The document discusses disruptions in the wealth management industry driven by changing client expectations, new technologies like robo-advisors, and the need for advisors to adapt. Key points: - Clients expect anytime, anywhere access to financial services on mobile devices and personalized advice based on life goals rather than products. Robo-advisors also offer low-cost investment options. - Advisors face challenges like an aging workforce, increased regulation, and demands for higher productivity. New technologies may help advisors better serve clients and collaborate. - To succeed, wealth managers must learn to "drive the new CAR" - balancing clients, advisors, and robots by meeting client expectations through new technologies while controlling costs

1. The Future of
Wealth Management
Learning to Drive the New CAR
(Clients, Advisors, and Robots)
Fall 2015
Cisco U.S. Enterprise Business Transformation Group
financialservices@cisco.com

2. The Future of Wealth Management 3
Contents
Overview of the Wealth Management Industry............................................................... 4
Epic Battle for Wealth Clients Underway........................................................................ 6
Wealth Clients’ Changing Expectations.......................................................................... 7
Enter the Robots ............................................................................................................ 8
Advisors Disrupted: the Connected Advisor Vision ...................................................... 11
Business Outcomes and the Role of the Board of Directors ........................................ 14
The 5 Pillars of Success............................................................................................... 16
Wealth Transformational Readiness Assessment ......................................................... 17
Business Architecture Roadmap for Achieving Business Outcomes ............................ 18
Conclusion ................................................................................................................... 19
Game-changing technology is fueling disruption in the wealth management industry,
changing the way clients view the world, value brands, and make buying decisions.
New players in the market challenge business models that have existed for hundreds of
years. We at Cisco are committed to helping our clients and partners grapple with these
disruptions and develop winning strategies in the battle for industry leadership, by sharing
the unique industry point-of-view we’ve developed through decades of experience
in servicing the global financial services market from the inception of the Internet.
Cisco is a leader in setting vision for, investing billions in, managing, and executing
market transitions. We have done so by delivering repeatable business and technology
architecture to achieve market scale. We have learned that the by-product of sound
architecture is a seamless client experience. Yoshio Taniguchi, the famous Japanese
architect who redesigned the Museum of Modern Art in New York, said “Architecture is
basically a container of something. I hope they will enjoy not so much the teacup, but
the tea.” (Time, November 22, 2004) We want to thank our valued clients and partners
whom we are privileged to serve on a daily basis. As we combine our best thinking,
together we can reimagine the financial services industry. We can only hope that the
clients of our banking industry customers enjoy not so much the teacup, but the tea.

3. The Future of Wealth Management 5
In a meeting a few years ago where world champion racing driver
Mario Andretti shared some wisdom about his career, he said that
the key to his success was driving the car to its full potential in every
competition. If it didn’t feel like the car was going out of control at
any moment, he wasn’t driving it to his, or its, full potential.
Joseph Pagano, Financial Services Practice Advisor, Cisco Business Transformation Group
At its foundation, the wealth industry is being disrupted along three main axes: Clients,
Advisors, and Robots (CAR). So the theme of this point-of-view paper is around how to
drive the new “CAR,” keeping in mind the wisdom of Mario Andretti.
• Clients: Wealth client expectations are changing. They’re questioning the fees they
pay for financial advice. They expect to be presented with financial solutions based on
their own life goals and events, and they’re less interested in being sold transactions
or products. And they wonder why they don’t get the same customer experience
from their financial advisor that they get from retail, entertainment, airline, and other
industries that have developed successful mobile apps and digital services that people
use in their daily lives. As Aité Group’s Ron Shevlin says, “The battle is not for the
primary financial institution any longer, but for the primary financial app.”1
Imagine a
world where a wealth software application brand has more value than a financial brand.
• Advisors: As client expectations are changing, wealth advisory firms are besieged
by new regulatory requirements, by turnover due to an aging workforce where more
than half of the 315,000 advisors in the United States will need to be replaced2
over
the next 10 years, by defections to competitor firms or new firms,3
and by increasing
expectations of advisor productivity set at the board level.4
Some clients and industry
analysts question how well-equipped financial advisors are with modern tools and
the skills to use them, and how effectively they share best practices and collaborate
within their firms to leverage the expertise of their colleagues.
• Robots: Robo-advisors are becoming popular entry-level offerings in the wealth
market. Enhanced by analytics capabilities, they represent a new wave of value
along with low fee structures, low thresholds for minimum initial investment, and
personalization to tailor investment offerings to a client’s life goals and risk tolerance.
The investment advice business is no longer just about serving the mass affluent,
high net worth, or ultra-high net worth segments. Anyone with discretionary income
to invest now has access to the technology and algorithms used by the most
prestigious institutions to invest capital.
So if you are in the wealth business and feel that the “CAR” is almost out of control,
perhaps Mario would say you are on the right track—assuming that you’re at the wheel
with the ability to react in real time while taking proactive measures to delight your
clients, meet the changing demands of the regulators, and see around corners, all while
disrupting the cost structure of the business.
The new vision for wealth management is for advisors to be present in the financial
lives of their clients any time, any place, on any device, and across any channel.
Achieving this vision will require learning how to drive the new CAR.
Overview of the Wealth
Management Industry
1
Brett King, Breaking Banks: The Innovators, Rogues, and Strategists Rebooting Banking, Wiley, 2014.
2
Aging Advisors Lack Succession Plans, Financial Advisor Magazine, May 2013.
3
Breakaway Advisors Look To LPL and Raymond James, Financial Advisor Magazine, October 2012.
4
UBS’s U.S. Wealth Unit Shrinks Further, Wall Street Journal, July 27, 2015.
4

