A moneyball approach to wealth management

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Smaller and midsized banks can play in the wealth management big leagues, but they have to use some Moneyball type tactics to compete and win against the big budget competition.

Before the financial crisis, a “Field of Dreams” approach worked– if you built it, they would come. An environment of deregulation, falling interest rates, a rising stock market and a seemingly unlimited supply of talent allowed banks the luxury of focusing largely on acquiring clients, almost regardless of cost. Now with compressed margins, skittish investors hoarding cash and a changing competitive landscape, new tactics are required

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A moneyball approach to wealth management

  1. 1. 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA Tel: 404-855-4604 | www.banksolutionsgroup.com A Moneyball Approach to Wealth Management JP Nicols, CFP® Partner Experts in the Business of Banking
  2. 2. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 2 9 10Out of banks Are considering a serious overhaul of their strategy, and 40% Say wealth management will be an important part of that strategy. Source: KMPG, American Banker 6/12
  3. 3. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 3 But the game has changed. The era of “build it and they will come” is over.
  4. 4. Everyone plans to take market share from everyone else Where will the growth come from? Bank Solutions Group, LLC | A leader in financial services industry consulting 3% 5% 6% 19% 40% 49% 79% Acquistion Expansion Focus on Affluent Clients Lower costs Unsure Other No growth expected Source: WealthManagement.com survey of 648 wealth managers from all channels (Oct 2012) Page 4
  5. 5. Five massive shifts define a new era in wealth managment Bank Solutions Group, LLC | A leader in financial services industry consultingPage 5 Low Growth/ Low Yield Regulatory Environment Competitive Environment Demographic Shifts Technology Shifts
  6. 6. *Up to 90% of heirs plan to leave their family’s institution. Huge wealth transfer opportunity over the next couple of decades Bank Solutions Group, LLC | A leader in financial services industry consulting Baby Boomers Gen X Gen Y $41 Trillion* Wealth of Gen X + Gen Y expected to exceed Boomers by 2018 Page 6
  7. 7. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 7 How Can Smaller to Midsized Financial Institutions Compete in the Big Leagues?
  8. 8. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 8 A Moneyball Approach to Wealth Management
  9. 9. The $1-$10MM investor space is twice as profitable and is growing twice as fast as the $10MM+ space, according to McKinsey & Co. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 9 Bigger isn’t Always Better
  10. 10. Traditional metrics such as Assets Under Management and Loan Volume are poor predictors of actual financial success. Today’s key metrics must favor measures of productivity and profitability over raw volume growth. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 10 Focus on the Right Metrics
  11. 11. It’s nice to have batting champs, but it’s even better to play in October. Likewise, wealth managers need to focus on the activities that are correlated to maximizing profitable growth over the long run. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 11 Focus on Wins Not Hits
  12. 12. According to WISE Gateway, allocated costs can impact margins by as much as 30-40%. Get behind the numbers to understand the true costs and ROI opportunity. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 12 Look Beyond Allocated Costs
  13. 13. Firms should expect $2.50 to $5.00 for every dollar of front-line compensation expense, firms supporting growth and/or in newer markets will take some time to reach this level as new hires ramp up production levels. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 13 Invest, Support and Challenge the Client-Facing Staff
  14. 14. The ideal front-line support to maximize revenue growth is a little less than one support person for every client-facing professional. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 14 Role Players Can be More Important then Sluggers
  15. 15. BSG Wealthcare Model Bank Solutions Group, LLC | A leader in financial services industry consultingPage 15 Standardized Process Specialized LowTouchIntimacy/EQHighTouch Execution Diagnosis Adapted from True Professionalism by David H. Maister © 1997 David H. Maister , used by permission • Standard Credit • Product Advice • Estate Settlement • Discretionary Trusts • Complex Issues • Goal Setting • Financial Planning • Complex Estates • Succession Issues • Nonfinancial Issues • Moral Support • Custom Credit • Asset Allocation • Basic Trust Admin • Complex Assets • Basic Estate Plans • Basic Service • Statements • Web and mobile • Standard products • Transactions • Item processing
  16. 16. They just have to make the right investments and establish the right metrics to manage them. Bank Solutions Group, LLC | A leader in financial services industry consultingPage 16 A Moneyball Approach to Wealth Management There is no reason for smaller banks to relegate themselves to the minor leagues.
  17. 17. Email: jp.nicols@banksg.com | Twitter: @JPNicols | Tel: +01 425-522-3579 Bank Solutions Group, LLC | A leader in financial services industry consultingPage 17 He is a partner at Bank Solutions Group and the founder and CEO of the research and innovation firm Clientific. He has served in various leadership positions at top financial institutions, including as the first Chief Private Banking Officer for U.S. Bank. In addition to holding a BA and MBA, he is a graduate of the Cannon Personal Trust School and has held the CFP® designation since 1996. He writes about the leadership, advice and innovation for the future of wealth management on his Affluent Strategies blog at jpnicols.com. A leading voice for leadership and innovation for the future of financial services in affluent markets, JP combines 20+ years of experience with a fresh perspective on combining high-tech with high-touch. His work has been featured in some of the industry’s top publications, including American Banker, BAI Banking Strategies and Bank Innovation. About JP Nicols, CFP®
