Doomsday Preppers? How Wealth Management CEOs are Preparing for the Future
Despite uncertainty and upheaval over the past 18 months, the wealth management industry has remained resilient. Many firms used the pandemic and sudden shift to remote working as a wake-up call to improve both employee and client digital offerings. These firms have upgraded their outdated, manual processes or software with modern, automated solutions to maintain their competitive advantage.
But as the pandemic wanes (thankfully), wealth management CEOs are looking to the future. The road ahead is paved with many unknowns. Perhaps the most important question is which capabilities and offerings will determine the success or failure wealth management enterprises. The Boston Consulting Group’s 20th edition Global Wealth report provides an outlook for the future based on what today’s firms need to be successful tomorrow.
The Landscape of Wealth Management is Changing… Again
The wealth management industry has survived numerous economic crises and digital upheavals over the past 20 years. However, the COVID-19 pandemic is the industry’s biggest challenge yet. With unemployment records finally pulling away from all-time highs and many global economies fiercely fighting off recession, financial leaders are concerned for future success.
To ensure wealth management CEOs successfully navigate the myriad of complex choices, BCG has created a Wealth Management CEO Agenda for industry leaders. These recommendations are divided into near-term actions that address immediate demands COVID-19 and provide funds for the future, medium-term actions that increase future competitive advantage, and foundational capability building critical for long-term success. This CEO Agenda centers around three main focuses: Protect the Bottom Line, Win the Future and Build Capabilities.
Protect the Bottom Line
Addressing the immediate demands of COVID-19 starts with keeping revenue on the table. Today’s firms must focus on smart revenue uplift, particularly onboarding, sales, and enablement, and optimizing the front office setup.
Firms that rely on ad-hoc responses to compliance and risk management processes must quickly identify where these tasks can be standardized, streamlined, or fully automated. Wealth management leaders who achieve this not only reduce costs but also improve customer satisfaction and organizational resilience.
Finally, firms must optimize end-to-end processes, streamline management and matrix structures, and embed agile working processes beyond IT teams to improve structural efficiency.
Win the Future
Given the change the industry has seen in the last 20 years, leaders must prepare for additional disruptive industry changes. BCG recommends firms focus on the following areas to remain surefooted in an increasingly crowded and competitive market while delivering exceptional client value:
- Personalized value propositions
- ESG and impact investing
- Challenger plays
- Ecosystems and M&A
To execute the above agenda, firms must refocus efforts on strengthening the foundational capabilities. The following are those BCG deems most important for long-term success:
- Client Understanding: Wealth management providers must implement a direct, systematic approach to gather and analyze client feedback. This information should be presented in an easily digestible way for stronger decision support.
- Talent and Culture: To succeed in an increasingly digital, client-focused world, firms must attract a broader range of talent, starting immediately. Business leaders and hiring managers must carefully examine talent pools for individuals who will further business growth and whose values align with business culture and practices.
- Digitization and Data: To maintain a competitive advantage in the future, firms must fully integrate the latest tools and technologies into business and operating models. A clear, consistent focus on implementation efforts and support from senior leadership ensures these efforts are successful.
- Technology Platform: Client needs, operating models, and business processes will look vastly different in upcoming years. Wealth management providers must assess those future needs and select the appropriate key technology tools and platforms needed to meet them.
There’s Money in the New Wave of Wealth Management
While the long-term impact of COVID-19 on wealth management firms remains unclear, wealth management firms must rise to the challenge.
Leaders and executives must position themselves and their firms for future success by refocusing and reinventing business and client processes, investing in smarter digital tools, and strengthening foundational capabilities. With this focus, their wealth management firms will be fully prepared to face the future’s unknowns.
Ryan George is the Chief Marketing Officer at Docupace. He is responsible for the company’s brand awareness, early-stage sales pipeline, content strategies, customer and industry insights, internal and external communications, design, and events. George actively engages in leadership roles in both the financial services and marketing communications communities. He a member of the Forbes Communications Council, an invitation-only, fee-based organization of senior-level communications and public relations executives, the CMO Council and the CMO Club.