Transforming the WM Industry

Financial
Transforming
the wealth
management
industry
Mark Del Col
Managing Principal, Capco
Andrew Hogan
Managing Principal, Capco
Thomas Roughan
Principal Consultant, Capco
Abstract
Mass affluent clients have become a very attractive part of the
overall wealth management industry. While response to this
growing market has been swift, the success stories are quite
rare. In this paper, we review the history of the wealth man-
agement industry to identify a number of important trends for
servicing mass affluent customers and offer a point of view on
where those trends will take the industry.
105

1 Datamonitor, 2001, U.S. High Net Worths 2001
2 Council on Financial Competition, 2001, Courting the Mass Affluent,
Corporate Executive Board, Washington DC
Transforming the wealth management industry
The emergence of the mass affluent customer as a new mar-
ket segment in the 1990s was greeted with enthusiasm by the
financial services industry. Numerous institutions spent time
and money trying to generate a successful formula for prof-
itably servicing these customers. To date, most have met with
limited success. Mass affluent customers require a complex
mix of products and services, including objective advice and
planning, best of breed products and differentiated service-
levels which few institutions can meet by themselves. Any
institution seeking success in this market will need to make
choices in the near future as to how and in what capacity they
will seek to service these customers, whether as a primary
advisor, a product supplier, or an industry processor.
In this paper, we have identified some important trends for
servicing mass affluent customers and offer a point of view on
where those trends will take the industry. In addition, we have
explored the ways industry providers will need to transform
themselves for the future. We find that current strategic
choices continue to pose difficulties for firms doing business
with mass affluent customers, as they require a departure
from conventional thinking on how to service these cus-
tomers, and suggest that financial firms need to give serious
consideration as to whether or not they can be all things to all
customers, or whether a more selective approach to offering
financial services is required for future success.
The mass affluent mirage
At the end of the last decade, two trends emerged at roughly
the same time to significantly alter the landscape for retail
financial service providers. First, the Glass-Steagall Act of 1933
was repealed in 1999, permitting financial institutions to break
out of their product silos and sell the full range of financial
products available to them to their customers. This deregula-
tion was due in part to a desire by American institutions to
have a level playing field with their European counterparts,
many of whom have offered bancassurance products for
decades. After deregulation, integrated firms developed with a
full product suite to offer to customers. The hope was that by
selling an increased array of proprietary products, they could
increase their ‘share of wallet’ of their customers and reap
additional profits.
The seemingly most attractive customer segment for these
institutions was the burgeoning mass affluent segment, indi-
viduals with U.S.$100,000 to U.S.$1 million in net investable
assets. These customers had gained in prominence during the
bull market of the late 1990s, when their net worth increased
dramatically with the booming stock and property markets,
and provide the biggest financial opportunity for today’s highly
integrated financial institutions. They are estimated to have
approximately 90% of the non-mass market customers by
number and 70% of non mass market assets1
. Estimates for
revenues range from 40%-50% of total retail revenue2
. For
the new, integrated firms, these were ideal customers as they
consumed a wide variety of financial products and services
which the integrated financial service firms could provide (see
Figure 1). Even some of the private banks, traditionally purve-
yors only to the very wealthy, believed that the mass affluent
segment represented potential opportunities and rewards.
Consequently, many institutions launched services targeted
specifically at the mass affluent, and providers spent substan-
tial time and money in trying to tailor their offerings to suit the
needs of this new market segment.
106
IRAs and Keogh plans
Life insurance
Mutual funds
Savings
Chequing
Money market demand accounts
Annuities
CDs
Stocks
Trusts
Bonds
Money market mutual funds
Broker's call money
Principal-residence real estate debt
Other real estate debt
Credit card
Other debt
$10.6
$8.9
$8.1
$5.7
$4.9
$4.9
$4.4
$3.6
$3.6
$1.1
$1.0
$0.7
$0.4
$18.4
$5.8
$1.7
Net revenues
($U.S. billions)
s Savings and investments
s Debt
Figure 1: Net revenues generated by mass affluent households by product, USA, 2000
Source: VIP Forum with data from U.S. Federal Reserve 1998 Survey of Consumer
Finances; Council interviews with member institutions; Council estimates
$1.3

