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Understand demand for digital technology in wealth management, as well as
cloud-based solutions for firms to transform their businesses
Wealth Management in the Digital Age
financial services cloud
Table of Contents
1	Introduction	 3
2	 Exciting Times in the Global Wealth Management Industry	 4
	 2.1.	Record Levels of HNWI Population and Wealth	 4			
	 2.2.	An Industry Marked by Disruption	 5
3	 The Future of Wealth Management is Digital	 7
	 3.1.	Busting the Digital Myth	7
	 3.2.	HNWI Digital Demand and the Implications of Inaction	 9
	 3.3.	A New Dynamic – Wealth Manager Digital Demand	 14
4	 A New Value Proposition for the Wealth Manager of the Future	 17
	 4.1	 Wealth Managers Continue to Play a Vital Role	 17
	 4.2.	Needs of Younger HNWIs Change the Dynamic	 17
	 4.3.	The Evolving Role of the Wealth Manager	 19
5	 Firms Need to Ingrain Digital Throughout Client Experience	 21
	 5.1	 STRATEGIC: Build A Transformative Digital Mindset	21
	 5.2.	TACTICAL: Equip Wealth Managers for Success	 22
6	 Conclusion: Faced with the Need to Rebuild, Cloud-Based
	 Platforms Are a Key Lever of Firms’ Digital Success	 24
References	26
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of their respective owners.
While global high net worth individual (HNWI1
) wealth is at an all-time record and is up
over 70% since 2008, this wealth growth has coincided with decreased profitability
for wealth management firms.
One of the biggest challenges for firms when addressing the revenue and profit
dilemma is to effectively leverage digital technology and the latest in cloud platforms
to transform their businesses. For example, our research shows that 46.5% of wealth
managers globally are not satisfied with the digital tools provided to them by their
firms. The dynamic is compounded as the majority of HNWIs state they will leave
their wealth management firm for the lack of an integrated channel experience.
Beyond just retaining existing HNW clients and wealth managers, the ability to
leverage digital technology to attract new clients and revenue through data-enabled
propositions for clients will be critical to firms’ profitability in the future.
One of the most critical dimensions to building digital capability is the ability to
tap into new data possibilities and the rapid evolution of third-party FinTech firms,
to bring the best capability to clients. Platforms such as those leveraging cloud
computing technology may offer firms immediate revenue-generating possibilities
on top of wealth manager productivity and efficiency gains, while also serving as
a future-proof and scalable platform to keep up with the fast pace of technological
change, especially the evolving FinTech ecosystem.
Introduction
1	
HNWIs are defined as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables
3
the way we see itWealth Management
2.	 Exciting Times in the Global Wealth 		
	 Management Industry
2.1. Record Levels of HNWI Population and Wealth
If there is one thing that can be said about the global HNWI population, it is that they
are exceptionally resilient (see Exhibit 1).
Capgemini research identified the following pillars of the performance of the global
HNWI population since 2008:
•	 RECOVERY: Global HNWI population and wealth was over 70% higher at year-
end 2014 than year-end 2008 (the crisis low-point for HNWI wealth), representing
almost 10% annual growth.
•	 CONSISTENCY: The global HNWI population has grown every year since 2008,
with only one year (2011) less than 7% annual growth.
•	 BALANCE: All wealth bands showed strong growth, with HNWIs in the US$1-30mn
category growing the most, at just over 72% over the 2008-2014 period.
•	 FORECAST: Global HNWI wealth is forecast to cross US$70 trillion by 2017,
growing by 7.7% annually from the end of 2014. This growth is expected to be led
by Asia-Pacific which is forecasted to surpass North America in HNWI wealth.
If there is one thing
that can be said
about the global high
net worth individual
population, it is that
they are exceptionally
resilient
Exhibit 1: HNWI Investable Wealth Forecast by Region (US$ Trillion), 2008–2017F
Note: Chart numbers may not add up due to rounding
Source: Capgemini Financial Services Analysis, 2016
7.37 9.65 10.82 10.71 12.02 14.20 15.82
21.219.06
10.67
11.64 11.37
12.70
14.88
16.23
19.91
8.32
9.50
10.19 10.07
10.90
12.39
12.97
16.52
5.79
6.66
7.27 7.07
7.54
7.70
7.66
8.39
1.40
1.47
1.65 1.67
1.81
2.11
2.28
2.72
0.84
1.01
1.15 1.12
1.25
1.34
1.44
1.70
0
15
30
45
60
75
2008 2009 2010 2011 2012 2013 2014 2017F
HNWIInvestableWealth(US$Trillion)
Total 39.0
Total 42.7
Total 42.0
Total 46.2
Total 52.6
7.7%
Annualized
Growth
CAGR
2014–2017F
Total 70.5
Total 56.4
Europe
NorthAmerica
Asia-Pacific
Latin America
Middle East
Africa
7.0%
10.3%
8.4%
3.1%
5.8%
6.0%
Global 7.7%
Total 32.8
4 Wealth Management in the Digital Age
There have however been several winners and losers across markets (see Exhibit 2).
Looking at the top 25 markets by HNWI population (representing over 90% of the
global total), we can see three clear categories of performance.
On the one hand, the winners include markets characterized by global financial centers
(Hong Kong, Singapore), key developing economies (China, India), and commodity-rich
nations (Norway, Kuwait). On the other hand, those in the bottom of the growth race
are understandably nations that have struggled economically since the crisis, with Latin
American and European nations the most prevalent. In the middle is a true mix of markets
including the U.S., which is the largest wealth market at around 30% of the global total.
The U.S. has recovered well since the crisis, especially given its significant size, with
wealth creation concentrated in the 12 top metropolitan statistical areas (MSAs).
Since 2008, almost 23% of new HNWI wealth added globally has come from New
York, Los Angeles, Chicago, Washington D.C., San Francisco, Boston, Houston,
Philadelphia, San Jose, Dallas, Detroit, and Seattle. In 2014 alone, these 12 MSAs
added $1 trillion in HNWI wealth, helping to drive the 9.4% overall increase in the U.S.
to a new record of $15.2 trillion.
2.2. An Industry Marked by Disruption
While the rise in global HNWI population and wealth is an undoubted boon for wealth
management firms, the industry is being disrupted by a variety of factors that are
re-shaping firms’ profit dynamics and relatedly, the competitive landscape of the industry.
For instance, wealth management firms are struggling to translate increased HNWI
wealth into profit. While wealth is up significantly on 2008 levels, the cost: income
ratio of the industry has failed to recover, having gone from around 62% in 2007 to
84.4% in 2014 – a highly concerning rise.3
In 2014 alone, the top
12 U.S. metro areas
added $1 trillion in
HNWI wealth, helping
to drive the 9.4%
overall increase in the
U.S. to a new record
of $15.2 trillion
Exhibit 2: HNWI Population and Wealth CAGRs4
for Top 25 Markets (%), 2008–2014
Note: Bubble size represents HNWI wealth in 2014
Source: Capgemini Financial Services Analysis, 2016
Fastest-
growing cluster
Moderate-
growth cluster
Below-average
growth cluster
Brazil
Italy
Mexico
France
Germany
Argentina
Spain
U.S.
Saudi Arabia
Netherlands
Canada
Russia
Australia
South Korea
Japan Switzerland
Austria
0%
16%
4%
8%
12%
20%
0% 5% 10% 15% 20%
HNWI Wealth 2008-14 CAGR
HNWIPopulation2008–14CAGR
GlobalAverage
(9.5%)
Global Average
(9.3%)
= US$1Trillion
Sample bubble
China
India
Kuwait
Taiwan
Norway
Hong Kong
Singapore
25.5% Wealth
24.4% Pop
U.K.
3	
“Key findings from Private Banking Benchmark 2015”, Scorpio Partnership, 2015
4	
CAGR refers to compound annual growth rate which provides a measure of that constant rate of return over the time period.
5
the way we see itWealth Management
The causes are myriad, though several stand-out:
•	 Shifting HNWI Demographics and Demands
–– The number and influence of younger HNWIs is increasing as they inherit wealth
and create wealth of their own, impacting firms not prepared for their high levels
of tech-savviness and expectations for the client experience
–– HNWIs are also holding significant amounts of their wealth in cash (25.6%5
) and
other asset classes that are not profitable for firms
•	 Increased Regulatory Pressure
–– The volume and pace of regulatory change has led to a significant increase in
costs (spanning people, documentation, IT and infrastructure, and opportunity
costs, in addition to the penalty and reputational costs of non-compliance) and
constraints in delivering an integrated client experience
–– Wealth managers are spending more time on non-value add activities related to
compliance, impacting their ability to prospect and serve HNW clients
•	 Entry of New Competitors
–– With increasing competition and investment performance transparency from
online brokerages, combined with market turbulence, wealth management firms
are challenged to differentiate their services beyond investment performance
–– Additional competition is now coming from FinTech players targeting different
aspects of the wealth management value chain
Firms are focused on these challenges in numerous ways, though we see ten general
areas of focus in the coming 12-18 months:6
1.	 Firms are increasingly building on their lending solutions and integrated
banking experience with an aim to drive growth and cater to the complex needs
of HNWIs
2.	 Wealth management firms are increasingly adopting a utility-based model for their
middle- and back-office functions in order to optimize operations and reduce costs
3.	 Identity thefts and personal financial crimes are increasing at a faster rate, resulting
in higher spending on cyber security
4.	 Wealth management firms are increasingly using cloud computing (for non-critical
tools and applications) to reduce infrastructure costs
5.	 Enhanced used of technology by younger generations is leading to increased focus
on, and investments in, digital and self-service capabilities by firms
6.	 Wealth management firms are increasingly focusing on social impact advice as
social impact investments by HNWIs are gaining foothold across the globe
7.	 Rise of automated advisors is leading to the emergence of new business models
8.	 Firms are increasingly using predictive analytics to process the vast amounts of
structured and unstructured data, with an aim to better understand their clients and
enhance client experience and loyalty
9.	 Global wealth management players are reassessing their international
operations in the light of increasing regulations and challenges facing the industry
10.	Firms are investing in financial planning and advice tools as a means to
enable and empower wealth managers to provide personalized and relevant
recommendations and free up their time for value add activities.
While the trends cover several areas, a common theme underpins many of them –
The importance of digital technology. The next section looks at this in more detail.
5	
“2015 World Wealth Report”, Capgemini and RBC Wealth Management, 2015
6	
“Top 10 Trends in Wealth Management in 2016”, Capgemini, 2016 (https://www.capgemini.com/resources/wealth-management-top-10-trends-for-2016)
6 Wealth Management in the Digital Age
3.	The Future of Wealth Management 			
	 is Digital
3.1. Busting the Digital Myth
For years, the wealth management industry has been resistant to transformative
digital technology, with several common reactions being used as an excuse for not
moving forward quickly. We consider these “myths” and while the industry has begun
to accept that more needs to be done on digital, the pace is still far too slow. These
myths are:
•	 MYTH 1: “HNWIs do not want digital tools, just face-to-face contact”
–– The Reality: While the direct relationship is important, over a quarter of HNW
clients outright prefer digital contact to direct contact, rising across regions and
age groups7
•	 MYTH 2: “Digital channels will cannibalize our business”
–– The Reality: Not investing sufficiently in digital will result in client, advisor, and
asset loss to competitors
•	 MYTH 3: “Wealth managers will not use digital tools”
–– The Reality: Wealth managers are increasingly recognizing the value that digital
tools provide to deepen the relationship and facilitate flow of information, such
as visualization on tablets (see page 15)
•	 MYTH 4: “True omni-channel capability is too difficult”
–– The Reality: It is difficult, but some firms are already part-way through the
journey to 360 portfolio views and data analytics
•	 MYTH 5: “It is a low priority compared to other issues”
–– The Reality: Around 56% of firms have digital as a top three priority for the
short-term, and almost 69% have it as top three priority over the medium term,8
so not moving forward will mean being left behind9
As a result, the wealth management industry’s digital maturity is lagging far behind
the majority of other industries, including those in financial services like insurance
and retail banking (see Exhibit 3).
Firms have a choice to make on whether they will bridge the gap, though the choice
is an easy one. Since wealth management clients have relationships with these more
mature industries, including insurers and retail banks, they will not accept a lower
standard from their wealth manager to whom they often pay for higher fees.
The wealth management
industry’s digital maturity
lags behind the majority
of other industries,
including those in financial
services like insurance
and retail banking
7	
“2014 World Wealth Report”, Capgemini and RBC Wealth Management, 2014
8	
Short term refers to 6-12 months while medium terms refers to 3 years from the time we asked the firms in Q1 2014
9	
“2014 World Wealth Report”, Capgemini and RBC Wealth Management, 2014
7
the way we see itWealth Management
Additionally, there are four fundamental forces in the wider landscape that serve as
unstoppable digital tailwinds:
•	 “Google-ification”
–– Google has driven the information age through an individuals’ ability to find a
wide variety of information quickly, easily, and for free
•	 “Apple-ification”
–– Apple established the customer experience at being at the center of a
firm’s strategy
•	 “Amazon-ification”
–– One of the first firms to articulate and deliver a contextual and sales-focused
digital value proposition
•	 “Facebook-ification”
–– Drove widespread adoption of digital social interaction
Given that the above services are generally free and deliver highly positive customer
experiences, wealth management firms must begin moving forward with their own
digital transformation programs.
