Wealth Management and Private Banking

15 July 2018James Goad

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Differentiating the client experience is crucial in ensuring that traditional wealth managers stay relevant to clients amid challenges from disruptive business models. An innovative client experience should cater for the individual needs of high-net-worth clients while still being able to complement existing business models. Utilising technology, working with suppliers and delivering bespoke client service are all challenges that the wealth industry must conquer in order to deliver unique client experience and retain loyalty.


  • Technology presents several challenges and opportunities as traditional wealth managers seek to innovate their business models.
  • Fintech firms have a competitive advantage in building innovative client experiences due to their flexibility and lack of legacy issues.
  • External suppliers are important for building the technology infrastructure needed for both back-office and client-facing innovations.
  • The quick pace of technology advances makes it difficult to normalise client segments within a differentiated client experience.
  • Open banking is expected to create more competition and innovation among UK wealth managers.


Key Issues and challenges:

  • The initial discussion centred on the issues that are elevating the client experience to boardroom tables. Wealth managers face common challenges in the form of regulatory pressures that have affected costs alongside the advent of increased competition from disruptive business models.
  • Technology is a key driver of change, presenting many challenges and opportunities as firms seek to stay relevant to clients.
  • One emerging priority for traditional wealth managers is the need to enhance and differentiate the client experience with every firm adopting their own unique approach to this problem.
  • The differences between legacy wealth providers and new fintech challengers were discussed at length in the context of technology. One delegate from a traditional wealth manager highlighted that: “Technology is currently used more for generating operational efficiencies in back office processes rather than the client experience.”
  • External suppliers are vital for building the technology infrastructure needed for both back office and client-facing innovations with more support available than ever before.
  • However, fintech firms have an inherent advantage in building innovative solutions due to their smaller size that allows for more flexibility without the burden of legacy software systems. Indeed, one delegate captured the difficulty of wealth managers innovating their products by stating that traditional firms were “stuck in 100 years of conducting business in the same way.”
  • On the other hand, the sheer pace of technology advances makes it difficult to normalise client segments within a differentiated client experience.
  • There are competing priorities at play between creating a standardised technology stack that will allow you to serve clients at scale while also being able to tailor the front-end of the client experience to suit the needs of different segments.
  • Several delegates highlighted the nuances of different sets of high-net-worth clients, some of which do not want to hear from a wealth manager for six months while other clients want live portfolio updates on an instant basis through a mobile app. It is therefore important to design a digital client experience that will allow a client: “to peel back the onion to their level of experience.”
  • All delegates from traditional wealth managers agreed that it was impossible to design entirely different client experiences for every segment but recognised the importance of adapting to meet changing customer behaviours.
  • The subject of wealth transfer was also a keen area for discussion given the substantial amount of assets that is set to be passed down to the next generation. Most delegates stated that running a separate investment and client proposition for “NextGen” clients does not make either commercial or practical sense.
  • Inheritors come from all ages and it is not just millennials who will be the beneficiaries of wealth transfers, but also 60 year old clients. However, most inheritors are not prepared for wealth transfer with many delegates highlighting the amount of education needed to help with this process.
  • One delegate cited the success of the NextGen educational programme that is run with millennial clients and covers several themes from family business to investment expertise. The educational programme embeds loyalty with millennial clients at an early age before they inherit most of their wealth, which is especially important considering that more than half of inheritors switch their wealth provider.
  • Wealth transfer subtleties also vary by region with family dynamics typically more complicated in regions such as the Middle East. An added complexity is a culture divide which can sometimes exist within families where the ideals of Western educated children come into conflict with the views of their more traditional parents.
  • The discussion closed with a brief review of the impact of regulation on the client experience and conduct outcomes. The FCA has put conduct outcomes at the front and centre of future regulation although most delegates felt that the level of regulation is now plateauing. It appears that over the course of the last decade, the regulation pendulum has swung from one extreme to the other following the implementation of Mifid II and GDPR.
  • Yet it remains unclear whether the FCA will strengthen its flexible approach once Brexit comes into effect. Several delegates also referenced the impact of PSD2 and open banking with the view that these directives will put more onus on firms to innovate the client experience.

Conclusions and solutions:

  • Wealth managers are adopting their own unique approaches to enhancing the client experience with a focus on using technology to support existing business models.
  • Technology is moving so quickly that it is hard to differentiate client segments from a technology perspective but the client experience should be able to have some degree of modification for different needs.
  • No ‘one size fits all’ segmentation is possible with next generation clients as each case needs to be individually managed in order for a wealth manager to be considered as the trusted advisor.

 Expert: Kevin Russell, SEI Wealth Platform