2016 opportunities in wealth

To help you look forward to 2016 we’ve focused on the year ahead and the principle themes which we believe will dominate the wealth landscape.

So sit back and read through the challenges, and the opportunities that the industry faces in the next 12 months!

Regulation – perhaps not as much to fear!

A new year, new regulation! Although long in the making, MiFID II’s provisions are largely inspired by the Retail Distribution Review (RDR), and are likely to be introduced from January 2017. This means 2016 will be a year of frantic compliance and procedural changes.

MiFID II applies to European operators and effectively looks at the management and governance of firms. It is also designed to ensure remuneration policies are based on the best interests of clients, rather than those of the firm.

There are also changes afoot pertaining to inducements for clients (don’t do it!), reductions in the number of products available on an execution-only basis and brokers needing to provide additional information around the best execution venues per product and per trade.

All these changes are designed to enhance the client experience (more on this later!). In our thought leadership piece with Pershing in 2013 (Brave New World) we explored the effect of RDR on the UK client. We found that although most clients felt advice was more expensive as a consequence of the regulation, they also found it easier to compare costs and understand what they were paying for:

Maybe if MiFID II has the same effect on European clients, the change might be worthwhile after all!

Figure 1: Which of the following statements most closely reflects your experience of financial services since the start of 2013?

client satisfaction financial services

Source: Wealth management report: A Brave New World, Pershing, 2013

The robots:  Mimic them, differentiate from them or join them!

The age of robo-advice is dawning (see our Ultra newsletter on this topic). Wealth managers who want to stay ahead need to be able to market the value they can bring to clients which the robots cannot. They could (perhaps) develop their own algorithmic-based investment platform, allowing them to offer the mass affluent an alternative solution which carries the goodwill of their brand.

Perhaps the responsibilities of relationship managers could be expanded to include educating clients on their investments. This is a service clients perceive to be more important than the relationship manager merely being the face of the company (Futurewealth 2015 Part 1). This is a facet of human interaction which robo-advisors will struggle to achieve to the same standard.

Of course, there are alternatives to these two strategies. As Schroders showed by investing in Nutmeg, if you can’t beat them, join them!

Figure 2: Within the context of your entire relationship with your primary wealth manager, what do you view as the main responsibilities of your relationship manager?

financial advisor key responsibilities

Source: Futurewealth 2015, Scorpio Partnership


Improving the client experience – one step at a time

Our Futurewealth 2015 Report, surveyed more than 3,000 respondents globally and one of the key findings was that there are still a large number of clients whose needs are not being met – especially around guidance and information. The APAC region fares worst in this regard and probably explains, in part, the rush of larger wealth managers to the area to capitalise on this.

However even in regions where guidance and information are more widely available, more can be done. One out of every three clients in the Americas for example, is in pursuit of knowledge their wealth managers are currently not providing. By meeting client needs in terms of guidance and information, the client experience (CX) is likely to improve at the very minimum.

But more importantly perhaps, improving the client experience, is likely to improve outcomes (something our regulatory friends are keen on), which in turn will most likely positively impact satisfaction (CSAT) and likelihood to refer (NPS).

If your clients are more satisfied and willing to refer others, growth needn’t necessitate aggressive geographic expansion. Better to do something well for your key client segments, than replace dissatisfied clients with others.

Figure 3: Do you feel that your relationship manager and your primary wealth management firm provide you with guidance and information to make informed investment decisions?

financial guidance HNWI

Source: Futurewealth 2015, Scorpio Partnership

Information and guidance are but two elements of the wider client experience – and we’ve identified an array of aspects which clients regard as important in their overall client experience with their wealth managers. So why not pick up the phone and give our team a call? We’ve successfully rolled this out in the UK with some prominent private client investment managers and global players too. The results are both exciting and disconcerting – but most importantly, actionable.

There will no doubt be other issues which emerge over the year as well – so please do not consider this list exhaustive, but rather themes I think will dominate strategists and their thinking.

Thought for the week:

“If you are willing to do only what’s easy, life will be hard. But if you are willing to do what’s hard, life will be easy.” – T. Harv Eker

News from the world of wealth:

Standard Chartered names Barclays banker as new global private banking head – Reuters

Banque SYZ SA joins the top 20 of Swiss private banks – Globe Newswire

FCA publishes consultation paper on MiFID II – Finextra

EU regulators raise concerns over ‘inconsistent’ robo-advice rules – Citywire

Julius Baer to buy Commerzbank Luxembourg arm for 68 mln euros – Reuters


Coming events to the world of wealth:

Financial services conference speakers

Scorpio Partnership is attending the highlighted events.  We look forward to seeing you there!


Photo from Ruocaled used under creative commons license


Ruohan Wang Scorpio PartnershipAuthor:  Ruohan Wang, Analyst at Scorpio Partnership

Education:  Ruohan holds a Bachelor’s degree in Joint Honours Economics and Finance from McGill University.

Role with us: Ruohan joined Scorpio on the graduate scheme. She works on a variety of projects and has recently conducted quantitative research analysis for thought leadership initiatives and client experience surveys.

And at the weekends:  Ruohan enjoys playing the piano and looking out for anything Canadian-related in London.

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