Online banking offered in
1981 by four major banks
Exhibit 3: Digital Penetration of Wealth Management vs. Real World, 1980–2020E
Source: Capgemini Financial Services Analysis, 2016
1980 1990 2000 2010 2020(E)
Sophistication
Low
High
General Website Banking
General Mobile Banking
General Website, Mobile,
Social Media Usage in
Real-World (Non-Banking)
WM Website
WM Mobile/Social Scenario 1
WM Mobile/Social Scenario 2
Dramatic rise in smartphone sales pushed usage
of social media and the internet to new heights,
aided by digital growth in emerging markets
Popularity of the internet began
to explode in the 1990’s
Launch of social media such as
Facebook, Twitter, LinkedIn etc.
continued to drive growth in
internet usage
Gap between
Wealth Management and
General Digital Sophistication
eCommerce Industry
Launch
Launch
WM firms appreciate need to
go digital, but still struggling
to develop clear roadmap
M-banking launched with
initial success
8 Wealth Management in the Digital Age
3.2. HNWI Digital Demand and the Implications of Inaction
Firms need to understand the extent to which HNWIs digital capability in their wealth
management relationships. Such a dynamic can be looked at through three lenses:
•	 Future digital demand from HNWIs
•	 Digital channel and capability segmentation
•	 Attrition risk for firms lacking digital capability
Future Digital Demand from HNWIs
It is clear that digital is fundamental to the future of the industry, given that the clear
majority of HNWIs globally state that they expect the majority or indeed entire wealth
management relationship to be digital. The 2014 Global HNW Insights Survey10
found
that 64.2% of HNWIs globally expect their future wealth management relationship
to be mostly or entirely digital, reaching as high as 82.3% in Asia-Pacific (excluding
Japan). Even in more developed markets, future digital demand is high, at 61.5% of
all HNWIs in Europe and 57.7% in North America.
Additionally, future digital demand is consistent across wealth bands – disproving
another myth that those with the most wealth are not interested in digital – and
is especially true for younger HNWIs, who represent the future of the wealth
management industry (see Exhibit 4).
Future digital demand
is consistent across
wealth bands –
disproving another
myth that those with
the most wealth are
not interested in digital
– and is especially true
for younger HNWIs
10	
Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014
Exhibit 4: Extent to Which HNWIs Consider Entire or Most of Future Wealth Management Relation to be Digital by
Age and Wealth Band, (% of Respondents), Q1 2014
Note: Question asked, “In FIVE YEARS, to what extent would you like your wealth management relationship to be conducted through digital channels?”
Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014
54.5%
73.5%
66.8%
64.4%
0% 25% 50% 75% 100%
$1m-$5m
$5m-$10m
$10-$20m
$20m+
Under 40
Age 40-49
Age 50-59
Age 60+ 47.6%
53.9%
70.2%
82.5%
0% 25% 50% 75% 100%
By Age By Wealth Band
9
the way we see itWealth Management
Digital Channel and Capability Segmentation
To move forward with a digital strategy, it must first be defined. Day-to-day
interactions between HNWIs and wealth managers cover a wide range of activities
that serve to inform clients, engage them, and enable transactions to be carried out,
either by HNWIs themselves, or on their behalf (see Exhibit 5).
•	 Inform-type capabilities encompass researching the wealth management firm
and its capabilities, downloading research and education, accessing news and
content, searching for products, services, and investments, as well as evaluating
portfolio information and performance.
•	 Engage-type capabilities include obtaining advice and service from the wealth
manager, engaging with multiple experts at the same time (such as for financial
planning discussions), and conducting general communications with the wealth
manager, including document exchange and recurring portfolio reviews.
•	 Transact-type capabilities include executing transactions and transferring
funds between accounts.
Exhibit 5: Understanding Channel Landscape in Wealth Management
Source: Capgemini Financial Services Analysis, 2016
Parent
Layer
Network
Layer
Interaction
Layer
Client
Layer
Website
Execute a
Transaction
Transfer
Money
between
Accounts
Research
Wealth
Management
Firm and
Capabilities
Download
Research &
Education
Content/
News
Search for
Products,
Services,
and
Investments
Access
Portfolio
Information/
Evaluate
Performance
Engage with
Multiple
Experts at
Same Time
General
Wealth
Manager
Communi-
cations Inc.
Doc Exchange
Obtain
Advice/
Service
from Wealth
Manager
Mobile Device Social Media Email Video Voice In-Person
Capability
Layer
Retail Banking Corporate Banking
Data Repository for all Business Lines
INFORM ENGAGE TRANSACT
Digital Channels – Core Focus Other Channels
Investment Banking Asset Management Wealth Management
Relationship
Manager + Team
Support Functions
10 Cloud-Enabled Transformation in Insurance
Some of the biggest
disruption is coming
from emerging digital
channels of mobile
applications, social
media, and video
Each one of these Inform, Engage, and Transact capabilities can be executed
through any one of a number of channels, including websites and mobile
applications, as well as in-person or telephone interactions.
Face-to-face interactions have long been the industry standard and continue to
hold significant sway, but the margin of preference for them is slight and expected
to fade as the next generation gains in prominence. For instance, the 2014 Global
HNW Insights Survey identified that HNWIs prefer digital channels over direct ones to
execute transactions (see Exhibit 6), with HNWIs in North America and Asia-Pacific
(excl. Japan) having the strongest preferences for executing transactions via the
website.
The pattern was similar when looking at the Inform capabilities, with HNWIs in Asia-
Pacific (excl. Japan) expressing the largest preference for using websites rather than
direct contact to obtain information.
The picture is slightly different when it comes to engaging with wealth managers,
given that HNWIs—especially those in North America—exhibit a preference for direct
rather than digital interactions.
Some of the biggest disruption is coming from emerging digital channels of mobile
applications, social media, and video, especially when segmenting the HNW client
base by age. As Exhibit 7 shows, the trend towards digital is even more prevalent
for HNWIs under the age of 40, and cuts across Inform, Engage, and Transact. This
is especially notable in the divergent demand for mobile applications, social media,
and video – tools that many firms and wealth managers are still not comfortable
providing or using.
Exhibit 6: HNWI Channel Importance for Different Wealth Management Capability Areas by Region, (% of
Respondents), Q1 2014
Note: Weighted average of respondents indicating importance level to difference capabilities per channel
Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014
North
America
58.4%
60.7%
48.5%
53.0%
60.6%
65.6% 66.1%
55.2% 55.1%
49.6%
62.2% 61.5%
58.3%
70.6%
49.8%
58.7% 59.1%
70.1%
0%
25%
50%
75%
100%
Respondents(%)
INFORM ENGAGE TRANSACT
North
America
Europe Asia-Pacific
(excl. Japan)
Europe Europe
Direct (In-Person, Phone) Website
North
America
Asia-Pacific
(excl. Japan)
Asia-Pacific
(excl. Japan)
11
the way we see itWealth Management
Of the three emerging forms of digital interaction, mobile applications received
the highest level of demand from HNWIs. Mobile applications can provide much
the same functionality as the website, while also offering the added elements of
spontaneity and convenience through a compact, dynamic interface.
Transact
Engage
Inform
Transact
Engage
Inform
Transact
Engage
Inform
Transact
Engage
Inform
Transact
Engage
Inform
Transact
Engage
Inform
40+
Under 40
In-Person/
Phone
Mobile
Applications
Social Media
Video
Website
Email
52.2%
50.6%
59.3%
57.6%
54.4%
49.4%
57.2%
53.3%
57.7%
44.7%
64.5%
61.4%
55.0%
51.5%
58.0%
56.0%
53.9%
45.2%
45.6%
25.5%
46.2%
25.9%
47.7%
22.5%
40.5%
18.9%
36.3%
20.2%
33.5%
12.2%
42.8%
20.1%
40.9%
24.0%
34.6%
14.0%
Exhibit 7: HNWI Channel Importance for Different Wealth Management Capability Areas by Channel,
(% of Respondents), Q1 2014
Note: Weighted average of respondents indicating importance level to difference capabilities per channel
Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014
12 Wealth Management in the Digital Age
The biggest implication
is the significant levels
of HNWI attrition risk for
not getting digital right
Exhibit 8: HNWI Propensity to Leave Wealth Management Firm Due to Lack of Integrated Channel Experience by
Demographics, (% of Respondents), Q1 2014
Note: Question asked, “To what extent do you agree or disagree with the following statement? 1. I expect my wealth management experience to be integrated
across all channels (personal, phone, digital) with a consistent level of service across all channels, for example, I should be able to start an activity on any
channel and finish on any another channel”, and “If your main wealth management provider could not offer this type of integrated wealth management
experience, would it prompt you to consider moving to another firm?”
Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014
65.3%
49.5%
60.5%
67.8%
79.7%
34.7%
50.5%
39.5%
32.2%
20.3%
0% 20% 40% 60% 80% 100%
Global
Age 60+
Age 50–59
Age 40–49
Under 40
65.3%
63.3%
70.0%
68.2%
65.3%
34.7%
36.7%
30.0%
31.8%
34.7%
0% 20% 40% 60% 80% 100%
Global
$20m+
$10m-$20m
$5m-$10m
$1m-$5m
By Region
By Wealth Band
By Age
Yes No
0% 20% 40% 60% 80% 100%
65.3% 34.7%Global
82.8% 17.2%Asia-Pacific ex Japan
62.7% 37.3%Europe
63.0% 37.0%Japan
87.1% 12.9%Latin America
75.6% 24.4%Middle East and Africa
56.4% 43.6%North America
In the most extreme
scenario of digital attrition,
firms would and wealth
managers lose an
estimated 56% of their
net income
Attrition Risk for Firms Lacking Digital Capability
We have seen that digital demand from HNWIs is significant, but what is the
implication for firms and wealth managers?
The biggest implication is the significant levels of HNWI attrition risk for not
getting digital right, as evidenced by Exhibit 8.
Regardless of region, age, or level of wealth, it is clear that there is significant risk
of HNWIs leaving their wealth management firm for a lack of an integrated channel
experience. The highest risk is in developing regions and amongst the younger
population of HNWIs, but is sufficiently elevated to be a concern regardless of
demographic factors.
Played out in a business scenario, the results would be significant, both to wealth
managers and their firms. As Exhibit 9 shows, in the most extreme scenario of
digital attrition, firms and wealth managers would lose an estimated 56% of their
net income.
13
the way we see itWealth Management
Exhibit 9: Hypothetical Digital Attrition Risk and Impact to a Wealth Manager and Wealth Management Firm
(US$), Q1 2016
Note: See assumptions in figure
Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014
$2,000,000
$396,000
$1,120,000
$484,000
56% net
income
loss risk
in this
scenario
POST-DIGITAL DISRUPTION (IF
DOES NOT REACT)
Wealth Manager Wealth Management Firm
PRE-DIGITAL DISRUPTION
$2.25BN
$871MN
$119MN
$1.26BN
$2.25BN
$270MN
$1.98BN
56% net
income
loss risk
in this
scenario
POST-DIGITAL DISRUPTION (IF
DOES NOT REACT)
PRE-DIGITAL DISRUPTION
Total
Annual
Fees –
Pre-Dis-
ruption
Firm and
Staff
Costs –
Pre-Dis-
ruption
Wealth
Manager
Net Annual
Income –
Pre-Dis-
ruption
Total
Annual
Fees –
Pre-Dis-
ruption
Operating
Costs –
Pre-Dis-
ruption
Firm Net
Annual
Income –
Pre-Dis-
ruption
Total
Annual
Fees –
Pre-Dis-
ruption
NEW:
Fee Loss
due to
Digital
Attrition
NEW:
Firm and
Staff Costs
NEW:
Wealth
Manager
Net Annual
Income
Total
Annual
Fees –
Pre-Dis-
ruption
NEW:
Fee Loss
due to
Digital
Attrition
NEW:
Operating
Costs
NEW:
Firm Net
Annual
Income
Assumptions
• $225 billion in HNWI assets under management (AuM)
o 3000 registered independent advisors (RIA) in the U.S.
o 75 HNW clients per advisor
o Average HNW client AuM of $1 million
• Average portfolio and commission fees of 100 bps per client
• Firms retains 12 bps per client after operating costs (advisor remuneration,
staff, IT, etc.) and these do not vary with asset size
• Poor digital technology/capability persists with no corrective action taken
• All HNWI clients stating they would leave (56%) do actually leave their RIA
• $200 million in HNWI assets under management (AuM)
o 20 HNW clients
o Average HNW client AuM of $10 million
o US-only
• Average portfolio and commission fees of 100 bps per client
• Wealth manager retains 45 bps per client after firm/platform and staff costs
removed (these costs cannot be automated)
• Poor digital technology/capability persists with no corrective action taken
• All HNWI clients stating they would leave (56%) do actually leave
Assumptions
$2,000,000
$900,000
$1,100,000
Over 50% of wealth
managers globally
state they are at least
somewhat likely to
leave their firm in the
short-term
While these scenarios are highly unlikely since attrition would be more phased over
time (and very few firms would take no action), it nonetheless paints a clear picture of
the amount of profit at stake as the industry transforms.
