In their study “Wining the Growth Game: Global Wealth 2015”, the Boston Consulting Group has identified five factors that are crucial for the success and future participation of global wealth growth for asset managers.
For over 15 years, the Boston Consulting Group has benchmarked the performance of wealth management organisations from all over the world. Using more than 1000 data points, five key success factors could be identified: segment-specific value propositions and coverage models, rigorous price realisation in target price segments, differentiated advisory offerings, a focus on front-office excellence as well as the ability to measure and manage profitability.
“The one-size-fits-all approach is no longer viable in today’s wealth-management arena,” says the study. Instead, wealth managers must identify customer segments and the most successful organisations have tailored their offering to specific segments using a modular scheme. Moreover, successful wealth managers prone their product trees regularly to avoid excess proliferation and complexity.
Second, the most successful asset managers have clear defined target groups and are able to enforce price realisation effectively. “Clients are less inclined to ask for discounts when the value proposition of the bank’s service is evident,” says the Boston Consoling Group in their study.
With differentiated advisory offerings, wealth managers must determine a clear value proposition. While cost comparison for advisory services is becoming cheaper and clients become more sceptical to delegate all their investment choices to wealth managers, organisations must be able to deliver a truly value-adding advisory service. Such might be done by a differentiated service level, fully transparent pricing or digital automatisation, claims the study.
Forth, front-office excellence is achieved by the top performances among wealth management organisations. Such might be achieved by making leaders accountable for team and not just individual performance, fostering cross-function approaches, development a client-centric sales structure and complementing the sales management system with activity-based measures.
Finally, the ability to measure and manage profitability is crucial for the success of wealth managers. While top performances steer their organisation based on profitability, most do on the basis of revenues. For organisations, this means that they must be able to have full cost transparency and be able to measure those along multiple dimensions as products, markets or clients.