The initial challenge was to simultaneously offer expanded
services to these mass affluent customers while still maintain-
ing profitability. The Internet was viewed as the primary
mechanism for accomplishing this and various institutions
developed offerings that could take advantage of this new
medium. For example, Merrill Lynch formed a joint venture
with HSBC to build an on-line mass affluent offering in the U.K.
Even private banks such UBS and Bank Vontobel initiated
projects to provide private banking style services to this market
segment through online delivery channels. However, as we all
know, the high-tech, low-touch approach failed. Merrill/HSBC,
USB and Bank Vontobel have all shut down their original on-
line only wealth management offerings. The first round of
innovation, while based upon reasonable assumptions, was
unsuccessful.
More recently, financial institutions have transformed their
approach and have sought to offer mass affluent customers
access to financial advisors with specialized knowledge. For
example, JP Morgan Chase announced the development of
their Personal Financial Services (PFS) line in 2002. Targeted
at customers with U.S.$250,000 to U.S.$10 million to invest,
PFS combines an asset management account with banking
products, mutual funds, separately managed accounts, and
insurance products. The advice component of the offer comes
via advisors accessible through branches, dedicated phone
lines, and online web portals.
Merrill Lynch has launched ‘Total Merrill’, offering trust, broke-
rage, financial planning, banking, asset management, insur-
ance, alternative investments, and discount brokerage. Their
strategy is to introduce relationship-pricing with no minimum
account size required, but to provide larger accounts with
more favorable rates.
Thus far, both ends of the wealth management spectrum have
generally miscalculated their approach for the mass affluent
market. The traditional retail financial service providers have
simply assumed that their existing integrated product suites
would satisfy their mass affluent customers and the high-end
private banks have, until recently, done little more than offer
alternative, less resource intensive versions of their traditional
services, hoping to snare mass affluent customers with their
existing reputation.
It seems that servicing and satisfying this growing group of
customers profitably has turned out to be more complicated
than many had expected. Slowly, the wealth management
industry is coming to the realization that the mass affluent
segment represents an essentially different breed of cus-
tomer, one who falls somewhere between the two traditional
extremes of mass market retail and exclusive private banking.
The mass affluent reality
Expanding share of wallet with the mass affluent segment has
proven to be a significant challenge for providers targeting
this market. This was partly due to the fact that it has taken a
long time for these institutions to gain a good understanding
of the complex financial needs of this segment. These
providers are coming to the realization that what the mass
affluent customer wants and needs fall into three categories:
advice, products, and differentiated service.
Objective, integrated advice, and planning
Using the Internet, mass affluent customers can educate
themselves on individual products quite easily, but market
gyrations have made building a plan and sticking to it more
important than ever. Putting together a complete and sensible
financial plan requires advice on asset allocation, tax planning,
and other services.
Overall, approximately 70% of mass affluent customers use
some type of advisor, with full service brokers often being the
primary choice. However, in the past few years there has been
slow erosion in the market share of the full service brokers –
from 46% to 36%3
. Bankers and accountants have also seen
reductions in their market share.
The real winners to date in servicing the mass affluent have
been independent financial planners and registered invest-
ment advisors. There has been a rapid growth in the number
of independent financial advisors globally, with the U.S.
107
3 Council on Financial Competition, 2001, Courting the Mass Affluent,
Corporate Executive Board, Washington DC

