Investment in systems, people and infrastructure to transform the front office is a pressing requirement for private banks and wealth managers as they are forced to compete more aggressively to protect and grow revenue in difficult markets. So says the tenth global private banking/wealth management survey by PriceWaterhouseCoopers.
The research indicates that competition among firms will be most intense for clients higher up the wealth pyramid, with 71% of survey respondents expecting to increase the number of ultra high net worth clients, but only 14% expecting rising numbers of affluent clients.
Bruce Weatherill, global private banking/wealth management leader, PricewaterhouseCoopers says: "The needs of private clients are complex, particularly at the high net worth and the ultra high net worth level. Wealth managers are experiencing problems in delivering the high levels of client service that they promise and have not invested adequately in transforming the front office to achieve this."
Wealth managers that take an holistic approach to client relationship management, shift the focus of product development to customer needs and invest in their client relationship managers both in terms of training and reward will be best placed to attract and retain clients, he says.
Focus will also be critical, he says, with a back-to-basics approach encouraging further outsourcing of non-core products and services and open product architecture.
With many firms struggling to comply with a burgeoning regulatory burden, PwC forecasts more consolidation ahead. This process will bring gains and economies of scale in the front and back office, but costs still need to be kept under iron control
Concludes Weatherill: "The green shoots of recovery are clearly visible for wealth managers, but only for those who invest in their valuable client relationships, adapt to changing clients needs and tougher market conditions."
Survey participants predict asset growth rates in domestic markets over the next year of some three per cent in Europe, significantly lower than the 13% growth rate participants predicted in the 2001 survey.