The State of the Nation: what is ‘really’ going on in wealth management and advisory firms, and how can technology help increase profitability?

Wealth Management and Private Banking

20 November 2019

AdviceAdvisorsBehavioursClientEngagementJourneyTechnologyWealth Management and Private BankingWealth Management and Private Banking

Key message

  • The data from the FCA’s intermediary market data for 2018 shows a clear trend of falling profitability, particularly among the larger advice and wealth management firms. Technology brings together distribution and advice, but businesses appear to be relying on outdated platforms and technology, which means they are missing out on efficiency gains.


  • Revenues increased in the aftermath of the Retail Distribution Review (RDR), but profitability has reduced. This is particularly visible among firms that have between 20-50 advisers where profit margins are observed to be half what they should be.
  • Although firms of different sizes across the industry could benefit from technology investment, there is some scepticism among round-table participants as to whether this would really improve profitability, with many firms wary of risky and expensive investments that may not ultimately increase sales or revenues.
  • This sentiment is borne out by data showing many advisers are resistant to re-platforming, despite expressing dissatisfaction with the solutions they currently have in place.
  • The nature of advice is far more complicated than it has ever been. Many wealth management firms are generating returns of just 15% - 20% when they should be achieving margins of closer to 30% to be profitable. Advisers are dealing with ever-increasing complexity at retirement in terms of client needs, which take time and require specialist advice. At the same time, the industry is facing a talent shortage as demographics shift and the current base looks to exit.
  • On-boarding was a major theme of the discussion with several round-table participants expressing frustration that the process can take weeks, even for clients with relatively “vanilla” requirements. Participants were not sure how much this could be feasibly reduced further, given for some the time had already come down from a few months to a couple of weeks. Many firms are still relying on a paper-based approach rather than fully automated onboarding, suggesting this is one area for potential future innovation.


    • There are challenges to the approach of investing more in technology in the immediate future.
    • Wealth management firms expressed some of the barriers they come up against internally, which included:
    • worries that investing in technology requires them to purchase more than they need or want;
    • that technology providers were often vague about the timeline for the return on investment;
    • that the solutions they had come across are limited when it comes to implementation;
    • that customisation can be less wide-ranging than they would expect, etc.
    • It is this latter point of customisation that many firms are now thinking about as their focus shifts from on-boarding to other parts of the client journey where they can best add value.
     “Customisation is where advisers can really add value.”

Expert: Mike Barrett, Consulting Director, the lang cat & Ed Carey, Chief Commercial Officer, Multrees

Facilitator: Tasha Vashisht, Senior Manager, Scorpio