4 Spectrum Group for Advent Software. From
(http://www.hnw.com/newsrsch/hnw_market/financial2003.jsp). April 2002.
5 Khirallah, K., 2003, ‘Building Integrated Relationship Products: Where Are US
Banks Today?’ Tower Group. March
6 Figures adapted from Khirallah, K., 2003, ‘Building Integrated Relationship
Products: Where Are US Banks Today?’ Tower Group. March.
And Spencer, R., 2003, ‘Key Issues in European Retail Banking 2003:
Channel Integration,’ Datamonitor
Financial Planning Association sponsoring a global push to
make the Certified Financial Planner (CFP) designation a global
standard. Other organizations have developed similar pro-
grams and they have also seen growth in numbers (see Box 1).
Providers like these offer the objectivity and independence
that the mass affluent customers desire.
For the 20%-30% of mass affluent clients that fall into the ‘do-
it-yourself’ category, other providers have experienced a cer-
tain degree of success. Personal financial information man-
agement packages such as Quicken and Money, which track
activity in financial accounts and link to websites with tools for
financial planning and to assist with product selection, have
seen continued growth.
The benefits of these approaches to the mass affluent cus-
tomers are that they can receive objective advice on how to
protect and increase their wealth. Additionally, they can
access their overall portfolio, assets and liabilities, quite easily
from one source. This would be something that a financial insti-
tution would have trouble recreating, even if the client permit-
ted them to have access to all of their personal financial data.
Best of breed products
While the mass affluent clients might not feel comfortable
developing a financial plan independently, they are relatively
comfortable making their own decisions about which products
and product suppliers to use. They use the Internet to retrieve
what information they need to educate themselves on average
performance and costs for various products, and to help select
the most appropriate one. This shopping mentality explains
the reluctance to sole source financial products – mass affluent
customers are more willing to go with the supplier that offers
the best perceived price/performance in a given product cate-
gory. This dilutes any concept of brand loyalty with these cus-
tomers as they are much more willing to develop multiple rela-
tionships with product suppliers. For example, one mass afflu-
ent survey found that on average, investors with more than
U.S.$500,000 of investable assets had around 12 investment
accounts and 3 checking and savings accounts4
. In contrast, a
Tower Group survey found that mass market consumers use
an average of just over 4 separate institutions to provide them
with an average of 10 products5
.
In terms of preference for a single supplier, again there is a dif-
ference with the mass market. Surveys in the U.S. and U.K.
point to the same conclusions in terms of consolidating busi-
ness with one supplier - 60%-70% of mass market consumers
would prefer to use one institution for their financial activities6
.
108 - The Journal of financial transformation
Box 1: Financial Planners
The financial planning market is composed of many different types of practitioners,
and there is a confusing jumble of acronyms currently used. One source has identi-
fied seventy-three different designations for financial professionals.[1]
However, of those seventy-three, only four are truly cross-product in their subject
matter, covering deposits, credit, investment, insurance, taxes, and estate planning.
These are the Certified Financial Planner (CFP), Chartered Financial Consultant
(ChFC), Registered Financial Consultant (RFC), and the CPA PFS, which is a Certified
Public Accountant with a specialty in Personal Financial Services.
The other designations are product specific and primarily focus on investments
(Series 7, CFA) and insurance (CLU, CPCU). Registered investment advisors fall into
this category as well.
In terms of numbers, the product specific designations have many more practition-
ers, with over 650,000 holding the Series 7 alone.[2] The total number of cross
product practitioners mentioned above is only approximately 84,000.[3] In addition,
however, the American Institute of Certified Public Accountants (AICPA) estimates
that there are approximately 85,000 CPAs involved in personal financial planning
with their clients (this number excludes CPA PFS holders).
[1] International Association for Registered Financial Consultants.
http://www.iarfc.org/coninfo/FA.SHTML ). August 4, 2003
[2] National Association of Securities Dealers.
http://www.nasdr.com/2380.asp). August 4, 2003.
[3] CFP numbers (40,375) from (http://www.fpsb.org).
Statistics page. August 4, 2003.
ChFC numbers (38,000) provided by the American College, August 4, 2003
RFC numbers (2,650) provided by the International Association of
Registered Financial Consultants, August 4, 2003, also from (http:// www.iarfc.org
CPA PFS numbers (3,185) from the American Institute of Certified Public
Accountants
Personal Financial Planning Division, August 1, 2003

