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The Double-Edged Sword of the Wealth Continuum

Movement along the wealth continuum, where clients’ wealth can both rise and fall, has intensified in recent times and has brought with it a raft of challenges for wealth managers. Although investors’ portfolios are by nature never stagnant, it is the sheer velocity and frequency of change that is proving tricky to deal with.

The difficulty comes from the shifting requirements of investors as they transition from one level of wealth to another. In its most simplistic form, very often the more money a client has the more transparency and detailed performance reporting they need, and vice-versa. This could include shifting requirements for analytics, such as exposures, performance, attribution and risk.

Supporting this view, the ‘2011 China Private Wealth Study’ from Bain & Company suggested that wealth managers’ objectives are now much more diverse than they were in 2009. But what does this mean for the wealth manager?

For the high number of wealth managers that use separate platforms for each business unit, moving clients from one wealth level to another is challenging. If a client changes their status, their full asset history has to be migrated between the platforms. This can be a hugely complex and laborious task.

Already a major headache in North America, the rapid rise of incomes among the super-rich has escalated the issue. This is especially true in Asia, where the number of billionaires has almost tripled in the past two years. But it’s not just the rise of the super-rich that is having an effect on the requirements of investors and consequently wealth managers; the financial crisis and regulatory pressures have also left their mark. To attract and maintain customers, wealth managers have put an increased focus on portfolio analytics, as well as compliance.

There is a growing demand for analytics that can span the whole of the wealth continuum. By providing just one analytical platform serving all business units, wealth managers can deliver a positive client perception, with a similar user experience. It also goes a long way in ensuring a seamless migration between business units.

It’s clear that there is a need for wealth managers to future proof their businesses. There will always be clients moving along the wealth continuum, with the corresponding shift in analytical needs. And in emerging economies, requirements for superior analytics will only increase – as will regulation. By utilising one system with a common operational model and the capability to scale as AUM (Assets Under Management) scales, wealth managers can improve their business agility and performance while simultaneously harnessing synergies.


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