Wealth managers reconfigure to win back client trust

* A new equilibrium of capitalisers and laggards will emerge within the next two years, says PwC survey

Wealth managers are struggling with the challenges posed by the economic environment and continuing regulatory pressures, according to a new PwC report, “Navigating to tomorrow: serving clients and creating value.”
The report includes findings from PwC’s 2013 20th anniversary Global Private Banking and Wealth Management Survey where participants suggested that the wealth management industry is moving away from simply providing products towards delivering solutions and advice to clients.
Trust, reputation and brand will all play a greater role in client propositions and clients’ perception of value, said PwC.
Despite the resurgence of global wealth to pre-2008 levels, the industry is facing significant margin pressure caused by increasingly stringent and costly regulatory requirements, uneven growth across geographic markets, loss of certain type of fees and subdued client activity. These dynamics are further compounded by shifting demographics and existing challenges around operations, technology, and talent management. Surviving and succeeding in this environment requires changing to a more consultative business model that places a premium on “doing the right thing,” said PwC.
The report, which surveyed 200 institutions from more than 50 countries, found that the wealth management industry is at an inflection point, precipitated by continuing regulatory pressure, a challenging macro-economic environment, margin compression, changing demographics and trust challenges.
It also found that the industry faces multiple pressures in five key areas: Markets and Clients, Risk and Regulation, Human Capital, Operations and Technology, and Products and Services.
Other findings in the report suggest that compliance replaced reputation as the top risk management concern, as wealth management firms struggle to keep pace with the scale, speed and costs of current and planned regulatory change.
Furthermore, infrastructure transformation will redefine how wealth managers serve clients, while the cost of complying with regulation will continue to rise, with respondents forecasting that risk and regulatory compliance expenses will account for 7% of annual revenue in two years, up from five percent today.
The repot concluded that attracting and developing quality client relationship manager (CRM) talent has become a critical priority for the wealth management industry.