3.3. A New Dynamic – Wealth Manager Digital Demand
The attrition risk is not only from HNWIs. Wealth managers are also looking at leaving
their current firms, as over 50% of wealth managers globally state they at least
somewhat likely to leave their firm in the short-term (see Exhibit 10). Given that over
66% of HNWIs are likely to follow their wealth managers to their next employer,11
this
represents a significant burning platform for firms to address.
11	
Capgemini and RBC Wealth Management Global HNW Insights Survey 2015, Q1 2015
14 Wealth Management in the Digital Age
Only 53% of wealth
managers globally are
at least somewhat
satisfied with wealth
manager digital
capabilities
Exhibit 10: Wealth Manager Propensity to Leave Wealth Management Firm (% of Respondents), Q1 2015
Global Japan North America Europe Latin America
5.9%
2.0% 11.1%
6.7% 1.6%
4.0%
47.1%
64.0%
51.2%
43.8%
35.1%
22.0%
24.7%
26.0%
20.5%
34.4%
23.8%
26.0%
22.4%
8.0%
17.1% 15.2%
39.5%
48.0%
0%
25%
50%
75%
100%
Asia-Pacific
(excl. Japan)
Respondents(%)
Highly Likely
Somewhat Likely
Somewhat Unlikely
Highly Unlikely
Note: Question asked: How likely are you to leave your firm within the next 6–12 months? Question was asked in Q1 2015
Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey 2015
Exhibit 11: Wealth Manager Satisfaction on Digital Capability of Firms for Advisory Capabilities
(% of Respondents), Q1 2015
29.6%
25.8%
22.3%
29.6% 28.8%
34.8%
16.6%
28.8%
26.1%
20.5%
13.7%
11.5%
7.3%
10.8%
14.1% 9.8%
7.0%
2.3%
0%
25%
50%
75%
Global Latin America Asia-Pacific
(excl. Japan)
Europe North America Japan
Respondents(%)
Extremely Satisfied
Satisfied
Somewhat Satisfied
53.5%
49.4% 48.5%
65.3%
59.9%
62.5%
Note: Question asked: How satisfied are you with the digital capabilities you have access to in the following areas?
Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey 2015
A significant lever for firms to arrest this churn is by focusing on emerging strong
digital demand from wealth managers. Exhibit 11 shows that when it comes to the
key digital capabilities for wealth managers themselves (such as real-time access
to client profile and market information and advisor desktop with all applications on
a single platform), only 53.5% of wealth managers globally are at least somewhat
satisfied with wealth manager digital capabilities. Additionally, only 23.9% are
“Satisfied” or “extremely” satisfied, implying very significant correlation between
digital capability and wealth manager attrition risk.
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the way we see itWealth Management
Exhibit 12: Wealth Manager Satisfaction on Digital Capability of Firms for Advisory Capabilities by Likelihood to
Leave (% of Respondents), Q1 2015
Note: Questions asked: How satisfied are you with the digital capabilities you have access to in the following areas?; How likely are you to leave your firm within
the next 6–12 months? Question was asked in Q1 2015
Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey 2015
64.2%
72.5%
49.5% 48.3%
0%
20%
40%
60%
80%
Highly Unlikely Somewhat Unlikely Somewhat Likely Highly Likely
Respondents(%)
Average Digital
Satisfaction for
Wealth Managers
Unlikely to leave
68.4%
Average Digital
Satisfaction for
Wealth Managers
Likely to leave
48.9%
19.4 PP
Wealth managers who
are likely to leave the
firm in the short term
are 19.4 percentage
points less digitally
satisfied
There is clear evidence of strong correlation between wealth manager digital
dissatisfaction and significant attrition risk (see Exhibit 12). The 2015 Capgemini
Wealth Manager Survey highlights that wealth managers who are likely to leave the
firm in the short term are 19.4 percentage points less digitally satisfied than wealth
managers stating they are unlikely to leave the firm.
16 Wealth Management in the Digital Age
4.	 A New Value Proposition for the Wealth 	
	 Manager of the Future
4.1. Wealth Managers Continue to Play a Vital Role
Despite the digital demands of HNWIs, the role of the wealth manager is and will
remain critical, with digital channels playing a complementary role to the client-wealth
manager relationship. Indeed, on the surface HNW clients are largely satisfied with
their wealth managers, with HNWIs globally giving their primary wealth manager a
nearly 73% performance rating.12
Such performance scores are impressive, given the breadth of support HNWIs are
looking for from wealth managers. For instance, HNWIs want their wealth manager
to fulfill a wide range of wealth needs, especially those deemed to be advice-related
wealth needs. These needs focus on specific actions around providing advice,
such as how wealth managers endeavor to understand HNWI needs, concerns,
and risk tolerances; how efficiently they use HNWI time and resolve problems; and
how well the investment decisions wealth managers make actually perform. It is the
responsibility of the wealth manager to meet these needs, whereas platform-related
wealth needs (which relate more directly to the firm platform that supports wealth
managers) sees the firm assume responsibility for improving service delivery.
While some of these needs are more essential than others, HNWIs rank the
importance of nearly all of them within a narrow band of 61% to 73%. When it
comes to achieving satisfaction on the measures that matter most to HNWIs, wealth
managers and firms appear to be doing a great job. Among HNWIs who place high
importance on their wealth needs, the average satisfaction level with the ability of
wealth managers and firms to fulfill these needs is 86.4%.
4.2. Needs of Younger HNWIs Change the Dynamic
Despite the overall high levels of HNW client satisfaction globally, there is a
disconnect on the part of wealth managers in understanding and meeting the needs
of younger HNWIs.
As Exhibit 13 shows, younger HNWIs are less satisfied than older HNWIs (70.0%
vs. 73.4% for older HNWIs) with their wealth managers, and have less trust and
confidence in them (54.3% vs. 58.3% for older HNWIs). While the gap is relatively
small, in the context of all the other ways that younger HNWIs are different (high
levels of digital demand, desire for social impact and philanthropy, and concerns
around the future, among others) it creates an imperative to focus more on younger
HNWIs.
From a practice management perspective, younger HNWIs are also much more
likely to hold relationships with five or more firms (43.2% vs. 14.7% for older HNWIs)
Despite the digital
demands of HNWIs,
the role of the wealth
manager is and will
remain critical
Despite the overall high
levels of HNW client
satisfaction globally, there
is a disconnect on the
part of wealth managers
in understanding and
meeting the needs of
younger HNWIs
12	“
2015 World Wealth Report”, Capgemini and RBC Wealth Management, 2015
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the way we see itWealth Management
and keep a lower percentage of assets with their primary manager, representing
both a challenge and an opportunity for firms that can meet the demanding service
expectations of younger HNWIs.
Wealth managers and firms will need to heed these findings, given that positive client
experiences must become a top priority to overcome the lower levels of confidence
and satisfaction that younger HNWIs have in wealth managers. Wealth managers
must also have a solid presence on both physical and online channels to take
advantage of the strong preference of younger HNWIs for word-of-mouth referrals.
Finally, working with other professionals, including those from other firms, will
become more important for wealth managers, given the propensity of younger
HNWIs to work with multiple institutions. To offer differentiating services, wealth
managers must also act as conduits to a broad range of capabilities, both inside and
outside of their firms.
Exhibit 13: Preferences and Wealth Management Approach of Younger HNWIs, (%), Q1 2015
a
Younger HNWIs
Have…
… As Demonstrated by:
73.4%
70.0%Younger
Older 58.3%
54.3%Younger
Older 58.1%
53.5%Younger
Older
Lower Trust and
Satisfaction
… Lower Satisfaction with their
Wealth Manager
… Lower Trust and Confidence in
Wealth Manager
… Lower Trust and Confidence
in Firms
14.7%
43.2%Younger
Older 58.6%
51.1%Younger
Older 73.6%
80.1%Younger
Older
Different
Approach to
Relationships
… Relationships with Five or �
More Firms
… Lower Percentage of Assets
Managed by Primary Wealth Manager
… An Orientation to the Firm as
the Primary Relationship
39.7%
58.4%Younger
Older 49.5%
53.6%Younger
Older
A Preference for
Referrals and
Advice
… Higher Rate of Introduction to
Wealth Manager Through Referrals
… A Preference for Seeking
Professional Advice
Note: Questions asked (in order of appearance of graphs in each row): “On a scale of 0%–100%, how satisfied are you with your primary wealth
manager?”; “Currently, to what extent do you agree or disagree with the following statement?—I have trust and confidence in the wealth managers
and firms.” Results were analyzed based on agreement and disagreement to arrive at the percentages for HNWI trust and confidence. Respond
ents were asked to rate on a scale of 1–7 and the above percentage represents the sum of rating from 5–7; “How many wealth management firms
do you work with?”; “What percentage of your financial assets are managed by your primary wealth manager?”; “Thinking about your primary
wealth manager, as well as the wealth management firm, please indicate which of them most influences your decision to hold assets with your
current wealth management firm.”; “How were you introduced to your primary wealth manager?” The above values represent the sum of HNWIs
choosing the response as referral by a friend or business contact; “Which statement best describes the way you currently work with wealth
managers?—I seek professional financial advice vs. I do not seek professional financial advice.”
Source: Capgemini Financial Services Analysis, 2016; Capgemini and RBC Wealth Management Global HNW Insights Survey, 2015
18 Wealth Management in the Digital Age
4.3.	 The Evolving Role of the Wealth Manager
These factors highlight a broader trend of the evolving role and value proposition of
the wealth manager. Firms and wealth managers face a host of industry challenges,
including ongoing issues such as shifting HNW client behaviors (including high levels
of cash), regulatory and cost pressures, and more recent threats from new entrants,
all of which are driving the evolution of the wealth manager’s role.
While the longer-standing issues are well-known to firms, the disruption from new
entrants (particularly automated advisory services13
, or as some know them, “robo-
advisors”), presents a significant challenge as well as an opportunity.
All of these factors are driving an evolution in the wealth manager value proposition
across multiple areas (see Exhibit 14). While some aspects have been in transition for
several years and there are global nuances, the difference now is in the convergence
of areas and accelerated pace of change. In summary, these changes are:
•	 Growing prominence of fee-based and discretionary solutions.
Regulations and client demand have shifted the focus of many wealth managers
and firms from commission or advice-based solutions toward fee-based or
discretionary products.
•	 Focus on behavior-based segmentation. Segmentation of clients has evolved
from traditional techniques based on HNWI age, wealth level, and risk profile, to
advanced approaches based on HNWI behaviors.
Exhibit 14: Evolution of the Wealth Manager Value Proposition and Role
Source: Capgemini Financial Services Analysis, 2016; 2015 World Wealth Report, Capgemini and RBC Wealth Management, 2015
Single Investment
Products
Asset Allocation &
Portfolio Management
Portfolio Management:
Discretionary & Fee-Based
Holistic and Integrated Approach to
Wealth Management
Cross Enterprise / Multi-Solution
Seamless Omni Channel Delivery
Enabling
Functions
for Evolving
Value
Proposition
Increasingly Commoditized
Wealth Manager Value Proposition and Role
• Focus on standardized,
proprietary offerings
• Measurement against index
benchmarks
• Discretionary/ advisory-based
model, based on client
preference
• Traditional segmentation
techniques of asset size, age,
and risk profile
• Primarily transaction focused
• Product level solutions
(stocks, bonds, mutual funds)
• 3rd party
aggregation and
reporting
• Financial plan
output
Differentiators
• Understanding client needs and concerns
• Engaging full household
• Translating needs and concerns into advice
opportunities
• Holistic and integrated approach to planning
• Collaboration with experts
• Educating clients and validating client understanding
• Tracking and reporting against client goals
Enablers
• Effective utilization of technology
• Professionalizing practice management
13	
Automated advisory services refer to online-only firms (or divisions of traditional wealth firms) that offer automated portfolio management services (i.e. client inputs result in automated
portfolio management recommendations). However, they are not typically equipped to offer more holistic and detailed financial product and planning services.
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the way we see itWealth Management
•	 Utilizing open architecture to offer varied products. The adoption of open
architecture is allowing wealth managers to offer HNWIs access to investments
that were previously available only to institutional investors, rather than relying on
the proprietary offerings of the firm.
•	 Shift toward a goals-based, holistic approach to wealth management.
Advice and solutions have evolved from suggesting plain and simple products
(equities, bonds, and mutual funds) to adopting a goals-based, holistic approach
to wealth management encompassing cash, credit, tax, estate planning,
insurance, philanthropy, and succession planning, both for businesses and
personal wealth.
•	 Delivery of the full capability of the firm. Along with the shift to delivering
a more holistic approach to wealth management advice, the core focus of the
relationship between the HNWI and the wealth manager has expanded such that
wealth managers increasingly act as conduits to provide HNWIs with access to a
broad range of experts from across the firm.
