The CEO Challenge

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Private Banking and Wealth Management

Alex Reidegeld

Alex Reidegeld

Senior Events Executive

The Financial Services Forum


For our final event in 2018, we looked at the state of wealth management in the UK and what firms can do in times of demographic changes. Alex Reidegeld provides a summary of the event.

Trends in Wealth Management

  • Assets held in the UK are fast approaching £1 trillion, mostly held in Private Banks, with a year on year growth of 13.3%
  • 2017 saw a £6.78bn (6.8%) growth in revenues. With that comes a cost increase of £5.07bn (5.4%)
  • Majority of cost increase is driven by the need for increased spending on IT & Operations to meet rising technological demands. This is also reflected in the higher number of In-House IT staff (6.1% increase year on year)
  • Profitability remains an issue for many firms and only 1 in 5 firms might be scalable if revenues continue to grow

 

The Investor’s View

Stats based on ComPeer investor research conducted in 2018

  • Average investor is male (61% vs 39% female) and 49 years old with £705k investable assets
  • Key criteria when selecting a wealth manager are investment performance (23%), followed by levels of service (1% and level of bespoke service (13%)
  • Availability of technology only ranked 9 out of 12 important criteria. A social media presence is also not rated as important, but negative comments on social media will impact decisions.
  • 45% of participants thought the value for money their wealth manager provides has stayed the same in the last 12 months, 40% it has improved. Only 3% thought it has worsened
  • Politeness of staff and overall reputation of the firm are seen as very important
  • 45% of investors rate the digital offering of their wealth management provider as “Good”, with 26% rating it as “Excellent”

 

The Wealth Managers Perspective

  • People always want to speak to a person in the first instance
  • Don’t neglect younger generations – they know they don’t have much money to invest due to rising housing costs and stagnant wages but might do in future
  • Technology is essential, apps and client portals are greatly appreciated but be careful they are not stranded in a technological desert and continue to offer personal services – especially also with view to older clients
  • As automation in client on-boarding and reporting becomes the norm, make sure to talk to clients about cyber security and how to stay safe online
  • The FCA places a focus on transparency, so make sure you abandon jargon so that clients can understand what they are investing in
  • Prepare your customer service team to talk to clients about Ongoing Charges Figures (OCF) once these fees must be disclosed for the first time

 

2019 Horizon

  • Getting net new money coming in is a challenge and wealth managers can’t keep relying on referrals for new clients
  • Attracting younger generations is important to keep up with the mortality rate of existing clients
  • Only 1 in 4 younger people have ever spoken with their parents’ wealth manager

 

Tips for Marketers to Take Away

  • A social media presence isn’t that important but if you have one make sure you get it right. Negative reviews can be combated by addressing the complaint directly
  • Start to engage younger people even though they don’t have much to invest now
  • Prepare your customer service team to have difficult discussions with clients who will start to find out more detail about fees that they previously didn’t know about
  • Have a solid digital offering, either app or client portal that gives comprehensive financial reporting
  • Despite increasing technology, make sure people can still talk to a person for advice


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