Despite some strong first quarter results, wealth managers face a number of challenges. This joint report with Deutsche Bank is aimed at understanding what the industry can do to progress.
The Wealth Management industry can drive growth by increasing alternative asset allocations, capturing onshore asset growth in emerging markets, taking advantage of revenue synergies and adapting advisory models.
Wealth managers should identify new revenue streams, drawing inspiration from the technology sector. The greatest cost-saving opportunity lies in digitizing processes.
To drive future growth and profitability, wealth managers should:
- Increase allocations to alternative assets
- Capture onshore assets under management growth in emerging markets
- Take advantage of revenue synergies through greater cross-selling
- Adapt advisory models, for example by investing in digital capabilities
- Automate and digitize processes to enhance accuracy, security and efficiency
The report also elaborates on ways for wealth managers to identify new revenue streams by drawing inspiration from the technology industry, where firms tend to compete in one or more areas rather than offering an end-to-end service. Potential opportunities include providing non-banking products and services, making wealth management platforms available to the broader market or focusing on niche products or capabilities.
1What is this year’s report about?
Over the past years, Wealth Management valuations have reached record highs. Despite encouraging Q1 2017 financial results, Wealth Managers face structural headwinds that will reduce future earnings capacity. While significant cost reduction potential still exists, the central theme of this year’s report is how Wealth Managers can mitigate profitability pressures and even raise profitability by doubling down on revenue growth initiatives.
2How can Wealth Managers shift gears towards revenue growth?
Wealth Managers need to double-down on growth levers, such as increasing Alternatives allocations in client portfolios, capturing onshore assets under management growth in emerging markets, rethinking collaboration approaches between wealth management and other bank units, and adapting advisory models to address non-traditional client needs. Furthermore, the report elaborates on ways how Wealth Managers can prepare to unlock new value sources outside of the traditional Wealth Management value chain by drawing inspiration from the technology sector.