•	 Use of multiple channels. The traditional method of dialogue between HNWIs
and firms has evolved from a single face-to-face channel, to a more integrated
multiple channel experience, with the goal of providing clients a consistent,
personalized, anytime/anywhere, seamless experience across all channels,
including digital.
•	 Increasing shift toward goals-based performance measurement.
The investment management process has evolved from a pure transaction-
based model that measures success based on relative returns, to a financial
planning model that measures success against the broad range of needs and
concerns of HNWIs to achieve a more relevant and personalized goals-based
performance measurement.
The imperative for wealth managers to embrace a holistic approach toward financial
planning and wealth management is clear, and by adapting to the new environment,
wealth managers can turn the disruption wrought by automated advisory services
into opportunity. As basic asset allocation, investment advisory, and risk profiling
services become commoditized, the value proposition of wealth managers is
transitioning. It is moving away from stock selection and investment management,
toward more holistic financial planning. With the transition already underway, leading
wealth management firms are ramping up their investments in capabilities related to
financial planning.
As basic asset allocation,
investment advisory, and
risk profiling services
become commoditized,
the value proposition
of wealth managers
is transitioning. It is
moving away from stock
selection and investment
management, toward
more holistic financial
planning
20 Wealth Management in the Digital Age
5.	 Firms Need to Ingrain Digital Throughout 	
	 Client Experience
5.1. STRATEGIC: Build a Transformative Digital Mindset
The Capgemini framework for firms to chart a path through this complex landscape
is multi-faceted (see Exhibit 15).
•	 Shift the business mindset. Future leaders will recognize that digital can no
longer be viewed as a channel, but should be instead an integral part of the HNWI
experience, integrated across all channels.
•	 Develop an ROI model built on cross-enterprise engagement. Typical ROI
approaches are not sufficient for measuring the investments required to infuse a
digital mindset throughout a firm. Firms need to go beyond merely identifying key
performance indicators, and should instead build comprehensive ROI models that
take into account the level of digital engagement required of wealth management
staff throughout every level and line of business of the firm. Since the success of
any digital program is based on end-user adoption, the entire enterprise, including
back-, middle-, and front-office staff, needs to be engaged.
•	 Make build vs. buy decisions. During the journey towards building digital
maturity, firms come across the decision of whether to build or buy capability.
Building functionality in-house presents a wide range of challenges, not least of
which are the complexity of existing systems. Third-party vendors may offer both a
more affordable way to acquire software expertise, while also being more scalable
to keeping up with the fast pace of technological change, especially those that can
integrate with the evolving FinTech ecosystem.
Third-party vendors
may offer both a
more affordable way
to acquire software
expertise, while also
being more scalable to
keeping up with the fast
pace of technological
change, especially
those that can integrate
with the evolving
FinTech ecosystem
Exhibit 15: High-Level Digital Prioritization Roadmap in Wealth Management
Source: Capgemini Financial Services Analysis, 2016; 2014 World Wealth Report, Capgemini and RBC Wealth Management, 2014
Core/Strategic Focus Shift the Business Mindset
Develop Big Data Opportunities
Transformation Focus
Develop ROI Model/Cross-
Enterprise Support
Make Build vs. Buy Decisions
Implement Quick Wins to Build
Momentum
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•	 Implement quick wins to build momentum. Given the importance of
maintaining organizational energy for digital transformation, especially in driving
adoption from the key end-users, wealth managers, firms should seek early
successes whenever they can. For example, providing tablet devices to allow
wealth managers to perform visualization, such as dynamic reporting and scenario
planning to engage with clients, could be one such approach.
•	 Develop big data opportunities. Many firms consider the Holy Grail for their
digital initiatives to be the ability to have a complete picture of all the types of
interactions the firm is having with clients and a clear sense of how effective those
touch points are in both meeting client expectations and achieving the financial
goals of the firm. The sum total of all a firm’s client interactions will generate data
that firms should be able to mine to gain meaningful intelligence aimed at driving
strategic decisions. Firms that figure out how to convert data into meaningful
information that they can act on will become the high-performance firms of
the future.
5.2. TACTICAL: Equip Wealth Managers for Success
Wealth managers have identified specific capabilities that are critical addressing HNWI
needs. The most important of these are wealth-planning tools, such as scenario
planning and asset allocation, as well as the ability to have access to experts, such as
legal, tax, and philanthropy at the firm and through third parties (see Exhibit 16). Both
of these capabilities must be digitally-enabled and can serve not just as a defensive
measure to retain HNW clients, but also as a revenue-generating tool by building
differentiated value propositions in the areas that HWNIs value.
Firms that figure out
how to convert data into
meaningful information
that they can act on
will become the high-
performance firms of
the future.
Exhibit 16: Wealth Manager Importance on Capabilities to Fulfill HNWI Wealth Needs, Q1 2015
Note: Questions asked: “On a scale of 1–7 (where 1 = Not At All Important and 7 = Extremely Important) please rate the importance of HNWI needs related
capabilities at your firm.”; Ratings of 5, 6, and 7 have been shown in the chart above
Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey, 2015
80.5%
71.8% 71.3% 71.2% 70.8% 69.6% 69.3% 68.3% 67.6% 67.5% 67.1% 66.6%
0%
25%
50%
75%
100%
Strongwealthplanning
tools
Accesstofirm/third-
partyexperts
Smoothaccountopening
procedures
Accessandservicethrough
differentchannels
Timelyanddetailedstatements
andoverallreportingQuality
Availabilityofhigh-quality
research(firmandthird-party)
Widegeographicreach
Highoverallservicequality
Broadproductandsolution
availability
Riskmanagementcapability
Feetransparency
Strongbrandreputation
Respondents(%)
22 Wealth Management in the Digital Age
It is therefore critical for a
wealth management firm
to be able to tap into a
platform that leverages
advanced application
programming interface
(APIs) and integration
with current and future
third-party tools
Lastly, as with any
significant technology
implementation,
articulating the
productivity and revenue-
generating benefits to
wealth managers will be
critical in driving adoption
and getting the most
from investments into
leading digital platforms
and capabilities
It is important to note that wealth managers and even their firms cannot have all of
the financial planning and expert capabilities that HNWIs need. At the same time
that third-party FinTech firms are increasing in both number and sophistication for
wealth management capabilities, it is therefore critical for a wealth management firm
to be able to tap into a platform that leverages advanced application programming
interface (APIs) and integration with current and future third-party tools, allowing
wealth managers a range of options on how they customize their service approach to
meet HNWIs’ needs.
Exhibit 16 also shows that another key capability demanded by wealth managers
is to have hassle-free account opening procedures, a development that could see
innovative concepts such as e-signatures become more mainstream. These new
account opening tools allow for not only a far smoother customer experience during
the critical 90-day referral window, but also offer firms a more robust capability for
regulatory compliance around know-your-customer requirements.
In the transition toward a more thorough financial planning approach enabled by
digital technology, major training and change management initiatives are required.
Wealth managers will benefit from understanding the importance of financial planning
discussions as a key part of the advisory process, and how they will support their
business growth and profitability. Coaching and support to segment clients into
those who need relatively simple financial planning software solutions vs. more
tailored approaches, such as dedicated financial planners, regardless of wealth level,
will be an important part of changing wealth manager behavior. Wealth managers
will also require more in-depth training on the use of digital tools and social media so
they can better engage with clients, particularly the younger ones. Finally, they need
guidance regarding how to become more creative in their discovery and prospecting
efforts. Lastly, as with any significant technology implementation, articulating the
productivity and revenue-generating benefits to wealth managers will be critical in
driving adoption and getting the most from investments into leading digital platforms
and capabilities.
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Three characteristics of
cloud computing—agility,
flexibility, and scalability—
make it a critical pillar
for wealth management
firms to consider
6.	 Conclusion: Faced with the Need to 			
	 Rebuild, Cloud-Based Platforms Are
	 a Key Lever of Firms’ Digital Success
Faced with the need to digitalize and build a unified view of clients to enable
contextual, collaborative, and personalized service, firms must ultimately rebuild
their technology platforms. To do so, they face a choice between re-building their
systems from scratch (by employing a service-oriented architecture [SOA] approach)
or leveraging a scalable and cost-efficient platform built on cloud technology that can
seamlessly integrate with upstream and downstream applications.
More and more firms are opting for cloud-based platforms when choosing how to
build their digital capability, given the need for both new revenue opportunities as
well as cost control. Three characteristics of cloud computing—agility, flexibility, and
scalability—make it a critical pillar for wealth management firms to consider in order
to succeed in today’s highly disrupted industry (see exhibit 17).14
In addition to the significant cost-benefit advantage that can be gained by replacing
fixed-cost investments with variable-cost investments, leading cloud platforms allow
firms the ability to collaborate internally and with clients (such as through chat functions),
integrate across multiple devices, tap into the FinTech capability to deliver new and
differentiated propositions to clients, as well as integrate seamlessly with existing
applications such as data feeds, portfolio management tools, and many others.
14	
Top 10 Trends in Wealth Management in 2016, Capgemini, 2016
Exhibit 17: Benefits of Cloud Computing for Wealth Management Firms
Source: Capgemini Financial Services Analysis, 2016
Benefits to
non-core functions
Cost Efficiency
Improved
Collaboration
Backup and
Recovery
Environment
FriendlinessQuick
Deployment
Scalability
Benefits to
core functions
Increase Productivity
(Smart Insights)
Engagement
Opportunities
Contextual
Market Insight
Proactive Alerts
Improved Segmentation
Increased
Collaboration
24 Wealth Management in the Digital Age
A solution built on cloud
technology needs to
provide a unified view
of the HNW client, by
using data and analytics
to glean actionable
intelligence from all of the
various interactions the
client has with the firm
and its ecosystem
IN PRACTICE: Preparing for New-Age Adaptive Transformation of the
Wealth Manager Workstation
A large North American bank wanted to optimize its wealth management
business to provide a superior client experience and improve advisor satisfaction.
Capgemini collaboratively guided the firm through a comprehensive ‘current
state’ assessment study across their wealth management value chain, identifying
the key pain points contributing to the high costs and inefficiencies within their
systems and processes. Capgemini performed a competitive benchmarking
analysis which compared key competitors on over 400 functionality points.
Capgemini advised the firm with actionable recommendations to help the firm
integrate and consolidate multiple, siloed tools in use, and identified a solution
based on Salesforce for increased optimization. A ‘target state’, multi-year
roadmap was also developed to achieve a Salesforce-based advisor workstation
that would enable greater revenue opportunities and enhance the client service
experience
The solution enabled:
•	 Increased productivity via smart insights and integrated workstation
•	 Proactive engagement opportunities through fully integrated household
information across the bank
•	 Contextual market insights across the book of business
•	 Proactive alerts on any device and private client communities
•	 Increased collaboration across teams
Finally, a cloud platform needs to ensure it provides a unified view of the client,
by using data and analytics to glean actionable intelligence from all of the various
interactions the client has with the firm and its ecosystem. By having this foundation,
the firm and the wealth manager can provide differentiated and personalized service
to the HNWI as both the relationship and the client’s own needs evolve over time.
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References
About the Authors
1.	 2015, 2014 World Wealth Report, Capgemini and RBC Wealth Management
accessed February 2016 at https://worldwealthreport.com
2.	 Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW
Insights Survey, 2014
3.	 Capgemini and RBC Wealth Management Global HNW Insights Survey, 2015
4.	 “Key findings from Private Banking Benchmark 2015”, Scorpio Partnership, 2015,
accessed February 2016 at
http://www.scorpiopartnership.com/knowledge/report/private-bank-benchmark-2014/
5.	 “Wealth managers look online to bolster advisory services”, Sarah White and
Joshua Franklin, Reuters, June 18, 2015 accessed February 2016 at
http://www.reuters.com/article/us-wealth-summit-digital-idUSKBN0ET1IN20140618
6.	 “Next Generation Wealth Management: Mobile Technology Enhances the Customer
Experience”, Cisco Blogs, May 2013
7.	 Digital Solutions for Wealth Management 2.0, Finextra, 2014
8.	 Top 10 Trends in Wealth Management in 2016, Capgemini, 2016
David P. Wilson is Head of the Strategic Analysis Group within
Capgemini Financial Services. With 10 years of experience in wealth
management working for both private banks and consulting firms,
he combines strategic thinking with industry thought leadership to
help wealth management firms identify their future direction.
Tej Vakta is a Wealth Management Leader with the Global Banking
and Financial Services Business Unit in Capgemini Financial Services.
With over 20 years of experience, his first-hand knowledge of financial
standards and market trends in capital markets and wealth management
helps financial firms enhance productivity and financial performance.
The authors would like to thank William Sullivan, Bhuvan Thakur, and Chirag Thakral
for their contributions to this publication.
26 Wealth Management in the Digital Age
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the way we see itWealth Management
About Salesforce
Salesforce, the Customer Success Platform and world’s #1 CRM, empowers
companies to connect with their customers in a whole new way.
Salesforce Financial Services Cloud, the world’s #1 CRM, reinvented for
financial advisors.