In contrast, only 31% of mass affluent would prefer to pur-
chase all their products from the same company7
.
Consequently, in order to succeed, products must prove them-
selves on their own merits. For the mass affluent, there must
be tangible economic benefits if they are going to deepen
their relationship with a supplier. A good example of this is
‘integrated banking’ products. Popular in the U.K., these have
become success stories and are good examples of products
that help deepen the relationship with the client and which
offer economic value for the customer. These products take
advantage of having access to combined customer asset and
liability accounts to deliver more value. Typically this involves
using the interest paid on the asset accounts (current and
savings) to offset against the interest owed on the liability
accounts (mortgages, credit cards). In situations where
interest is calculated daily, providers state that customers pay
much less interest overall, and also avoid paying tax on interest
earned as it is applied immediately to the liability accounts.
One provider (Intelligent Finance) acquired 9% of the U.K. mort-
gage market in its first year of operation due to this product8
.
This concept is now being explored by a number of U.S.
providers. However, the integrated asset/liability product
might be more difficult to establish in the U.S. because mort-
gages are typically sold off immediately to mortgage service
companies. However this does not preclude U.S. providers
from developing these products in their non-U.S. markets, or
developing other products based on the same premise.
Differentiated service – ‘Business class’ for mass
affluent customers
The majority of mass affluent customers have generated their
wealth either by running their own businesses or being
employed in well compensated professional occupations, such
as management, law, and medicine. These customers are used
to superior service from other, non-financial, providers and
often place a premium on customer service, flexibility in terms
of product choice, and timely, accurate information. Financial
service firms are coming to consider these expectations when
servicing the mass affluent market.
The mistakes made by most providers in the past usually
revolve around two types of errors. The mass-market retail
institutions have typically under-delivered their service propo-
sitions and as a result have left mass affluent customers want-
ing more, feeling generally unsatisfied, and inviting them to
look elsewhere for their wealth management needs. On the
other hand, traditional private banks have over-delivered, pro-
viding ‘first class’ service yet charging ‘economy class’ prices,
resulting in terrible customer economics. The challenge has
always been to develop a service proposition that exceeds the
mass-market offer while profitably creating economic wealth
for the supplier. And the wealth management industry has
started to look outside itself for inspiration. Consider the travel
and tourism industries, for example, which are quite sophisti-
cated in segmenting their customer base and developing dif-
ferentiated customer value propositions and offerings based
on their common core product set. Regardless of where you sit
on an airplane, you still arrive at a common destination at the
same time as everyone else on your flight. For business class
passengers, however, there are major differences in service
level quality from those sitting in the economy class section of
the plane, yet far less perceived differences with those in first
class. Airlines have found ways to differentiate the business
class flight experience from economy by focusing on a few key
differentiating offering attributes:
s Time is recognized as a customer-valued resource, and so
almost all elements of the customer experience are
designed to maximize the customer’s return on time
invested.
s Customer service is proactive, with customer satisfaction
monitored frequently and new services offered to targeted
customers regularly.
s There is greater flexibility and variety in products and
services offered for use. The provider will take care of the
planning and offer alternatives when needed. Business
class travelers have the option of changing their itiner-
aries at the last minute as their requirements change.
s Information on flights and other products used are
available through a wide variety of channels and are as
up-to-date as is possible.
109
7 VIP Forum, 2001, The Next Generation, Cultivating and Profiting from the High Net
Worth Client of Tomorrow, Corporate Executive Board, Washington DC
8 Spencer, R., 2003, ‘Key Issues in European Retail Banking 2003:
Channel Integration,’ Datamonitor

s Customer loyalty programs are the norm now in airline,
hotel, and some other industries. In the financial markets,
credit cards are the only product currently used which
reward customer loyalty.
Early evidence is emerging that some financial institutions are
developing their own version of ‘business class’, a level of
service for the mass affluent that offers a sophisticated blend
of private banking panache and economically sound mass
market delivery.
Similar to private banking, innovative customer service models
are emerging whereby a relationship manager who is sup-
ported by product specialists targets the mass affluent cus-
tomer. In this way, they can offer customized, proactive advice
to clients. In order to save time, however, some providers send
relationship managers to meet clients at home or their places
of work. This face-to-face contact is usually reserved for finan-
cial planning exercises. When defining solutions for clients,
these institutions rely on open source architecture and use
products from other providers. This approach offers customers
the flexibility they desire to use best of breed products.
To save on costs, mass affluent customers are encouraged
with pricing discounts to use lower-cost channels such as the
Internet, ATMs, and the phone for routine transaction pro-
cessing and account maintenance activities. This is standard
practice in the mass market world and works well with the
mass affluent clients as they realize it is a time-saving measure.
What will we be when we grow up?
The mass affluent clients are demanding, and have thus far
spread their business across a number of different service
providers in order to meet their financial needs. Their needs
for objective advice, best of breed products, and differentiated
service levels constitute a complex proposition mix which few
providers can comprehensively meet. As a result, the mass
affluent clients have started to shape the industry as a whole.
A good example is the growing use of managed accounts by
the major broker/dealers, essentially where they have out-
sourced the investment management function to external
money managers. If there is a failure, it becomes much easier
to simply replace the external manager as opposed to having
to eliminate an internal supplier.
This desire for objectivity and best of breed products continues
into other product groups (transaction, credit, insurance), so
that there is a growing fragmentation of the value chain with-
in this market, creating a divergence between those whose
main business becomes owning the overall customer relation-
ship, and those who build and supply financial products.
Primary advisors work with the customer to build a financial
plan, and then choose the appropriate product suppliers to
use when implementing the plan. As the products used are
mainly non-proprietary, this insulates the primary advisor to
some degree should one of the products fail. Product suppliers
are focusing on building best-of-breed products which are
then distributed to the primary advisors via various channels.
Supporting the primary advisors and product suppliers are
growing numbers of industry processors, whose main role
will be transaction processing, accounting and reporting and
other administrative functions. All of these roles currently
exist in the financial industry today, with many companies
operating in one or more of the three areas outlined. However,
the transformational nature of this industry is demonstrating
that over time, it is likely that providers will choose one of the
three primary differentiating roles within which to do business.
Primary advisors
The primary advisor needs to be able to offer a ‘total balance
sheet’ service to its customers. They need to develop a finan-
cial plan, find the appropriate products, and perform continuous
monitoring of the client to make the appropriate changes to
the plan as the customer’s situation changes. Ideally, a pri-
mary advisor would offer objective advice on the full range of
financial products - which ones are best, which ones comple-
ment each other, which ones to avoid - and would also take
proactive action to protect customer wealth.
For traditional providers, this poses quite a dilemma. Banks,
brokers, insurers, and mutual fund companies all evolved as