  18. 18. About BSG Experts in the Business of Banking
  19. 19. Experts in the Business of Banking • That banking is a business – essential, unique, and embattled as never before • Banking today requires the wisdom of the veterans, coupled with a vision for the future • Expertise isn’t talent or intelligence or any one thing • Expertise is the combination of skill-honed, time invested, success reinforced, and trust earned • True experts earn long-term relationships “Researchers have settled on what they believe is the magic number for true expertise: ten thousand hours.” Malcolm Gladwell, Outliers: The Story of Success Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com As “Experts in the Business of Banking” we understand…
  20. 20. BSG is a financial services industry consulting firm with… • The scale and skills to fill the gap between small boutique firms and “Big Firms” • Deep industry expertise covering 11 practice areas • Consultants in 11 countries on 5 continents combining global insight with local expertise • Professionals averaging 15 years of industry experience, 10 years as consultants • Projects leveraging small, cost effective teams of 3-5 industry experts • Shorter timeframe engagements • Additional local resources accessible to support larger projects Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  21. 21. Our 11 practice areas encompass the “business of banking” • Consumer and Small Business Banking • Wealth Management and Trust • Payments and eCommerce • Commercial Lending • Insurance • Risk and Compliance • Operations • Information Technology • Treasury and Finance • Marketing and Segmentation • Organizational Effectiveness Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  22. 22. How can we help? (Partial list representative of past engagements) • Corporate and Business Line Strategy • Competitive Assessment • Performance Management • Revenue Growth • Marketing and Market Planning • Product Management and Pricing • Segmentation • Value Proposition Development • M&A Support • Risk Management • Business Transformation • Bank Turnaround / Recovery Planning • Project Management / Implementation • Distribution and Planning Tactics • Vendor Sourcing / RFI / RFP • Contract Negotiation • Operational Reengineering • Operational Assessment • Peer and Industry Benchmarking • IT Assessment and Planning • Sales and Service • Strategic Finance and Treasury • Portfolio Valuation • Expense Improvement • Regulatory Actions • Compliance Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  23. 23. BSG has developed several proprietary, cost effective accelerated performance improvement projects that require just six to eight weeks to complete and provide immediate results Quick ImpactTM Revenue Enhancement Quick ImpactTM Cost Improvement Quick ImpactTM Vendor Contract and Pricing Review Quick ImpactTM Line of Business Peer Benchmarking and Competitive Assessment Quick ImpactTM Services Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  24. 24. Hundreds of successful engagements over 30+ years in 30+ countries • About half in the U.S • Argentina • Australia • Bahamas • Barbados • Belgium • Bermuda • Brazil • Canada • Chile • Colombia Experts in the Business of Banking • Dominican Republic • Dubai • El Salvador • France • Germany • Hong Kong • Indonesia • Italy • Jamaica • Malaysia • Mexico • Panama • Peru • Puerto Rico • Saudi Arabia • Singapore • Spain • Thailand • United Kingdom • United States Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  25. 25. Just a few of the hundreds of clients we have served Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  26. 26. Our Partners are at the top of their game – seasoned practitioners with successful consulting backgrounds Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com Ann S. Taylor Partner ann.taylor@banksg.com Mark Grossman Partner mark.grossman@banksg.com Kim Andres Partner kim.andres@banksg.com Rob Stansfield Partner rob.stansfield@banksg.com Russ Drummond Partner russ.drummond@banksg.com Charles Albano Partner charles.albano@banksg.com Craig Page Partner craig.page@banksg.com Wilton Dolloff Partner wilton.dolloff@banksg.com Robert Hughes Managing Partner bob.hughes@banksg.com Steven Warner Partner steven.warner@banksg.com Gregory Noonan Partner greg.noonan@banksg.com Michael Bradley Partner mike.bradley@banksg.com Peter Hetzler Managing Partner peter.hetzler@banksg.com Alan Thompson Partner alan.thompson@banksg.com John Muell Partner john.muell@banksg.com Steven Appenzeller Partner steven.appenzeller@banksg.com John Taylor Partner john.taylor@banksg.com Les Riedl Senior Managing Partner les.riedl@banksg.com Darryl McGee Partner darryl.mcgee@banksg.com JP Nicols Partner jp.nicols@banksg.com
  27. 27. With teams in 11 countries, we gain advantage from a global perspective, leveraging fresh ideas and new approaches from colleagues in different markets  Atlanta (Headquarters)  Canada  Mexico  United Kingdom  Belgium  Colombia  Peru  Australia  Hong Kong  Thailand Experts in the Business of Banking  Puerto Rico Los Angeles   Miami  New York  Dallas Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com  Seattle
  28. 28. What our clients say “I bring BSG’s expert consultants back every time we need fast recommendations that I know will stand up during the implementation. They have never let me down.” EVP of Top 50 bank “These days we don’t have time for consulting project oversight like we used to. BSG’s consultants can work independently.” CEO of Community Bank “We don’t worry about scope-creep with BSG. They stay focused on results and timelines.” CTO of Regional Bank “So far I haven’t come across a problem that stumps BSG ‘s veteran consultants. They’ve been around, they’ve seen it all, and nothing fazes them.” CBO of International Bank Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  29. 29. Six core principles define our culture and our conduct 1. Act with Integrity 2. Work with Passion 3. Deliver Value 4. Commit to Service 5. Value Relationships 6. Be Accountable ​ Experts in the Business of Banking Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
  30. 30. Experts in the Business of Banking 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA Tel: 404-855-4604 | www.banksolutionsgroup.com

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