For more information about Salesforce (NYSE: CRM), visit
http://www.salesforce.com/industries/financial-services/
financialservices-cloud/
About Capgemini
With more than 180,000 people in over 40 countries, Capgemini is one of
the world’s foremost providers of consulting, technology and outsourcing
services. The Group reported 2015 global revenues of EUR 11.9 billion.
Together with its clients, Capgemini creates and delivers business,
technology and digital solutions that fit their needs, enabling them to
achieve innovation and competitiveness.
A deeply multicultural organization, Capgemini has developed its own
way of working, the Collaborative Business Experience™, and draws on
Rightshore®
, its worldwide delivery model.
Learn more about us at
www.capgemini.com
All products or company names mentioned in this document are trademarks or registered trademarks of their respective owners.
Rightshore is a registered trademark of Capgemini.
The information contained in this document is proprietary. ©2016 Capgemini.
All rights reserved. Rightshore®
is a trademark belonging to Capgemini.
financial services cloud
For more information visit:
www.capgemini.com/wealth
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wealth_management_in_the_digital_age_2016_web

  • 1. Understand demand for digital technology in wealth management, as well as cloud-based solutions for firms to transform their businesses Wealth Management in the Digital Age financial services cloud
  • 2. Table of Contents 1 Introduction 3 2 Exciting Times in the Global Wealth Management Industry 4 2.1. Record Levels of HNWI Population and Wealth 4 2.2. An Industry Marked by Disruption 5 3 The Future of Wealth Management is Digital 7 3.1. Busting the Digital Myth 7 3.2. HNWI Digital Demand and the Implications of Inaction 9 3.3. A New Dynamic – Wealth Manager Digital Demand 14 4 A New Value Proposition for the Wealth Manager of the Future 17 4.1 Wealth Managers Continue to Play a Vital Role 17 4.2. Needs of Younger HNWIs Change the Dynamic 17 4.3. The Evolving Role of the Wealth Manager 19 5 Firms Need to Ingrain Digital Throughout Client Experience 21 5.1 STRATEGIC: Build A Transformative Digital Mindset 21 5.2. TACTICAL: Equip Wealth Managers for Success 22 6 Conclusion: Faced with the Need to Rebuild, Cloud-Based Platforms Are a Key Lever of Firms’ Digital Success 24 References 26 Disclaimer: The information provided in this white-paper is strictly for the convenience of our customers and is for general informational purposes only. Publication by Capgemini and Salesforce does not constitute an endorsement. Capgemini and Salesforce do not warrant the accuracy or completeness of any information, text, graphics, links or other items contained within this white-paper. Capgemini and Salesforce do not guarantee you will achieve any specific results if you follow any advice in the white-paper. It may be advisable for you to consult with a professional such as a lawyer, accountant, architect, business advisor or professional engineer to get specific advice that applies to your specific situation. © 2016 Capgemini and Salesforce. All rights reserved. Rightshore® is a Capgemini trademark. Salesforce, Salesforce1, Sales Cloud, Service Cloud, Marketing Cloud, AppExchange, Salesforce Platform, and others are trademarks of Salesforce, inc. All other trademarks are the property of their respective owners.
  • 3. While global high net worth individual (HNWI1 ) wealth is at an all-time record and is up over 70% since 2008, this wealth growth has coincided with decreased profitability for wealth management firms. One of the biggest challenges for firms when addressing the revenue and profit dilemma is to effectively leverage digital technology and the latest in cloud platforms to transform their businesses. For example, our research shows that 46.5% of wealth managers globally are not satisfied with the digital tools provided to them by their firms. The dynamic is compounded as the majority of HNWIs state they will leave their wealth management firm for the lack of an integrated channel experience. Beyond just retaining existing HNW clients and wealth managers, the ability to leverage digital technology to attract new clients and revenue through data-enabled propositions for clients will be critical to firms’ profitability in the future. One of the most critical dimensions to building digital capability is the ability to tap into new data possibilities and the rapid evolution of third-party FinTech firms, to bring the best capability to clients. Platforms such as those leveraging cloud computing technology may offer firms immediate revenue-generating possibilities on top of wealth manager productivity and efficiency gains, while also serving as a future-proof and scalable platform to keep up with the fast pace of technological change, especially the evolving FinTech ecosystem. Introduction 1 HNWIs are defined as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables 3 the way we see itWealth Management
  • 4. 2. Exciting Times in the Global Wealth Management Industry 2.1. Record Levels of HNWI Population and Wealth If there is one thing that can be said about the global HNWI population, it is that they are exceptionally resilient (see Exhibit 1). Capgemini research identified the following pillars of the performance of the global HNWI population since 2008: • RECOVERY: Global HNWI population and wealth was over 70% higher at year- end 2014 than year-end 2008 (the crisis low-point for HNWI wealth), representing almost 10% annual growth. • CONSISTENCY: The global HNWI population has grown every year since 2008, with only one year (2011) less than 7% annual growth. • BALANCE: All wealth bands showed strong growth, with HNWIs in the US$1-30mn category growing the most, at just over 72% over the 2008-2014 period. • FORECAST: Global HNWI wealth is forecast to cross US$70 trillion by 2017, growing by 7.7% annually from the end of 2014. This growth is expected to be led by Asia-Pacific which is forecasted to surpass North America in HNWI wealth. If there is one thing that can be said about the global high net worth individual population, it is that they are exceptionally resilient Exhibit 1: HNWI Investable Wealth Forecast by Region (US$ Trillion), 2008–2017F Note: Chart numbers may not add up due to rounding Source: Capgemini Financial Services Analysis, 2016 7.37 9.65 10.82 10.71 12.02 14.20 15.82 21.219.06 10.67 11.64 11.37 12.70 14.88 16.23 19.91 8.32 9.50 10.19 10.07 10.90 12.39 12.97 16.52 5.79 6.66 7.27 7.07 7.54 7.70 7.66 8.39 1.40 1.47 1.65 1.67 1.81 2.11 2.28 2.72 0.84 1.01 1.15 1.12 1.25 1.34 1.44 1.70 0 15 30 45 60 75 2008 2009 2010 2011 2012 2013 2014 2017F HNWIInvestableWealth(US$Trillion) Total 39.0 Total 42.7 Total 42.0 Total 46.2 Total 52.6 7.7% Annualized Growth CAGR 2014–2017F Total 70.5 Total 56.4 Europe NorthAmerica Asia-Pacific Latin America Middle East Africa 7.0% 10.3% 8.4% 3.1% 5.8% 6.0% Global 7.7% Total 32.8 4 Wealth Management in the Digital Age
  • 5. There have however been several winners and losers across markets (see Exhibit 2). Looking at the top 25 markets by HNWI population (representing over 90% of the global total), we can see three clear categories of performance. On the one hand, the winners include markets characterized by global financial centers (Hong Kong, Singapore), key developing economies (China, India), and commodity-rich nations (Norway, Kuwait). On the other hand, those in the bottom of the growth race are understandably nations that have struggled economically since the crisis, with Latin American and European nations the most prevalent. In the middle is a true mix of markets including the U.S., which is the largest wealth market at around 30% of the global total. The U.S. has recovered well since the crisis, especially given its significant size, with wealth creation concentrated in the 12 top metropolitan statistical areas (MSAs). Since 2008, almost 23% of new HNWI wealth added globally has come from New York, Los Angeles, Chicago, Washington D.C., San Francisco, Boston, Houston, Philadelphia, San Jose, Dallas, Detroit, and Seattle. In 2014 alone, these 12 MSAs added $1 trillion in HNWI wealth, helping to drive the 9.4% overall increase in the U.S. to a new record of $15.2 trillion. 2.2. An Industry Marked by Disruption While the rise in global HNWI population and wealth is an undoubted boon for wealth management firms, the industry is being disrupted by a variety of factors that are re-shaping firms’ profit dynamics and relatedly, the competitive landscape of the industry. For instance, wealth management firms are struggling to translate increased HNWI wealth into profit. While wealth is up significantly on 2008 levels, the cost: income ratio of the industry has failed to recover, having gone from around 62% in 2007 to 84.4% in 2014 – a highly concerning rise.3 In 2014 alone, the top 12 U.S. metro areas added $1 trillion in HNWI wealth, helping to drive the 9.4% overall increase in the U.S. to a new record of $15.2 trillion Exhibit 2: HNWI Population and Wealth CAGRs4 for Top 25 Markets (%), 2008–2014 Note: Bubble size represents HNWI wealth in 2014 Source: Capgemini Financial Services Analysis, 2016 Fastest- growing cluster Moderate- growth cluster Below-average growth cluster Brazil Italy Mexico France Germany Argentina Spain U.S. Saudi Arabia Netherlands Canada Russia Australia South Korea Japan Switzerland Austria 0% 16% 4% 8% 12% 20% 0% 5% 10% 15% 20% HNWI Wealth 2008-14 CAGR HNWIPopulation2008–14CAGR GlobalAverage (9.5%) Global Average (9.3%) = US$1Trillion Sample bubble China India Kuwait Taiwan Norway Hong Kong Singapore 25.5% Wealth 24.4% Pop U.K. 3 “Key findings from Private Banking Benchmark 2015”, Scorpio Partnership, 2015 4 CAGR refers to compound annual growth rate which provides a measure of that constant rate of return over the time period. 5 the way we see itWealth Management
  • 6. The causes are myriad, though several stand-out: • Shifting HNWI Demographics and Demands –– The number and influence of younger HNWIs is increasing as they inherit wealth and create wealth of their own, impacting firms not prepared for their high levels of tech-savviness and expectations for the client experience –– HNWIs are also holding significant amounts of their wealth in cash (25.6%5 ) and other asset classes that are not profitable for firms • Increased Regulatory Pressure –– The volume and pace of regulatory change has led to a significant increase in costs (spanning people, documentation, IT and infrastructure, and opportunity costs, in addition to the penalty and reputational costs of non-compliance) and constraints in delivering an integrated client experience –– Wealth managers are spending more time on non-value add activities related to compliance, impacting their ability to prospect and serve HNW clients • Entry of New Competitors –– With increasing competition and investment performance transparency from online brokerages, combined with market turbulence, wealth management firms are challenged to differentiate their services beyond investment performance –– Additional competition is now coming from FinTech players targeting different aspects of the wealth management value chain Firms are focused on these challenges in numerous ways, though we see ten general areas of focus in the coming 12-18 months:6 1. Firms are increasingly building on their lending solutions and integrated banking experience with an aim to drive growth and cater to the complex needs of HNWIs 2. Wealth management firms are increasingly adopting a utility-based model for their middle- and back-office functions in order to optimize operations and reduce costs 3. Identity thefts and personal financial crimes are increasing at a faster rate, resulting in higher spending on cyber security 4. Wealth management firms are increasingly using cloud computing (for non-critical tools and applications) to reduce infrastructure costs 5. Enhanced used of technology by younger generations is leading to increased focus on, and investments in, digital and self-service capabilities by firms 6. Wealth management firms are increasingly focusing on social impact advice as social impact investments by HNWIs are gaining foothold across the globe 7. Rise of automated advisors is leading to the emergence of new business models 8. Firms are increasingly using predictive analytics to process the vast amounts of structured and unstructured data, with an aim to better understand their clients and enhance client experience and loyalty 9. Global wealth management players are reassessing their international operations in the light of increasing regulations and challenges facing the industry 10. Firms are investing in financial planning and advice tools as a means to enable and empower wealth managers to provide personalized and relevant recommendations and free up their time for value add activities. While the trends cover several areas, a common theme underpins many of them – The importance of digital technology. The next section looks at this in more detail. 5 “2015 World Wealth Report”, Capgemini and RBC Wealth Management, 2015 6 “Top 10 Trends in Wealth Management in 2016”, Capgemini, 2016 (https://www.capgemini.com/resources/wealth-management-top-10-trends-for-2016) 6 Wealth Management in the Digital Age
  • 7. 3. The Future of Wealth Management is Digital 3.1. Busting the Digital Myth For years, the wealth management industry has been resistant to transformative digital technology, with several common reactions being used as an excuse for not moving forward quickly. We consider these “myths” and while the industry has begun to accept that more needs to be done on digital, the pace is still far too slow. These myths are: • MYTH 1: “HNWIs do not want digital tools, just face-to-face contact” –– The Reality: While the direct relationship is important, over a quarter of HNW clients outright prefer digital contact to direct contact, rising across regions and age groups7 • MYTH 2: “Digital channels will cannibalize our business” –– The Reality: Not investing sufficiently in digital will result in client, advisor, and asset loss to competitors • MYTH 3: “Wealth managers will not use digital tools” –– The Reality: Wealth managers are increasingly recognizing the value that digital tools provide to deepen the relationship and facilitate flow of information, such as visualization on tablets (see page 15) • MYTH 4: “True omni-channel capability is too difficult” –– The Reality: It is difficult, but some firms are already part-way through the journey to 360 portfolio views and data analytics • MYTH 5: “It is a low priority compared to other issues” –– The Reality: Around 56% of firms have digital as a top three priority for the short-term, and almost 69% have it as top three priority over the medium term,8 so not moving forward will mean being left behind9 As a result, the wealth management industry’s digital maturity is lagging far behind the majority of other industries, including those in financial services like insurance and retail banking (see Exhibit 3). Firms have a choice to make on whether they will bridge the gap, though the choice is an easy one. Since wealth management clients have relationships with these more mature industries, including insurers and retail banks, they will not accept a lower standard from their wealth manager to whom they often pay for higher fees. The wealth management industry’s digital maturity lags behind the majority of other industries, including those in financial services like insurance and retail banking 7 “2014 World Wealth Report”, Capgemini and RBC Wealth Management, 2014 8 Short term refers to 6-12 months while medium terms refers to 3 years from the time we asked the firms in Q1 2014 9 “2014 World Wealth Report”, Capgemini and RBC Wealth Management, 2014 7 the way we see itWealth Management