sellers of specific financial products in specific markets. Banks
sold transaction and deposit products, insurers sold insurance,
and brokers and mutual fund companies focused on invest-
ment products. For these firms, the leap to providing compre-
hensive wealth management advice is a big one. Post Glass-
Steagall, while there may be one parent company acting as a
coordinating force, the underlying businesses, processes, and
technology are still primarily product focused. This has hinde-
red the growth of services which focus on meeting the total
financial needs of customers. Building an integrated view has
been quite difficult, even for those customers who have wanted it.
To transition into a primary advisor, there are several steps
that need to be taken:
s Identify target customers - Successful providers have
mined their institution’s mass market customer base for
potential mass affluent customers. Using product,
transactional, demographic, and other information these
institutions have been able to identify current mass
affluent customers as well as predict which of their
current mass market clients might move into that category
in the future. While this can be a difficult hurdle for
traditional firms, as most customer information resides in
product silos, successful firms have been able to bring
together an integrated view of the customer’s financial
picture. Referrals from existing mass affluent customers
provide another source of new customer acquisition.
Finally, micro-segmentation, for example along
occupational lines, is evolving as yet another means of
identifying and targeting distinct sub-groups of mass
affluent customers.
s Identify value added core products - In order for these
firms to succeed as primary advisors, they will need to
perform analysis to understand which products are
perceived as best of breed by their customers and
leverage their offerings around their strongest
sub-brands. This will be an especially difficult undertaking
for firms which have recently grown on the premise of
selling all types of products to their clients. However, few
companies can truly manufacture a wide-range of
products that are all best of breed, especially if these
products are still being manufactured by various
subsidiaries with different management styles, processes,
and technology.
s Build third-party product network and rating system -
Primary advisors will need to develop comprehensive
knowledge of financial product suppliers and have the
ability to rank them. Vendors like Morningstar and Lipper
which provide this type of data for mutual funds are
excellent examples. Rating standards for other financial
products should be designed and implemented, either
internally or using an external provider. With third party
products, the issue of whether commissions will be paid to
advisors that recommend certain products needs to be
squarely dealt with. From an infrastructure perspective,
the primary advisor will need to support an open architec-
ture structure that allows for a ‘plug and play’ analysis of
external products within the overall client balance sheet.
Again, this capability can be developed internally or an
industry processor can be used.
s Build total balance sheet advisory capabilities -
Advisors are already beginning to use sophisticated
financial planning tools for their clients in order to analyze
life goals and deliver a financial plan for their customers to
implement and maintain. The accounting and reporting on
the balance sheet are becoming increasingly available
through all the standard channels – Internet, wireless,
phone, and updated either real-time or on a daily basis.
This will make consistent monitoring by the customer and
the advisor possible and changes can be quickly made to
products as needed. To support this planning process,
firms are reconsidering their existing relationship and
customer service staff. To support a total balance sheet
plan, cross-product professionals are needed which can
analyze the big picture and recommend the appropriate
solution.
s Build ‘business class’ service levels - As stated
previously, the mass affluent client expects a higher level
of service than mass market customers and will switch
providers if their needs are not met. Firms targeting the
mass affluent market need to develop service models
111

