Data Analytics Can Boost Wealth Industry Revenues Up To 20 Per Cent - Study

Tom Burroughes

27 April 2018

Wealth managers can boost revenues by up to 20 per cent by making smarter use of information such as through data analytics, a report noting that the industry is still riding a rising escalator of growing global financial wealth.

Firms need to build a foundation for advanced analytics either in-house or embrace third-party solutions to close the "capability gap", the report by said.

“Wealth Managers must act now to preserve their superior valuations by focusing on more strategic and structural changes to their value propositions and business models, both of which they have failed to address in recent years," Kai Upadek, head of wealth management at Oliver Wyman, said.

Wealth managers also need to embed data analytics into the organizational culture and day-to-day business processes, most notably the advisor desktop, to ensure acceptance by users, it said.
The sector enjoyed a 7 per cent rise in overall financial wealth last year, although fee and cost pressures keep profitability in check, the report said. Firms' efforts to diversify how they earn a living may not give them enough protection if the decade-long equity market bull market comes to an end. In the short-run, revenues still tightly track equity markets.

The report also identified talent management is an important way for firms to improve their performance.

"Firms need to expand learning and training efforts to upgrade existing employees’ skillsets, particularly related to rising data analytics demands. Wealth Managers must sharpen the talent value proposition to accommodate the preferences of new and transforming talent pools. Firms will need to seek external partnerships to tap into new talent pools beyond financial services to access the required skillsets, i.e. a shift from nurturing `farmer'-profiles to sales-driven `hunter'-profiles," it added.