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Wealth Management Industry
Overview
- Merril Lynch / Cap Gemini Ernst & Young World Wealth Report 2002 estimates the HNWI asset wealth at $26.2 trillion with the number of HNWI reaching 7.1 million. Interestingly both figures rose by about 3% in 2001 despite recession and declining markets.
- PriceWaterhouseCoopers North American Private Banking / Wealth Management Survey 2002 projects industry growth between 7% in the short term and 10% over the next three years.
- A recent study by Celent - Wealth Management Update 2002: The Race to Become the Trusted Advisor (October 8, 2002) projects the revenues of the financial institutions from the wealth management fees grow to US $ 800 billion by 2007 from the current level of $ 500 billion.
- A Profile of the US Investment Advisory Profession prepared by Investment Counsel Association of America and National Regulatory Services (September 2002) shows that RIAs filing form ADV with SEC increased from 6649 in the previous year to 7581 in the current year with assets under management reaching $22.1 trillion with 10% growth.
Emerging Trends
Worldwide, the financial services industry is going thru rapid changes in its structure, participants, products, services and expectations. The emerging trends leading to the transformation of the wealth management industry are:
- Convergence within financial services institutions leading to competition between banks, brokerages, asset management companies and investment advisors for share of the HNW and mass affluent market.
- Pressure on margins and the resulting need for enhancing the market reach and business volumes and attaining higher level of productivity and efficiency.
- Emergence of new class of high net worth (HNW) and mass affluent investors with individualized investment preferences, keen to participate in the decision making process and want personalized, tax efficient investment management.
- Market participants discovering the potential of huge 'mass affluent' segment with tremendous business potential beyond the traditional HNW market.Emergence of new class of high net worth (HNW) investors with increased expectations - more independent, interested in having relevant information, want access to current data on portfolio as against periodic historical reports, keen to participate in the decision making process and wants personalized, tax efficient investment management.
- Technology has become a driver of growth for the industry. With the technological advances, the cost of advice has been coming down, enabling the industry to expand its reach beyond traditional account minimums for eligibility.
- High level of market volatility demanding continuous monitoring at the portfolio level and more active management.
- Radical transformation in the distribution of investment products leading to a shift from product-centric to customer-centric business model.
- International trend towards fee-based revenues derived from asset management, planning and advice.
- Economic and pension reforms across the world.
Technology Challenge
The sweeping changes in the wealth management and private banking industry are leading to a high level of expectations on technology as the enabler of the changes. The significant expectations from the technology are:
- Integrating the enterprise - corporate decision makers, advisors and investment managers, relationship managers and customers to ensure enterprise wide collaboration, efficiency and consistency.
- Enhancing the business volumes by bringing down minimum limits with technology to improve efficiency and productivity so that institution can service enhanced volumes without proportionate increase in the resources.
- Leverage operating efficiencies and reduce operating costs.
- Continuous - near real time monitoring at the portfolio level
- eliminate human efforts for monitoring
- timely action in volatile markets
- provide personalized service
- Efficiently manage business opportunities by selecting and reaching out to target customers leading to higher revenues and profitability.
- Provide comprehensive 360 degree view of customer preferences, assets, transactions and performance for providing personalized services.
- Facilitate personalization and customization in accordance with customer preferences and with tax efficiency. Tax efficient investment requires detailed lot and transaction level data to be available for decision making.
- Strengthen client relationship leading to higher customer satisfaction.
WealthSpectrum is new generation product not limited by design, architecture or technology of the legacy applications and has been designed with focus on the emerging industry trends and business requirements. Explore to see how WealthSpectrum provides for all of above expectations.
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