  • 8. Additionally, there are four fundamental forces in the wider landscape that serve as unstoppable digital tailwinds: • “Google-ification” –– Google has driven the information age through an individuals’ ability to find a wide variety of information quickly, easily, and for free • “Apple-ification” –– Apple established the customer experience at being at the center of a firm’s strategy • “Amazon-ification” –– One of the first firms to articulate and deliver a contextual and sales-focused digital value proposition • “Facebook-ification” –– Drove widespread adoption of digital social interaction Given that the above services are generally free and deliver highly positive customer experiences, wealth management firms must begin moving forward with their own digital transformation programs. Online banking offered in 1981 by four major banks Exhibit 3: Digital Penetration of Wealth Management vs. Real World, 1980–2020E Source: Capgemini Financial Services Analysis, 2016 1980 1990 2000 2010 2020(E) Sophistication Low High General Website Banking General Mobile Banking General Website, Mobile, Social Media Usage in Real-World (Non-Banking) WM Website WM Mobile/Social Scenario 1 WM Mobile/Social Scenario 2 Dramatic rise in smartphone sales pushed usage of social media and the internet to new heights, aided by digital growth in emerging markets Popularity of the internet began to explode in the 1990’s Launch of social media such as Facebook, Twitter, LinkedIn etc. continued to drive growth in internet usage Gap between Wealth Management and General Digital Sophistication eCommerce Industry Launch Launch WM firms appreciate need to go digital, but still struggling to develop clear roadmap M-banking launched with initial success 8 Wealth Management in the Digital Age
  • 9. 3.2. HNWI Digital Demand and the Implications of Inaction Firms need to understand the extent to which HNWIs digital capability in their wealth management relationships. Such a dynamic can be looked at through three lenses: • Future digital demand from HNWIs • Digital channel and capability segmentation • Attrition risk for firms lacking digital capability Future Digital Demand from HNWIs It is clear that digital is fundamental to the future of the industry, given that the clear majority of HNWIs globally state that they expect the majority or indeed entire wealth management relationship to be digital. The 2014 Global HNW Insights Survey10 found that 64.2% of HNWIs globally expect their future wealth management relationship to be mostly or entirely digital, reaching as high as 82.3% in Asia-Pacific (excluding Japan). Even in more developed markets, future digital demand is high, at 61.5% of all HNWIs in Europe and 57.7% in North America. Additionally, future digital demand is consistent across wealth bands – disproving another myth that those with the most wealth are not interested in digital – and is especially true for younger HNWIs, who represent the future of the wealth management industry (see Exhibit 4). Future digital demand is consistent across wealth bands – disproving another myth that those with the most wealth are not interested in digital – and is especially true for younger HNWIs 10 Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014 Exhibit 4: Extent to Which HNWIs Consider Entire or Most of Future Wealth Management Relation to be Digital by Age and Wealth Band, (% of Respondents), Q1 2014 Note: Question asked, “In FIVE YEARS, to what extent would you like your wealth management relationship to be conducted through digital channels?” Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014 54.5% 73.5% 66.8% 64.4% 0% 25% 50% 75% 100% $1m-$5m $5m-$10m $10-$20m $20m+ Under 40 Age 40-49 Age 50-59 Age 60+ 47.6% 53.9% 70.2% 82.5% 0% 25% 50% 75% 100% By Age By Wealth Band 9 the way we see itWealth Management
  • 10. Digital Channel and Capability Segmentation To move forward with a digital strategy, it must first be defined. Day-to-day interactions between HNWIs and wealth managers cover a wide range of activities that serve to inform clients, engage them, and enable transactions to be carried out, either by HNWIs themselves, or on their behalf (see Exhibit 5). • Inform-type capabilities encompass researching the wealth management firm and its capabilities, downloading research and education, accessing news and content, searching for products, services, and investments, as well as evaluating portfolio information and performance. • Engage-type capabilities include obtaining advice and service from the wealth manager, engaging with multiple experts at the same time (such as for financial planning discussions), and conducting general communications with the wealth manager, including document exchange and recurring portfolio reviews. • Transact-type capabilities include executing transactions and transferring funds between accounts. Exhibit 5: Understanding Channel Landscape in Wealth Management Source: Capgemini Financial Services Analysis, 2016 Parent Layer Network Layer Interaction Layer Client Layer Website Execute a Transaction Transfer Money between Accounts Research Wealth Management Firm and Capabilities Download Research & Education Content/ News Search for Products, Services, and Investments Access Portfolio Information/ Evaluate Performance Engage with Multiple Experts at Same Time General Wealth Manager Communi- cations Inc. Doc Exchange Obtain Advice/ Service from Wealth Manager Mobile Device Social Media Email Video Voice In-Person Capability Layer Retail Banking Corporate Banking Data Repository for all Business Lines INFORM ENGAGE TRANSACT Digital Channels – Core Focus Other Channels Investment Banking Asset Management Wealth Management Relationship Manager + Team Support Functions 10 Cloud-Enabled Transformation in Insurance
  • 11. Some of the biggest disruption is coming from emerging digital channels of mobile applications, social media, and video Each one of these Inform, Engage, and Transact capabilities can be executed through any one of a number of channels, including websites and mobile applications, as well as in-person or telephone interactions. Face-to-face interactions have long been the industry standard and continue to hold significant sway, but the margin of preference for them is slight and expected to fade as the next generation gains in prominence. For instance, the 2014 Global HNW Insights Survey identified that HNWIs prefer digital channels over direct ones to execute transactions (see Exhibit 6), with HNWIs in North America and Asia-Pacific (excl. Japan) having the strongest preferences for executing transactions via the website. The pattern was similar when looking at the Inform capabilities, with HNWIs in Asia- Pacific (excl. Japan) expressing the largest preference for using websites rather than direct contact to obtain information. The picture is slightly different when it comes to engaging with wealth managers, given that HNWIs—especially those in North America—exhibit a preference for direct rather than digital interactions. Some of the biggest disruption is coming from emerging digital channels of mobile applications, social media, and video, especially when segmenting the HNW client base by age. As Exhibit 7 shows, the trend towards digital is even more prevalent for HNWIs under the age of 40, and cuts across Inform, Engage, and Transact. This is especially notable in the divergent demand for mobile applications, social media, and video – tools that many firms and wealth managers are still not comfortable providing or using. Exhibit 6: HNWI Channel Importance for Different Wealth Management Capability Areas by Region, (% of Respondents), Q1 2014 Note: Weighted average of respondents indicating importance level to difference capabilities per channel Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014 North America 58.4% 60.7% 48.5% 53.0% 60.6% 65.6% 66.1% 55.2% 55.1% 49.6% 62.2% 61.5% 58.3% 70.6% 49.8% 58.7% 59.1% 70.1% 0% 25% 50% 75% 100% Respondents(%) INFORM ENGAGE TRANSACT North America Europe Asia-Pacific (excl. Japan) Europe Europe Direct (In-Person, Phone) Website North America Asia-Pacific (excl. Japan) Asia-Pacific (excl. Japan) 11 the way we see itWealth Management
  • 12. Of the three emerging forms of digital interaction, mobile applications received the highest level of demand from HNWIs. Mobile applications can provide much the same functionality as the website, while also offering the added elements of spontaneity and convenience through a compact, dynamic interface. Transact Engage Inform Transact Engage Inform Transact Engage Inform Transact Engage Inform Transact Engage Inform Transact Engage Inform 40+ Under 40 In-Person/ Phone Mobile Applications Social Media Video Website Email 52.2% 50.6% 59.3% 57.6% 54.4% 49.4% 57.2% 53.3% 57.7% 44.7% 64.5% 61.4% 55.0% 51.5% 58.0% 56.0% 53.9% 45.2% 45.6% 25.5% 46.2% 25.9% 47.7% 22.5% 40.5% 18.9% 36.3% 20.2% 33.5% 12.2% 42.8% 20.1% 40.9% 24.0% 34.6% 14.0% Exhibit 7: HNWI Channel Importance for Different Wealth Management Capability Areas by Channel, (% of Respondents), Q1 2014 Note: Weighted average of respondents indicating importance level to difference capabilities per channel Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014 12 Wealth Management in the Digital Age
  • 13. The biggest implication is the significant levels of HNWI attrition risk for not getting digital right Exhibit 8: HNWI Propensity to Leave Wealth Management Firm Due to Lack of Integrated Channel Experience by Demographics, (% of Respondents), Q1 2014 Note: Question asked, “To what extent do you agree or disagree with the following statement? 1. I expect my wealth management experience to be integrated across all channels (personal, phone, digital) with a consistent level of service across all channels, for example, I should be able to start an activity on any channel and finish on any another channel”, and “If your main wealth management provider could not offer this type of integrated wealth management experience, would it prompt you to consider moving to another firm?” Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014 65.3% 49.5% 60.5% 67.8% 79.7% 34.7% 50.5% 39.5% 32.2% 20.3% 0% 20% 40% 60% 80% 100% Global Age 60+ Age 50–59 Age 40–49 Under 40 65.3% 63.3% 70.0% 68.2% 65.3% 34.7% 36.7% 30.0% 31.8% 34.7% 0% 20% 40% 60% 80% 100% Global $20m+ $10m-$20m $5m-$10m $1m-$5m By Region By Wealth Band By Age Yes No 0% 20% 40% 60% 80% 100% 65.3% 34.7%Global 82.8% 17.2%Asia-Pacific ex Japan 62.7% 37.3%Europe 63.0% 37.0%Japan 87.1% 12.9%Latin America 75.6% 24.4%Middle East and Africa 56.4% 43.6%North America In the most extreme scenario of digital attrition, firms would and wealth managers lose an estimated 56% of their net income Attrition Risk for Firms Lacking Digital Capability We have seen that digital demand from HNWIs is significant, but what is the implication for firms and wealth managers? The biggest implication is the significant levels of HNWI attrition risk for not getting digital right, as evidenced by Exhibit 8. Regardless of region, age, or level of wealth, it is clear that there is significant risk of HNWIs leaving their wealth management firm for a lack of an integrated channel experience. The highest risk is in developing regions and amongst the younger population of HNWIs, but is sufficiently elevated to be a concern regardless of demographic factors. Played out in a business scenario, the results would be significant, both to wealth managers and their firms. As Exhibit 9 shows, in the most extreme scenario of digital attrition, firms and wealth managers would lose an estimated 56% of their net income. 13 the way we see itWealth Management
  • 14. Exhibit 9: Hypothetical Digital Attrition Risk and Impact to a Wealth Manager and Wealth Management Firm (US$), Q1 2016 Note: See assumptions in figure Source: Capgemini Financial Services Analysis, 2016; Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014 $2,000,000 $396,000 $1,120,000 $484,000 56% net income loss risk in this scenario POST-DIGITAL DISRUPTION (IF DOES NOT REACT) Wealth Manager Wealth Management Firm PRE-DIGITAL DISRUPTION $2.25BN $871MN $119MN $1.26BN $2.25BN $270MN $1.98BN 56% net income loss risk in this scenario POST-DIGITAL DISRUPTION (IF DOES NOT REACT) PRE-DIGITAL DISRUPTION Total Annual Fees – Pre-Dis- ruption Firm and Staff Costs – Pre-Dis- ruption Wealth Manager Net Annual Income – Pre-Dis- ruption Total Annual Fees – Pre-Dis- ruption Operating Costs – Pre-Dis- ruption Firm Net Annual Income – Pre-Dis- ruption Total Annual Fees – Pre-Dis- ruption NEW: Fee Loss due to Digital Attrition NEW: Firm and Staff Costs NEW: Wealth Manager Net Annual Income Total Annual Fees – Pre-Dis- ruption NEW: Fee Loss due to Digital Attrition NEW: Operating Costs NEW: Firm Net Annual Income Assumptions • $225 billion in HNWI assets under management (AuM) o 3000 registered independent advisors (RIA) in the U.S. o 75 HNW clients per advisor o Average HNW client AuM of $1 million • Average portfolio and commission fees of 100 bps per client • Firms retains 12 bps per client after operating costs (advisor remuneration, staff, IT, etc.) and these do not vary with asset size • Poor digital technology/capability persists with no corrective action taken • All HNWI clients stating they would leave (56%) do actually leave their RIA • $200 million in HNWI assets under management (AuM) o 20 HNW clients o Average HNW client AuM of $10 million o US-only • Average portfolio and commission fees of 100 bps per client • Wealth manager retains 45 bps per client after firm/platform and staff costs removed (these costs cannot be automated) • Poor digital technology/capability persists with no corrective action taken • All HNWI clients stating they would leave (56%) do actually leave Assumptions $2,000,000 $900,000 $1,100,000 Over 50% of wealth managers globally state they are at least somewhat likely to leave their firm in the short-term While these scenarios are highly unlikely since attrition would be more phased over time (and very few firms would take no action), it nonetheless paints a clear picture of the amount of profit at stake as the industry transforms. 3.3. A New Dynamic – Wealth Manager Digital Demand The attrition risk is not only from HNWIs. Wealth managers are also looking at leaving their current firms, as over 50% of wealth managers globally state they at least somewhat likely to leave their firm in the short-term (see Exhibit 10). Given that over 66% of HNWIs are likely to follow their wealth managers to their next employer,11 this represents a significant burning platform for firms to address. 11 Capgemini and RBC Wealth Management Global HNW Insights Survey 2015, Q1 2015 14 Wealth Management in the Digital Age
