The status quo in the private banking and wealth management industry is changing as the focus shifts to client service and value delivery, according to our 2011 Global Private Banking and Wealth Management survey - Anticipating a New Age in Wealth Management. New competitors are challenging the dominance of established firms, and the impact of new regulations and more demanding client expectations are forcing private banks and wealth managers to change their client service infrastructures and the way they operate. Those who can master change will be in a position to lead the industry and we believe that clear industry leaders and losers will emerge by the middle of this decade. Some highlights:
- Today’s client is cautious, smart, less loyal and expects excellent service and clear value.
- Regulation has become the not-so-invisible hand, increasing the cost of operations.
- Greater operational efficiency and effectiveness are required, not just to compete but to survive.
- Standing still is no longer an option and institutions must now quickly adapt or face being left behind.
In PwC's 2011 biennial report, which surveyed a record 275 institutions from 67 countries, we found that wealth management continues to be a lucrative business with untapped potential for significant growth if institutions can be agile in adapting to meet changing demands. Our 2011 survey found that the industry faces multiple pressures in five key areas, as follows:
Performance and Change
The DNA of the wealthy investor has been transformed as a result of the global financial crisis and recent scandals. The result is higher expectations of service and value. Clients are more active in managing their own financial affairs and they are paying increased attention to reputation, regulatory compliance and risk management.
Markets and Clients
Shifting patterns of world wealth between emerging and established markets and tougher regulatory oversight present challenges for some wealth managers and creates new opportunities for others. Wealth managers must adapt their networks and businesses.
Client Relationship Managers and Human Capital
The shortage of talent is one of the biggest barriers to future growth. Top quality people are becoming more valuable, more difficult to source, and more expensive to train. The industry is getting better at institutionalising client relationships. Links between performance and pay are becoming critical. New strategies, incentives, and support are needed to attract and retain qualified professionals.
Operations and Technology
The industry remains historically underinvested and respondents are at different stages of their operational evolution. Many continue to run legacy systems and manual processes. Technology budgets are being directed to better support client relationship managers and the front-end client experience.
Risk Management and Regulation
Risk management systems and processes are being upgraded to provide integrated approaches to better align risk and value. The global wealth management industry is now at the forefront of regulatory change. Cross-border standards, customer protection and transparency are anticipated to impact the front-end client experience and increase costs.
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