The future outlook for wealth management and private banking – what’s next for the industry? and what lessons can be learnt from other countries?

Wealth Management and Private Banking

21 April 2016

Wealth Management and Private Banking


wealth-dynamix.gif          capgemini.jpg  scorpio.jpg

Sponsor Introducing: Gary Linieres, WDX
Expert: Rod Bryson, CapGemini Consulting
Facilitator: Catherine Tillotson, Scorpio Partnership

Key message

The private banking and wealth management industry is continuing to wrestle with the challenges presented by developing a compelling service proposition which is being commoditised and in some cases, replaced by technological advances.


  • There is a view that the larger retail operations may get back in to the advice market using the cloak of technology and robo-advice as cover
  • Robo-advice is not yet here but it is coming and industry participants need to think very carefully about what differentiates them in an environment where services and products are replicable
  • Technology is a double edged sword for the industry, making it cheaper and easier to enter the advice market but as a firm evolves and grows, it becomes more expensive and harder to maintain legacy systems
  • Regulation will continue to drive the industry towards transparency both in terms of the proposition and pricing
  • The UK’s regulatory structure and demands place it at the forefront of the move towards transparency – even other mature markets like the US are looking to the UK as an example of best practice and guidance in the advice regulation arena

Key themes

Demonstrating the level of interest the subject matter has amongst industry professionals, there were three roundtable discussions seeking to explore this topic. 

Beginning with expert testimony, the session’s discussions were placed in the context of a global picture of regulators in key wealth markets becoming more activist in guidance to private banks and wealth managers, where Britain was at the front of increasing transparency around fees and performance.

Reassuringly for those present, the expert view of robo-advice was that it was currently not in existence.

 “What I do think exists are algorithms around asset mix. Robo-advice will come though. The challenge is around the government and retirement planning and how pensions will be taxed. If the environment simplifies, it makes robo-advice far easier.”

There was little dissent on this view across the three roundtables.

Yet, regulation and technology were not the only factors which set the scene for these discussions. Leaning on personal experience of an 18 page retirement planning form which wasn’t tailored, the expert view was that there needed to be greater automation of processes.

When the floor was opened to delegates, there was recognition that some businesses were struggling more than others to articulate the value they brought to their clients.

“What is the difference in the proposition? I look at various wealth organisations and they find it difficult to explain how they manage money. If you can’t articulate that, you are going to struggle.”

This contribution led attendees to discuss where in the value chain their firms could add value. From their perspective, it wasn’t simply a case of where they could charge most for their services, but also an opportunity to evaluate what they should and should not be doing in business activities.

“We are trying to unpick the value chain and how to articulate it. Most firms will have the same underlying process and proposition. We are trying to isolate the pieces in the value chain and focus on areas we do well and then outsource other areas. I cannot do everything.”

Another aspect of the changing dynamics in the industry revolved around how clients wish to interact with their wealth manager. Clients are more inclined to use technology as part of their relationship - not as a substitute for it. As a result, the industry needs to establish how to move from a multi-channel operation to an omni-channel one.

“Increasingly, clients want to move seamlessly, transitioning between on and offline. If we were sitting here three years ago, we were all scared of how technology was going to fit in. Now, although we have multi-channel capabilities, they still don’t tie together as neatly or simply as they could. That is why we think service delivery has to be omni-channel in nature, leveraging digital and personal interactions to deliver a better experience and outcomes.”

Returning to the theme of firms focussing on what they are good at and outsourcing the remainder, one concern raised pertained to how best to manage a number of outsourced relationships.

“How do you manage 20 outsourced operations? Outsourcing doesn’t mean that’s you done. It’s a part solution.”

And while there was no specific response to this concern, there was a view that smaller firms may struggle to continue to operate without the smart use of outsourced solutions, particularly around technology development and maintenance.

Beyond the technology question, many had questions regarding the pricing of services. The consensus view was that however challenging aspects of UK regulation are, it does result in firms having to be much more transparent on pricing grounds.

In fact the UK’s system is being looked at very closely by the US, Singapore and other developed wealth markets. The game appears to be changing in the US, thanks in part to an investigation into conflicts of interest in the advice community by the Department of Labor.

One final aspect discussed by the participants was how newer players could break in to an already crowded and consolidating market place.

“Newer entrants have a couple of major pluses and minuses. You don’t have a brand, heritage or distribution, which will all reduce growth potential. But at the same time, by setting up something new, you can have a significantly reduced cost structure, so you can afford to charge less and maintain a lower margin as a result.”

However, regardless of the price of the services provided, most agreed that in order to ensure a sustainable business over the long-term, wealth managers will need to identify which aspects of delivery they do better than other firms, and specialise on that element of delivery.

It is an exciting time to be in the industry. Technological developments and outsourcing are driving transformative businesses and disruptive models which are causing wealth managers to fundamentally rethink their value to clients and subsequently what they can charge for.


The conclusion is neatly wrapped up in one attendees comment:

 “People have to think and have an honest conversation around what their value proposition is. What is the key proposition to the customer around the experience and engagement? It’s about creating engagement amongst clients and that will happen if the experience is good. If you want to play in the premium space, you have to know what your value is and to be able to articulate it.”