  • 15. Only 53% of wealth managers globally are at least somewhat satisfied with wealth manager digital capabilities Exhibit 10: Wealth Manager Propensity to Leave Wealth Management Firm (% of Respondents), Q1 2015 Global Japan North America Europe Latin America 5.9% 2.0% 11.1% 6.7% 1.6% 4.0% 47.1% 64.0% 51.2% 43.8% 35.1% 22.0% 24.7% 26.0% 20.5% 34.4% 23.8% 26.0% 22.4% 8.0% 17.1% 15.2% 39.5% 48.0% 0% 25% 50% 75% 100% Asia-Pacific (excl. Japan) Respondents(%) Highly Likely Somewhat Likely Somewhat Unlikely Highly Unlikely Note: Question asked: How likely are you to leave your firm within the next 6–12 months? Question was asked in Q1 2015 Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey 2015 Exhibit 11: Wealth Manager Satisfaction on Digital Capability of Firms for Advisory Capabilities (% of Respondents), Q1 2015 29.6% 25.8% 22.3% 29.6% 28.8% 34.8% 16.6% 28.8% 26.1% 20.5% 13.7% 11.5% 7.3% 10.8% 14.1% 9.8% 7.0% 2.3% 0% 25% 50% 75% Global Latin America Asia-Pacific (excl. Japan) Europe North America Japan Respondents(%) Extremely Satisfied Satisfied Somewhat Satisfied 53.5% 49.4% 48.5% 65.3% 59.9% 62.5% Note: Question asked: How satisfied are you with the digital capabilities you have access to in the following areas? Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey 2015 A significant lever for firms to arrest this churn is by focusing on emerging strong digital demand from wealth managers. Exhibit 11 shows that when it comes to the key digital capabilities for wealth managers themselves (such as real-time access to client profile and market information and advisor desktop with all applications on a single platform), only 53.5% of wealth managers globally are at least somewhat satisfied with wealth manager digital capabilities. Additionally, only 23.9% are “Satisfied” or “extremely” satisfied, implying very significant correlation between digital capability and wealth manager attrition risk. 15 the way we see itWealth Management
  • 16. Exhibit 12: Wealth Manager Satisfaction on Digital Capability of Firms for Advisory Capabilities by Likelihood to Leave (% of Respondents), Q1 2015 Note: Questions asked: How satisfied are you with the digital capabilities you have access to in the following areas?; How likely are you to leave your firm within the next 6–12 months? Question was asked in Q1 2015 Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey 2015 64.2% 72.5% 49.5% 48.3% 0% 20% 40% 60% 80% Highly Unlikely Somewhat Unlikely Somewhat Likely Highly Likely Respondents(%) Average Digital Satisfaction for Wealth Managers Unlikely to leave 68.4% Average Digital Satisfaction for Wealth Managers Likely to leave 48.9% 19.4 PP Wealth managers who are likely to leave the firm in the short term are 19.4 percentage points less digitally satisfied There is clear evidence of strong correlation between wealth manager digital dissatisfaction and significant attrition risk (see Exhibit 12). The 2015 Capgemini Wealth Manager Survey highlights that wealth managers who are likely to leave the firm in the short term are 19.4 percentage points less digitally satisfied than wealth managers stating they are unlikely to leave the firm. 16 Wealth Management in the Digital Age
  • 17. 4. A New Value Proposition for the Wealth Manager of the Future 4.1. Wealth Managers Continue to Play a Vital Role Despite the digital demands of HNWIs, the role of the wealth manager is and will remain critical, with digital channels playing a complementary role to the client-wealth manager relationship. Indeed, on the surface HNW clients are largely satisfied with their wealth managers, with HNWIs globally giving their primary wealth manager a nearly 73% performance rating.12 Such performance scores are impressive, given the breadth of support HNWIs are looking for from wealth managers. For instance, HNWIs want their wealth manager to fulfill a wide range of wealth needs, especially those deemed to be advice-related wealth needs. These needs focus on specific actions around providing advice, such as how wealth managers endeavor to understand HNWI needs, concerns, and risk tolerances; how efficiently they use HNWI time and resolve problems; and how well the investment decisions wealth managers make actually perform. It is the responsibility of the wealth manager to meet these needs, whereas platform-related wealth needs (which relate more directly to the firm platform that supports wealth managers) sees the firm assume responsibility for improving service delivery. While some of these needs are more essential than others, HNWIs rank the importance of nearly all of them within a narrow band of 61% to 73%. When it comes to achieving satisfaction on the measures that matter most to HNWIs, wealth managers and firms appear to be doing a great job. Among HNWIs who place high importance on their wealth needs, the average satisfaction level with the ability of wealth managers and firms to fulfill these needs is 86.4%. 4.2. Needs of Younger HNWIs Change the Dynamic Despite the overall high levels of HNW client satisfaction globally, there is a disconnect on the part of wealth managers in understanding and meeting the needs of younger HNWIs. As Exhibit 13 shows, younger HNWIs are less satisfied than older HNWIs (70.0% vs. 73.4% for older HNWIs) with their wealth managers, and have less trust and confidence in them (54.3% vs. 58.3% for older HNWIs). While the gap is relatively small, in the context of all the other ways that younger HNWIs are different (high levels of digital demand, desire for social impact and philanthropy, and concerns around the future, among others) it creates an imperative to focus more on younger HNWIs. From a practice management perspective, younger HNWIs are also much more likely to hold relationships with five or more firms (43.2% vs. 14.7% for older HNWIs) Despite the digital demands of HNWIs, the role of the wealth manager is and will remain critical Despite the overall high levels of HNW client satisfaction globally, there is a disconnect on the part of wealth managers in understanding and meeting the needs of younger HNWIs 12 “ 2015 World Wealth Report”, Capgemini and RBC Wealth Management, 2015 17 the way we see itWealth Management
  • 18. and keep a lower percentage of assets with their primary manager, representing both a challenge and an opportunity for firms that can meet the demanding service expectations of younger HNWIs. Wealth managers and firms will need to heed these findings, given that positive client experiences must become a top priority to overcome the lower levels of confidence and satisfaction that younger HNWIs have in wealth managers. Wealth managers must also have a solid presence on both physical and online channels to take advantage of the strong preference of younger HNWIs for word-of-mouth referrals. Finally, working with other professionals, including those from other firms, will become more important for wealth managers, given the propensity of younger HNWIs to work with multiple institutions. To offer differentiating services, wealth managers must also act as conduits to a broad range of capabilities, both inside and outside of their firms. Exhibit 13: Preferences and Wealth Management Approach of Younger HNWIs, (%), Q1 2015 a Younger HNWIs Have… … As Demonstrated by: 73.4% 70.0%Younger Older 58.3% 54.3%Younger Older 58.1% 53.5%Younger Older Lower Trust and Satisfaction … Lower Satisfaction with their Wealth Manager … Lower Trust and Confidence in Wealth Manager … Lower Trust and Confidence in Firms 14.7% 43.2%Younger Older 58.6% 51.1%Younger Older 73.6% 80.1%Younger Older Different Approach to Relationships … Relationships with Five or � More Firms … Lower Percentage of Assets Managed by Primary Wealth Manager … An Orientation to the Firm as the Primary Relationship 39.7% 58.4%Younger Older 49.5% 53.6%Younger Older A Preference for Referrals and Advice … Higher Rate of Introduction to Wealth Manager Through Referrals … A Preference for Seeking Professional Advice Note: Questions asked (in order of appearance of graphs in each row): “On a scale of 0%–100%, how satisfied are you with your primary wealth manager?”; “Currently, to what extent do you agree or disagree with the following statement?—I have trust and confidence in the wealth managers and firms.” Results were analyzed based on agreement and disagreement to arrive at the percentages for HNWI trust and confidence. Respond ents were asked to rate on a scale of 1–7 and the above percentage represents the sum of rating from 5–7; “How many wealth management firms do you work with?”; “What percentage of your financial assets are managed by your primary wealth manager?”; “Thinking about your primary wealth manager, as well as the wealth management firm, please indicate which of them most influences your decision to hold assets with your current wealth management firm.”; “How were you introduced to your primary wealth manager?” The above values represent the sum of HNWIs choosing the response as referral by a friend or business contact; “Which statement best describes the way you currently work with wealth managers?—I seek professional financial advice vs. I do not seek professional financial advice.” Source: Capgemini Financial Services Analysis, 2016; Capgemini and RBC Wealth Management Global HNW Insights Survey, 2015 18 Wealth Management in the Digital Age
  • 19. 4.3. The Evolving Role of the Wealth Manager These factors highlight a broader trend of the evolving role and value proposition of the wealth manager. Firms and wealth managers face a host of industry challenges, including ongoing issues such as shifting HNW client behaviors (including high levels of cash), regulatory and cost pressures, and more recent threats from new entrants, all of which are driving the evolution of the wealth manager’s role. While the longer-standing issues are well-known to firms, the disruption from new entrants (particularly automated advisory services13 , or as some know them, “robo- advisors”), presents a significant challenge as well as an opportunity. All of these factors are driving an evolution in the wealth manager value proposition across multiple areas (see Exhibit 14). While some aspects have been in transition for several years and there are global nuances, the difference now is in the convergence of areas and accelerated pace of change. In summary, these changes are: • Growing prominence of fee-based and discretionary solutions. Regulations and client demand have shifted the focus of many wealth managers and firms from commission or advice-based solutions toward fee-based or discretionary products. • Focus on behavior-based segmentation. Segmentation of clients has evolved from traditional techniques based on HNWI age, wealth level, and risk profile, to advanced approaches based on HNWI behaviors. Exhibit 14: Evolution of the Wealth Manager Value Proposition and Role Source: Capgemini Financial Services Analysis, 2016; 2015 World Wealth Report, Capgemini and RBC Wealth Management, 2015 Single Investment Products Asset Allocation & Portfolio Management Portfolio Management: Discretionary & Fee-Based Holistic and Integrated Approach to Wealth Management Cross Enterprise / Multi-Solution Seamless Omni Channel Delivery Enabling Functions for Evolving Value Proposition Increasingly Commoditized Wealth Manager Value Proposition and Role • Focus on standardized, proprietary offerings • Measurement against index benchmarks • Discretionary/ advisory-based model, based on client preference • Traditional segmentation techniques of asset size, age, and risk profile • Primarily transaction focused • Product level solutions (stocks, bonds, mutual funds) • 3rd party aggregation and reporting • Financial plan output Differentiators • Understanding client needs and concerns • Engaging full household • Translating needs and concerns into advice opportunities • Holistic and integrated approach to planning • Collaboration with experts • Educating clients and validating client understanding • Tracking and reporting against client goals Enablers • Effective utilization of technology • Professionalizing practice management 13 Automated advisory services refer to online-only firms (or divisions of traditional wealth firms) that offer automated portfolio management services (i.e. client inputs result in automated portfolio management recommendations). However, they are not typically equipped to offer more holistic and detailed financial product and planning services. 19 the way we see itWealth Management
  • 20. • Utilizing open architecture to offer varied products. The adoption of open architecture is allowing wealth managers to offer HNWIs access to investments that were previously available only to institutional investors, rather than relying on the proprietary offerings of the firm. • Shift toward a goals-based, holistic approach to wealth management. Advice and solutions have evolved from suggesting plain and simple products (equities, bonds, and mutual funds) to adopting a goals-based, holistic approach to wealth management encompassing cash, credit, tax, estate planning, insurance, philanthropy, and succession planning, both for businesses and personal wealth. • Delivery of the full capability of the firm. Along with the shift to delivering a more holistic approach to wealth management advice, the core focus of the relationship between the HNWI and the wealth manager has expanded such that wealth managers increasingly act as conduits to provide HNWIs with access to a broad range of experts from across the firm. • Use of multiple channels. The traditional method of dialogue between HNWIs and firms has evolved from a single face-to-face channel, to a more integrated multiple channel experience, with the goal of providing clients a consistent, personalized, anytime/anywhere, seamless experience across all channels, including digital. • Increasing shift toward goals-based performance measurement. The investment management process has evolved from a pure transaction- based model that measures success based on relative returns, to a financial planning model that measures success against the broad range of needs and concerns of HNWIs to achieve a more relevant and personalized goals-based performance measurement. The imperative for wealth managers to embrace a holistic approach toward financial planning and wealth management is clear, and by adapting to the new environment, wealth managers can turn the disruption wrought by automated advisory services into opportunity. As basic asset allocation, investment advisory, and risk profiling services become commoditized, the value proposition of wealth managers is transitioning. It is moving away from stock selection and investment management, toward more holistic financial planning. With the transition already underway, leading wealth management firms are ramping up their investments in capabilities related to financial planning. As basic asset allocation, investment advisory, and risk profiling services become commoditized, the value proposition of wealth managers is transitioning. It is moving away from stock selection and investment management, toward more holistic financial planning 20 Wealth Management in the Digital Age
