IBS Journal July – August 2015
Propensity to use automated advisory services %, by region
80% 60% 48.6 40% 20.0 20% 0% 19.3 15.6 45.8 32.0 14.0 33.5 17.9 76.3 70.4 52.5
HNWIs
Wealth manager
Global
Asia-Pacific (excl. Japan)
Europe
Japan
Latin America
North America Source: World Wealth Report 2015
Pacific is at the highest level, ‘but we haven’t seen more than pockets of innovation and disruption here’. There are also what can be termed
David Wilson, Capgemini
There is at least one wealth manager that Capgemini is talking to at present that is considering white labelling the offerings of one of these new players. There is a dis- connect between the perceived demand and the actual demand, it seems. The report found that 67 per cent of younger HNWIs would consider using an auto advisor, whereas wealth managers felt that only 20 per cent would look that way. In some ways, it is surprising that the US is leading the way in innovation in wealth management because HNWIs here have traditionally been less demanding, in part due to their age profile. The flip-side, Wilson observes, is that demand in Asia
‘open investment communities’, through which consumers can use their peers to inform them about investments, in much the same way that they might when eval- uating a new mobile phone or camcord- er. Wilson believes wealth managers need to overcome their fears, usually regulato- ry-related, of finding prospects and offering advice via social media. At a more nitty-gritty level, what about
the ever present challenge of reducing over- heads? Many wealth managers have a poor cost income ratio and are hindered by leg- acy infrastructures. These are daunting to fix and are holding firms back, says Wilson. Where the wealth management business is part of a wider group, typically with its infra- structure hard-wired into that of its parent, there will be added complexities. Wilson believes that the legacy systems
and the nature of the services that advisors are able to provide to clients are increasing- ly board level issues. He feels that mindsets have changed, with a realisation that invest- ment performance is no longer the sole dif- ferentiator and that there is a need to address those aforementioned holistic needs.
© IBS Intelligence 2015 To a degree, the issue then becomes
where to turn for new solutions. The sector is relatively under-served when it comes to technology, although there are some offerings emerging that might be classed as ‘plug-ins’. The wealth sector has had few third parties specialising in individ- ual wealth capabilities, perhaps because wealth firms have been hesitant about losing control of even non-core process- es. That is now changing, the report states, with several players bringing strong capa- bilities in this space (and with firms being more receptive), due to cost pressures and the need to advance customer experience and client acquisition. Examples are Wealth Access for client reporting and Hearsay Social for social media. Nevertheless, it is perhaps telling that most recent new entrants have built their own core plat- forms. Nutmeg is a case in point (IBS Jour- nal, November 2012). The good news from the report is the
customer satisfaction numbers, with these less volatile than during the most turbu- lent few years of the financial crisis. The challenge will be to maintain these num- bers over the coming few years for more demanding customers with more options about where to turn for managing their wealth.
www.ibsintelligence.com 31
analysis: world wealth report
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