5 Business Imperatives for Successful Wealth Management Firms
Here are five business imperatives successful wealth management firms will need to heed over the next three years:
1. Ensure profitability can withstand continued pricing, cost pressure and volatility.
Have we improved our true productivity (especially in fast growth areas like ops and IT) and taken steps to ensure annual productivity gains?
Do we capture the benefits of scale or spend them on complexity? How can we reduce duplication, complexity and waste (especially outside the investment platform)?
2. Develop conviction about the growth opportunities that will account for a third of new profits by 2015.
What is our view of the growth landscape for 2015?
Which two or three mega-growth areas will drive more than half of our growth (and a third of profits) over the next three to four years and how will this change the business mix?
How much of our budget (and leadership) is dedicated to growth in general and in particular to the mega-growth areas? Is this number proportionate to the opportunity and our firms ambition?
What initiatives will we cut to create financial capacity and leadership bandwidth to fuel our targeted growth ambitions?
3. Shift investment emphasis toward solutions and outcomes.
If we are leaders, how big a business do we think solutions will be in 2015?
How do we transition from a product-driven firm to a client- and solutions-driven firm? For example, is our investment platform organized and incented to deliver client outcomes (e.g., income) or product-focused investment alpha?
4. Bring investment-like discipline to sales and marketing.
How much sales alpha does our sales force deliver compared to what it should be delivering? Is our sales force focused on the largest opportunities
for sales alpha?
How can we tie our sales incentives more closely to our firms economics and true sales value-add? By 2015, what portion of retail sales incentives should be tied to gross sales?
5. Make decisions about a winning 2015 business model.
For generalist firms, how do we avoid spreading ourselves too thin, playing in too many products, clients segments and geographies but winning in none?
Is our ownership structure optimal? Are we deriving enough value from our financial institution parent (e.g., distribution, protection products)? What are the risks (e.g., compensation) from parent company regulation?