The 2011 PwC Global Private Banking and Wealth Management Survey has been released and shows that clients are still cautious while increased regulation will fundamentally alter business models
The 2011 PwC Global Private Banking and Wealth Management Survey has been released; its conclusions are reprinted below.
Client evolution: The client is cautious, smart, less trusting and loyal and now demanding better service and clearer value
Clients are taking nothing for granted and are probing the fundamentals of their advisor relationship: “Do you really provide a value add for me?” and “So why exactly should I be loyal to you?” Increas- ingly clients all across the entire wealth pyramid are taking charge and articulat- ing a view that private wealth products and services should be simpler, more transparent and deliver clearer value. The private banking and wealth client of today has far higher expectations in terms of both performance and service delivery. The sleeping giant is indeed awakening, and to succeed as a truly trusted advisor, successful organisations will have to up their game in service provided and value delivered.
The impact of regulation: A much more demanding regulatory agenda will continue to challenge existing business models
Regulation continues apace and the financial services industry is clearly under scrutiny. Regulation has profound impacts and consequences for all business models. It is increasingly the not-so-invisible-hand trimming profitability. In our view this will only accelerate as regulatory develop- ments continue coming hard and fast.
The industry will need stronger risk management infrastructures, particularly in the front-office and around client inter- action, to cope with current and future regulatory initiatives which strive to protect consumers from the organisations or professionals they turn to in safeguard- ing their wealth. Business models will need to evolve dynamically in order to keep pace as strategic directions change in reaction to the implementation of fast moving regulatory agendas.
Operational excellence: Far greater operational efficiency and effectiveness are required
Never before has identifying and deliver- ing excellence in terms of operational and systems efficiencies been so important. Shared services, outsourcing and new technologies are gaining traction. The real challenge is not just delivering efficiencies and cutting costs, but also improving the overall quality of the client experience. This means doing it all at the same time. We are entering an age when only those who can genuinely deliver transformative change on a cost-effective basis will lead the industry.
Change is the reality: Standing still is no longer an option. Being able to see beyond the pressures of today and implement effective change is critical
The industry’s track record on executing complex cross-functional change has not always been great. The sheer enormity of change driven by these current themes is vast. But, it is equally clear that the status quo is not an option either for profitability today or survival tomorrow. Leading a private wealth management business is a challenging experience right now and is becoming even more so. Institutions need to chart a clear course and direction to come to grips with how they approach barriers and challenges to change.
Our survey tells us barriers span right across the industry, at every wealth segment, and every business model and type. It also tells us that leadership, for a variety of reasons, may not truly be focused on innovation and the investment necessary to effect transformative change.