  • 21. 5. Firms Need to Ingrain Digital Throughout Client Experience 5.1. STRATEGIC: Build a Transformative Digital Mindset The Capgemini framework for firms to chart a path through this complex landscape is multi-faceted (see Exhibit 15). • Shift the business mindset. Future leaders will recognize that digital can no longer be viewed as a channel, but should be instead an integral part of the HNWI experience, integrated across all channels. • Develop an ROI model built on cross-enterprise engagement. Typical ROI approaches are not sufficient for measuring the investments required to infuse a digital mindset throughout a firm. Firms need to go beyond merely identifying key performance indicators, and should instead build comprehensive ROI models that take into account the level of digital engagement required of wealth management staff throughout every level and line of business of the firm. Since the success of any digital program is based on end-user adoption, the entire enterprise, including back-, middle-, and front-office staff, needs to be engaged. • Make build vs. buy decisions. During the journey towards building digital maturity, firms come across the decision of whether to build or buy capability. Building functionality in-house presents a wide range of challenges, not least of which are the complexity of existing systems. Third-party vendors may offer both a more affordable way to acquire software expertise, while also being more scalable to keeping up with the fast pace of technological change, especially those that can integrate with the evolving FinTech ecosystem. Third-party vendors may offer both a more affordable way to acquire software expertise, while also being more scalable to keeping up with the fast pace of technological change, especially those that can integrate with the evolving FinTech ecosystem Exhibit 15: High-Level Digital Prioritization Roadmap in Wealth Management Source: Capgemini Financial Services Analysis, 2016; 2014 World Wealth Report, Capgemini and RBC Wealth Management, 2014 Core/Strategic Focus Shift the Business Mindset Develop Big Data Opportunities Transformation Focus Develop ROI Model/Cross- Enterprise Support Make Build vs. Buy Decisions Implement Quick Wins to Build Momentum 21 the way we see itWealth Management
  • 22. • Implement quick wins to build momentum. Given the importance of maintaining organizational energy for digital transformation, especially in driving adoption from the key end-users, wealth managers, firms should seek early successes whenever they can. For example, providing tablet devices to allow wealth managers to perform visualization, such as dynamic reporting and scenario planning to engage with clients, could be one such approach. • Develop big data opportunities. Many firms consider the Holy Grail for their digital initiatives to be the ability to have a complete picture of all the types of interactions the firm is having with clients and a clear sense of how effective those touch points are in both meeting client expectations and achieving the financial goals of the firm. The sum total of all a firm’s client interactions will generate data that firms should be able to mine to gain meaningful intelligence aimed at driving strategic decisions. Firms that figure out how to convert data into meaningful information that they can act on will become the high-performance firms of the future. 5.2. TACTICAL: Equip Wealth Managers for Success Wealth managers have identified specific capabilities that are critical addressing HNWI needs. The most important of these are wealth-planning tools, such as scenario planning and asset allocation, as well as the ability to have access to experts, such as legal, tax, and philanthropy at the firm and through third parties (see Exhibit 16). Both of these capabilities must be digitally-enabled and can serve not just as a defensive measure to retain HNW clients, but also as a revenue-generating tool by building differentiated value propositions in the areas that HWNIs value. Firms that figure out how to convert data into meaningful information that they can act on will become the high- performance firms of the future. Exhibit 16: Wealth Manager Importance on Capabilities to Fulfill HNWI Wealth Needs, Q1 2015 Note: Questions asked: “On a scale of 1–7 (where 1 = Not At All Important and 7 = Extremely Important) please rate the importance of HNWI needs related capabilities at your firm.”; Ratings of 5, 6, and 7 have been shown in the chart above Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey, 2015 80.5% 71.8% 71.3% 71.2% 70.8% 69.6% 69.3% 68.3% 67.6% 67.5% 67.1% 66.6% 0% 25% 50% 75% 100% Strongwealthplanning tools Accesstofirm/third- partyexperts Smoothaccountopening procedures Accessandservicethrough differentchannels Timelyanddetailedstatements andoverallreportingQuality Availabilityofhigh-quality research(firmandthird-party) Widegeographicreach Highoverallservicequality Broadproductandsolution availability Riskmanagementcapability Feetransparency Strongbrandreputation Respondents(%) 22 Wealth Management in the Digital Age
  • 23. It is therefore critical for a wealth management firm to be able to tap into a platform that leverages advanced application programming interface (APIs) and integration with current and future third-party tools Lastly, as with any significant technology implementation, articulating the productivity and revenue- generating benefits to wealth managers will be critical in driving adoption and getting the most from investments into leading digital platforms and capabilities It is important to note that wealth managers and even their firms cannot have all of the financial planning and expert capabilities that HNWIs need. At the same time that third-party FinTech firms are increasing in both number and sophistication for wealth management capabilities, it is therefore critical for a wealth management firm to be able to tap into a platform that leverages advanced application programming interface (APIs) and integration with current and future third-party tools, allowing wealth managers a range of options on how they customize their service approach to meet HNWIs’ needs. Exhibit 16 also shows that another key capability demanded by wealth managers is to have hassle-free account opening procedures, a development that could see innovative concepts such as e-signatures become more mainstream. These new account opening tools allow for not only a far smoother customer experience during the critical 90-day referral window, but also offer firms a more robust capability for regulatory compliance around know-your-customer requirements. In the transition toward a more thorough financial planning approach enabled by digital technology, major training and change management initiatives are required. Wealth managers will benefit from understanding the importance of financial planning discussions as a key part of the advisory process, and how they will support their business growth and profitability. Coaching and support to segment clients into those who need relatively simple financial planning software solutions vs. more tailored approaches, such as dedicated financial planners, regardless of wealth level, will be an important part of changing wealth manager behavior. Wealth managers will also require more in-depth training on the use of digital tools and social media so they can better engage with clients, particularly the younger ones. Finally, they need guidance regarding how to become more creative in their discovery and prospecting efforts. Lastly, as with any significant technology implementation, articulating the productivity and revenue-generating benefits to wealth managers will be critical in driving adoption and getting the most from investments into leading digital platforms and capabilities. 23 the way we see itWealth Management
  • 24. Three characteristics of cloud computing—agility, flexibility, and scalability— make it a critical pillar for wealth management firms to consider 6. Conclusion: Faced with the Need to Rebuild, Cloud-Based Platforms Are a Key Lever of Firms’ Digital Success Faced with the need to digitalize and build a unified view of clients to enable contextual, collaborative, and personalized service, firms must ultimately rebuild their technology platforms. To do so, they face a choice between re-building their systems from scratch (by employing a service-oriented architecture [SOA] approach) or leveraging a scalable and cost-efficient platform built on cloud technology that can seamlessly integrate with upstream and downstream applications. More and more firms are opting for cloud-based platforms when choosing how to build their digital capability, given the need for both new revenue opportunities as well as cost control. Three characteristics of cloud computing—agility, flexibility, and scalability—make it a critical pillar for wealth management firms to consider in order to succeed in today’s highly disrupted industry (see exhibit 17).14 In addition to the significant cost-benefit advantage that can be gained by replacing fixed-cost investments with variable-cost investments, leading cloud platforms allow firms the ability to collaborate internally and with clients (such as through chat functions), integrate across multiple devices, tap into the FinTech capability to deliver new and differentiated propositions to clients, as well as integrate seamlessly with existing applications such as data feeds, portfolio management tools, and many others. 14 Top 10 Trends in Wealth Management in 2016, Capgemini, 2016 Exhibit 17: Benefits of Cloud Computing for Wealth Management Firms Source: Capgemini Financial Services Analysis, 2016 Benefits to non-core functions Cost Efficiency Improved Collaboration Backup and Recovery Environment FriendlinessQuick Deployment Scalability Benefits to core functions Increase Productivity (Smart Insights) Engagement Opportunities Contextual Market Insight Proactive Alerts Improved Segmentation Increased Collaboration 24 Wealth Management in the Digital Age
  • 25. A solution built on cloud technology needs to provide a unified view of the HNW client, by using data and analytics to glean actionable intelligence from all of the various interactions the client has with the firm and its ecosystem IN PRACTICE: Preparing for New-Age Adaptive Transformation of the Wealth Manager Workstation A large North American bank wanted to optimize its wealth management business to provide a superior client experience and improve advisor satisfaction. Capgemini collaboratively guided the firm through a comprehensive ‘current state’ assessment study across their wealth management value chain, identifying the key pain points contributing to the high costs and inefficiencies within their systems and processes. Capgemini performed a competitive benchmarking analysis which compared key competitors on over 400 functionality points. Capgemini advised the firm with actionable recommendations to help the firm integrate and consolidate multiple, siloed tools in use, and identified a solution based on Salesforce for increased optimization. A ‘target state’, multi-year roadmap was also developed to achieve a Salesforce-based advisor workstation that would enable greater revenue opportunities and enhance the client service experience The solution enabled: • Increased productivity via smart insights and integrated workstation • Proactive engagement opportunities through fully integrated household information across the bank • Contextual market insights across the book of business • Proactive alerts on any device and private client communities • Increased collaboration across teams Finally, a cloud platform needs to ensure it provides a unified view of the client, by using data and analytics to glean actionable intelligence from all of the various interactions the client has with the firm and its ecosystem. By having this foundation, the firm and the wealth manager can provide differentiated and personalized service to the HNWI as both the relationship and the client’s own needs evolve over time. 25 the way we see itWealth Management
  • 26. References About the Authors 1. 2015, 2014 World Wealth Report, Capgemini and RBC Wealth Management accessed February 2016 at https://worldwealthreport.com 2. Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey, 2014 3. Capgemini and RBC Wealth Management Global HNW Insights Survey, 2015 4. “Key findings from Private Banking Benchmark 2015”, Scorpio Partnership, 2015, accessed February 2016 at http://www.scorpiopartnership.com/knowledge/report/private-bank-benchmark-2014/ 5. “Wealth managers look online to bolster advisory services”, Sarah White and Joshua Franklin, Reuters, June 18, 2015 accessed February 2016 at http://www.reuters.com/article/us-wealth-summit-digital-idUSKBN0ET1IN20140618 6. “Next Generation Wealth Management: Mobile Technology Enhances the Customer Experience”, Cisco Blogs, May 2013 7. Digital Solutions for Wealth Management 2.0, Finextra, 2014 8. Top 10 Trends in Wealth Management in 2016, Capgemini, 2016 David P. Wilson is Head of the Strategic Analysis Group within Capgemini Financial Services. With 10 years of experience in wealth management working for both private banks and consulting firms, he combines strategic thinking with industry thought leadership to help wealth management firms identify their future direction. Tej Vakta is a Wealth Management Leader with the Global Banking and Financial Services Business Unit in Capgemini Financial Services. With over 20 years of experience, his first-hand knowledge of financial standards and market trends in capital markets and wealth management helps financial firms enhance productivity and financial performance. The authors would like to thank William Sullivan, Bhuvan Thakur, and Chirag Thakral for their contributions to this publication. 26 Wealth Management in the Digital Age
  • 27. 27 the way we see itWealth Management
  • 28. About Salesforce Salesforce, the Customer Success Platform and world’s #1 CRM, empowers companies to connect with their customers in a whole new way. Salesforce Financial Services Cloud, the world’s #1 CRM, reinvented for financial advisors. For more information about Salesforce (NYSE: CRM), visit http://www.salesforce.com/industries/financial-services/ financialservices-cloud/ About Capgemini With more than 180,000 people in over 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2015 global revenues of EUR 11.9 billion. Together with its clients, Capgemini creates and delivers business, technology and digital solutions that fit their needs, enabling them to achieve innovation and competitiveness. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business Experience™, and draws on Rightshore® , its worldwide delivery model. Learn more about us at www.capgemini.com All products or company names mentioned in this document are trademarks or registered trademarks of their respective owners. Rightshore is a registered trademark of Capgemini. The information contained in this document is proprietary. ©2016 Capgemini. All rights reserved. Rightshore® is a trademark belonging to Capgemini. financial services cloud For more information visit: www.capgemini.com/wealth or e-mail wealth@capgemini.com