banks/ financial institutions coupled with mounting losses, in the recent past, has had an adverse impact on the client trust. Winning back client trust is the top priority of firms today. I recommend bringing in transparency in operations and make full disclosure of facts to the customer, in order to achieve this. There can be no hard and fast rules here but I believe that advisors with their conduct and expertise can win back customer trust over a period of time.
2. Operational Efficiency and Technology
It's a fact well known today, that margins of advisory firms (or WM firms) are at an all time low. There is a huge need to cut costs and yet sustain and grow business operations. While dealing with the client in a "rendezvous" sort of mode comes at a cost; alternatives are provided by technology today in the form of "Smart devices" like the iphone or blackberry which facilitate seamless connectivity. Also initiatives like setting up comprehensive and user friendly online services provide an extra edge to the firms in the ever competitive market place.
3. Looking East
Advisors are today increasingly looking at "New money" in the Asian markets of China, Singapore and India. These markets have shown growth even in the last year or so and have been largely untapped. The trick here is not just to dump the western products in these markets but for me the key to success here would be to bring in the "regional flavor" and come up with customized products and services with which local investor can associate.
4. Regulatory Compliance
Post the economic downturn, a whole new set of regulations has been put in place to ensure that Financial Services firms remain healthy and robust. Starting from the account opening (KYC process) to trading regulations (MiFID, NMS, SOX etc), the regulatory scanner is higher today than ever before. This has a direct implication on operational costs and efficiency, as firms need to quickly ramp up there systems to comply with these regulations. What would help here is technology enabled flexible and agile process setup, which can be modified with relative ease.
5. Thinking Out of the Box
With the widening client base, the advisors need to come up with innovative solutions which cater to the needs of its "Diverse clientele". Having burnt their fingers in equities most clients today are looking out for products/solutions which offer them diversification and growth. The growing traction in fields like Wine banking, Art banking and even Islamic banking seconds my claim here!