which maximize time spent with the customer and offer
tangible benefits for deepening the relationship without
sacrificing the economics of the customer relationship for
the provider. The customer’s total balance sheet needs to
be updated and proactive advice ready for client consider-
ation. Benefits need to be offered to the mass affluent
clients to encourage them to extend product use or to
deepen the relationship. This is already the case with most
credit card propositions, but few other financial products
offer any type of benefit for use, but this too is changing.
Firms that maintain the total balance sheets for their
customers will increasingly offer financial or other
benefits to keep good customers loyal.
s Monitor customer profitability - Today’s providers are
getting better at monitoring customer profitability and are
taking strides to use the information effectively. Short
lived are the days where customer economics are
calculated at great effort and expense only to sit unused in
a bank database. In the mass affluent market, profitability,
both current and future, will continue to be an important
determinant in migrating customers either up or down in
the wealth management segmentation scheme.
By building these competencies, the major banks and broker-
age firms can stave off the competition from the independent
financial advisors and add value to the do-it-yourself mass
affluent consumer who sees little value in paying money to an
advisor who tells them what they already know.
Product suppliers
Most retail financial institutions typically grew up around one
product set, be it credit cards, mortgages, or mutual funds.
Many have since been combined into larger institutions, but as
the influence of the mass affluent clients continues to exert
itself, strong product capabilities will become increasingly
important. As information on financial products becomes ever
easier to obtain, customers will continue to become more dis-
criminating with the products they want to use. This will influ-
ence some companies to go back to their roots and focus on
building superior financial products, rather than trying to build
primary advisory capabilities. For those companies, there are
several critical competencies they will need to develop.
s Create best of breed products - Product suppliers will
need to build and sell best in class products to gain
business from the primary advisors and their customers.
They will need to continue to invest in first-rate product
specialists who have a clear understanding of who their
target markets are so that products are designed to the
appropriate specifications to meet customer expectations.
Rankings against competitor’s products will need to be
monitored regularly so that any changes required to
match or stay ahead of competitors can be quickly made.
s Build efficient infrastructure - The manufacturing
process for the product needs to be efficient and
consistent so that the products can deliver solid price/
performance rankings over time. Firms should consider
utilizing Six Sigma or similar techniques in their
production processes to enforce standardization of
manufacturing results as well as identification of
improvement opportunities.
s Develop extensive distribution capabilities - Product
suppliers will be mainly in the business-to-business space
as end customers will primarily reside with the primary
advisors. To this end, they will need to invest in first-rate
distribution capabilities to ensure that their products
reach the primary advisor community. Product suppliers
will need to utilize the full array of distribution channels
and have a good understanding of which channels are
appropriate for the different types of primary advisors.
Industry processors
As primary advisors and product suppliers focus their invest-
ments on capabilities that improve their competitive position,
they will outsource the rest. Industry processors, many of
which already exist, will fill the operational gaps with software
and service solutions designed for both. These processors will
need to continue focusing on the following capabilities:
Develop turnkey wealth management solutions
s Wealth management advisory capabilities require
sophisticated planning and advisory tools, especially
regarding investment, tax, or estate planning decisions.
Processors should consider whether to buy or build these
tools. There are a number of independent software

vendors for investment planning in existence which could
be considered as candidates for acquisition.
s Integrated product accounting and reporting.
s Building a total balance sheet will require accounting
software to reflect asset and liability balances, cash flows,
tax accruals, and other financial information. The software
will need to track the costs and performance of each
product used and reflect the contributions of each product
to overall financial performance.
s Scalable transaction engines
s As the bulk processors for the industry, these firms will
need to develop transaction engines which are highly
scalable and efficient, but retain some degree of flexibility
to meet the different needs of customers.
Focus on service quality
Primary advisors and product suppliers will be heavily reliant
on the service offerings of the processors, and these will need
to be tailored to different market segments and specific firms
in order to supply them with the services they require to sup-
port their respective customers. As the backbone of the
wealth management industry, industry processors will need to
maintain high levels of service quality in terms of information
accuracy, timeliness, and completeness. Proactive monitoring,
measurement, and improvement of service level quality across
the client base will be critical to the success of these firms.
Conclusion
While it is true that the entire wealth management industry
has had to undergo tremendous transformational change in
recent years, the emerging mass affluent segment is driving a
particular need for change. Providers have gradually come to
the realization that they can no longer prosper by trying to
force the mass affluent customer into existing offer proposi-
tions originally designed for either the mass market or the
wealthy private banking customer. The needs of the mass
affluent segment are simply too specialized for that.
Providers are taking two primary tacks when approaching this
problem. They are designing tailored offerings geared specifi-
cally for the unique requirements of the mass affluent seg-
ment; and they are choosing where to specialize in the industry
value chain, be it at the customer front end as primary advi-
sors, or as product suppliers, or industry processors. The days
of being all things to all segments are quickly coming to an end.
113

Transforming the WM Industry

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