Wealth Management and private banking will change more in the next 5 years than it has in the last 50
The wealth management and private banking industry has retained its position as the most profitable segment in banking for over 200 years, and it has done so without any significant changes to its playbook.
It has remained robust against many a crisis, thanks to growing wealth, several strong and sustained bull markets, and client desires for a high-touch approach.
But COVID-19, unlike any other crisis faced to date, looks set to turn the wealth management and private banking industry on its head. It has accelerated trends in place before the crisis and injected a whole new set of challenges for organisations to navigate:
- Profit and revenue compression
- Rising costs
- Economic uncertainty
- Changing wealth demographics
- Increased competition from Fintech’s and digitally-enabled new entrants
- Remote working
- Changing customer expectations
It’s perhaps the last point that is acting as the biggest catalyst for change. Serving the world’s wealthy is going to be far more complicated in the Post-COVID-19 new normal.
Evolution or revolution? Time to reimagine the playbook to survive the impact and secure a bright future
According to the McKinsey 2020 Affluent, Private and HNWI Customer Insights Survey:
- 1/4 of clients said their bank had made no contact during the COVID-19 lockdown
- 1/3 report being unsatisfied with the quality of financial advice received
- 1 in 5 clients have moved their assets due to poor performance by their bank during the crisis
Whilst it remains true that now more than ever clients are greatly reliant on their advisors, COVID-19 has highlighted gaps in how the sector has performed in meeting client expectations during the crisis.
Wealth management and private banking organisations must deal with today’s challenges, as well as scanning the horizon for tomorrow’s opportunities.
To survive in the new normal, wealth managers and front-line private banking relationship managers must:
- Deliver remarkable experiences and innovative client propositions
- Consistently provide client-centric moments at every stage of the client journey
- Personalise advice with a holistic total wealth and lifestyle perspective
- Become more tightly aligned to client behaviours and expectations
- Continuously evaluate where they can create holistic value beyond pure economic returns
- Meet the demands of changing wealth demographics and new client segments (e.g. digital natives)
What is more, they must do all this whilst working remotely, efficiently and in the most agile way possible in order to boost profit margins and keep costs under control.
Watch three industry experts from Schroders Personal Wealth, Elixirr, and The Penny Group debate:
- The wealth management and private banking customer of the future
- How wealth managers and private banks are adapting
- The innovations that will drive recovery and reimagination for the next generation of clients
Watch the interview below: