WM Market Reports

Wealth Managers In Americas Target Leaner Business Models, Are More Tech-Savvy Than Peers - PwC

Tom Burroughes, Group Editor, 27 June 2013

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Wealth managers in the Americas are more tech-savvy and target a far leaner business model than for their global peers, according to the bi-annual industry survey by PricewaterhouseCoopers.

Wealth managers in the Americas are more tech-savvy and
target a far leaner business model than is the case for their global peers, according to
the bi-annual industry survey by PricewaterhouseCoopers that shows a worldwide sector
facing continual pressures.

The report adds to a slew of surveys from other
organizations such as Boston Consulting Group showing the global sector in flux; some 74 per cent of
them are making significant changes to business models. The 60-page PwC study,
entitled, Navigating to tomorrow: serving
clients and creating value
, covers 200 organizations in 51 nations. Participants said the industry is moving from simply providing products
towards delivering solutions and advice to clients. Trust, reputation and brand
will likely all play a greater role in client propositions and clients' perception
of value, the firm said.

Although – as demonstrated by recent evidence from the likes
of RBC Wealth Management/Capgemini - high net worth individuals have seen fortunes recover after 2008, this is not an easy source of help. Margins
are under “significant” pressure; growth in different markets is uneven, while
shifting demographics and technology pose their own challenges to business models.
During last year, cost/income ratios, on average, stood at 69 per cent. Globally,
managers expect that rate to fall to 64 per cent by 2014.

Americas

In terms of the Americas,
the main conclusions include the point that respondents in the region consider New York, London and Miami to be the most
successful international centers. Globally, Switzerland currently tops the
list.

Cost/income ratio goals are “significantly lower for the Americas
with firms targeting 48 per cent for 2014 – way below the global average
expectation, PwC found.

Respondents in the Americas
are nearly twice as likely to use new technology to communicate with their
wealth clients (43 per cent of Americas
firms currently use PDAs and mobile tablets compared to 26 per cent globally).

Firms in the region are “making significant investments in
core processes and technology as reflected in substantially higher operations
and technology budget forecasts”, the report continued.

Globally, among the main conclusions are that compliance has
replaced reputation as the top risk management concern, as wealth management
firms struggle to keep pace with the scale, speed and costs of current and
planned regulatory change; infrastructure transformation will redefine how
wealth managers serve clients; compliance costs will continue to go up; and attracting
and developing quality client relationship manager (CRM) talent has become a
critical priority for the wealth management industry.

Specifically, PwC's survey said the industry must
tackle five areas of change that will define business success:

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