The next generation is different and will require more sophisticated, up-to-date and, in many cases, Internet-based reporting.

This is the name of a recent paper written by Anisha Puri and Rohitha Perera of IBM Consulting in the UK and Todd Paoletti of Actuate UK. It is a great title and should have wealth management chief executives rushing to buy a copy… Sorry, we are in the Internet age now. Chief executives will therefore be instructing their assistants to download a copy and print it for them. But what does the paper actually say? Certain facts set the context. The industry is growing fast. IBMs Wealth Management survey for 2005 suggested annual growth of 6 per cent. How much of a dent may be put into that by the sub-prime problems is an open question. There is, without doubt however, even faster growth in Brazil, Russia, India & China which are creating more millionaires each year than many western countries. Add to the mix the amount of wealth to be handed down to the next generation and there is certainly a breeze of change in the air. The next generation is certainly savvier. This author recalls travelling to see clients in the Arabian Gulf a few years ago. The old generation and the young generation would ask the same question – “What is happening in the market?” The difference was that the younger generation usually did so with a Reuters or Bloomberg screen in front of them and were arguably the better informed of the two of us at that moment. After all they were paying for real time data not the delayed stuff that many private bankers have to deal with (and can’t access easily when they are on the road). The next generation has grown up in the age of Google. They are used to having access to information. They are informed. To most of them, the idea of an account statement in the mail is faintly ridiculous. These clients are not so much interested in when to buy IBM shares as they are in advice on the latest hedge fund strategies and private equity investments. And they want real time valuations at the push of a button. The paper makes these points very clearly. Reporting and aggregation are two closely linked issues that are important elements of client service and are also linked to reputation and image in the market. The paper lists six areas in which technology can help create value for clients and their wealth managers. In brief they are; aggregation of investments held with various institutions, performance and history, the ability for users to customise, capacity for future scenario planning, real-time reporting over the internet and an overall “rich and dynamic user experience”. One point that the paper does not cover is the contradiction between a desire for real time, aggregated reporting when you hold assets such as hedge funds and private equity which are often illiquid and do not, or cannot, publish real-time prices. The next generation is different and will require more sophisticated, up-to-date and, in many cases, Internet-based reporting. But with the profusion of investment opportunities and the increase in overall complexity is not the wealth manager even more necessary than before? Timely and informative reporting is important, but I think that most clients would settle for the first two in IBM’s list of technology to-dos with, maybe, Internet access. That would already be an achievement for any wealth manager. To download the white paper click here.