As part of a continuing series, here are views on the global wealth management industry from PwC.
This publication has approached a raft of consultants operating in the wealth management sector to give their views about a range of challenges and opportunities for the industry in different parts of the world. A number of articles are being released in these pages in the coming weeks and we hope readers find them stimulating. The articles have been sought by this publication and also by Bruce Weatherill, of Weatherill Consulting, and also chairman of ClearView Financial Media, publisher of this news service.
Here are comments from Jeremy Jensen, PwC wealth management partner and Ian Woodhouse, PwC wealth management director.
It’s useful to reflect on the critical issues that wealth managers face in 2014 and how leading players are positioning themselves to capitalise. The challenge is to understand how best to capitalise on the industry inflection point.
A combination of powerful forces - client evolution, changing expectations, complex regulations, technology changes and more volatile markets - are driving the wealth industry to an inflection point. This is reflected in pressures to grow revenue and contain litigation and compliance costs. PwC’s latest Global Private Banking and Wealth Survey shows global cost/income ratios at 65 per cent in 2013.
Typically, in an inflection point, traditional competitive advantages come under pressure from new and disruptive entrants. This usually results in industry consolidation and exits. Subsequently, a new line up of industry winners and laggards emerge.
This is a challenging time for wealth management firms, but can also represent an opportunity for those organisations that can understand the key trends, are willing to challenge the status quo and who can capitalise on the inflection point.
Our survey shows a realigning of budget spend priorities. Supporting and enabling business growth is now the main priority for respondents, followed by cost reduction through enhanced efficiency, becoming a more client focused organisation and addressing legal and regulatory compliance also emerging as key themes.
Supporting and enabling business growth
Significant growth differentials are emerging across markets and client segments, and this drives a requirement for a more granular approach to market and segment priorities. Many survey respondents are now in the process of refocusing their market coverage and client segment orientation.
Increased regulatory demands have led to advisor client facing time in some countries reducing to just 40 per cent of total time, which constrains service and selling time at a point when client needs are changing and there is a much greater requirement for client insight to create responsive propositions to grow revenue.
Several wealth managers are improving how they undertake their client research, engagement and survey insight programmes. These now anticipate where client societal and behavioural changes are taking place to inform approaches to exploit them. For example, a decrease in client trust is fuelling competition from alternative competitors, such as multifamily offices and private client investment firms that are perceived to be more aligned with client interests.
Digitalisation across the industry is causing significant disruption as it spreads in a number of ways across different segments, ranging from simple self directed and guided solutions, through to approaches that complement the client advisor.
Emerging technologies, such as tablets and mobile devices with rich interfaces and visualisation, enable clients to receive information in real time, and with the advent of social networking, big data, cloud computing and gamification, firms have a host of new approaches to gain and use client insights from both structured and unstructured data. These will enable superior client insight, more personalised engagement and support deeper interactions aligned across multiple channels to create superior client experiences.
Although there remain numerous challenges associated with digital, including cyber security and regulatory uncertainty, it is clear that the nature of the traditional client and advisor interaction models are changing and it will be necessary to develop options for a digital strategy.