The Transformation of Wealth Management - Part 2

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By 2007, high-net-worth investors around the globe had accumulated assets valued at approximately 50 trillion US dollars, yet only half of that wealth was managed by professionals. A recent VIP Forum study may help to explain the discrepancy. According to that study, eighty-four percent of wealthy participants stated that they are looking for comprehensive advice, referring to an advisory relationship that includes a range of expertise and services and is based on an understanding of a client’s entire situation.

Participants who reported a high degree of satisfaction with the advice they were receiving were very positive about their advisors, giving them higher overall satisfaction ratings, greater loyalty and more of their assets. Unfortunately, satisfied clients were in the minority. In fact, they were less satisfied with advice than with any other part of the wealth management offering.

Wealth managers have been trying to fulfill the market’s demand for advice by recruiting top talent and adding selected products, services and technology components. While these are all important this augmentation strategy is falling short of client expectations, as the VIP Forum study shows. The shortcomings, we believe, are largely the result of trying to shoehorn the new components into an old, product-development-and-delivery business model. The new value proposition—comprehensive advice about using one’s wealth to realize life goals—requires a business model that completely supports wealth managers’ new role of trusted advisor and integrator.