4. The Future of Wealth Management 76
Epic Battle for Wealth Clients Underway
An epic battle is forming to win and retain wealth clients. As reported by the Boston Consulting
Group (BCG), global private wealth assets totaled U.S.$164 trillion and grew 12 percent in 2014.5
However, in the same report, BCG stated that only around 25 percent of that growth was from
the creation of new wealth versus the appreciation of existing wealth due to rising market values.
BCG identified five categories of wealth advisory businesses
in the United States going after wealth clients. These include
retail banks, online brokerages, registered investment advisors
(RIAs), full-service brokerages, and pure private banks. Retail
banks are trying to convert transaction centers into advisor
centers and stores. Online brokerages are taking advantage
of the trust built from transactional engagements to extend
to advisory services. RIAs have done well in expanding
their business in recent years as trust broke down between
some clients and their big-brand advisors, while full-service
brokerages and pure private banks have been able to make
investments in transformational initiatives and new technology
platforms to expand their wealth footprints.
These advisory businesses are all going after multiple
segments of wealth clients, who can be roughly divided into
the emerging affluent and mass affluent, the affluent, the
high net worth, and the ultra-high net worth. Given the low
threshold for the minimum robo-advisor investment level, we
might add yet another market segment called “discretionary
investable income,” which can start as low as $5,000.
A wealth advisory business can grow by taking market
share from competitors via acquisition or competitive hiring,
improving returns on existing assets under management by
using more intelligent portfolios, capturing new customers
who are entering into the financial advice market segments
via wealth transfer or simply by becoming new investors,
innovating new fee-based and higher-margin products and
services, or improving cross-selling to existing clients.
Keep in mind that research from Hearts & Wallet$ has shown
that 55 percent of clients with $500K or more in investable
assets worked with three or more firms in 2014, up from 49
percent in 2013.6
So as an advisory business, a large part of
your market share battle is to become the primary provider of
financial advice and ultimately reduce the number of firms the
client buys financial advice products and services from.
Wealth Clients’ Changing Expectations
Technology is certainly playing a critical role in the wealth
client experience. MyPrivateBanking Research reported
that “more than 80 percent of the affluent/high-net-worth
individuals worldwide use apps or mobile websites for
financial matters.8
” This contradicts conventional wisdom
that presumes that Millennial clients are the heaviest users of
digital channels.
The Boston Consulting Group Global Wealth 2014 report
shows that there is as much as a 60 percent gap in the
market between clients who demand video engagement
with their wealth advisors and banks that provide video
capabilities.9
The technology exists today to remediate such
gaps and deliver superior client experiences to improve
satisfaction and sales results.
Wealth clients have unprecedented access to financial
information. Financial advice can come from social networks,
news reporting, search content, family, friends, mobile apps,
various publications, and websites. The Millennial generation
has grown up surrounded by computers and immediate
access to information. Some Millennials wonder why they
would ever need a financial advisor. So “competing with
free” needs to be part of the competition strategy for wealth
management businesses who want to acquire new Millennial
clients or want to get ahead of the wealth transfer curve
and develop relationships with Millennial children of existing
clients. The question that needs to be explored in today’s
market is, what does a “freemium” (free, premium) financial
advice business model look like.
Even non-Millennial clients are exposed to the same inputs,
interrupts, and real-time access points that Millennial clients
are exposed to. These inputs can either embolden the
financial advisor relationship and value proposition, or create
distance. Better-informed clients might ask better questions,
leading to an opportunity for the advisor to provide a higher
level of value. However, distance can widen if clients feel
they’ve become “smarter” than advisors or advisors can’t
provide timely service and timely answers to the questions
that clients come up with on their own.
Wealth clients have been exposed to digital experiences in
several other industries, and we believe this has raised the bar
for expectations of customer service and digital experiences.
Take Amazon Prime, where a client can use a single-click
“buy now” button to have a product shipped (same-day in
some markets), and where the customer service program
generously and proactively compensates clients for major
and minor inconveniences. For example, I recently purchased
a streaming movie that didn’t play continuously due to
buffering problems. Amazon noticed there was poor playback,
automatically apologized, and refunded the full amount for the
movie without any prompting.
Meeting Higher Expectations
A wealth management business might give
incentives and credits to clients based on their
meeting level-of-interaction or trading thresholds,
and perhaps for SLAs the firm failed to meet around
reporting or disruption in website or mobile app
availability. It is not so much the economic value
that is important in digital customer service—it is
the gesture that helps to create the brand. Service
can be a core differentiator in crowded and mature
markets, including wealth management.
Combine industry-leading service with simplicity, transparency,
mobility, and lower costs to clients and we have the ingredients
for market disruption. If traditional wealth management firms
embrace the transformation that is occurring, they can create
an onramp for higher value and higher-margin services, thus
avoiding a “race to zero” relative to fee structures.
Epic Battle for Wealth
Clients Underway
5
Global Wealth 2015: Winning the Growth Game, Boston Consulting Group,
June 2015.
6
Portrait of U.S. Household Wealth, Hearts & Wallet$
7
Video Collaboration Increases Sales for U.K. Financial Firm
8
Global Survey of Mobile Disruption in Wealth Management 2014,MyPrivateBanking Research, November 2014.
9
Global Wealth 2014: Riding a Wave of Growth, Boston Consulting Group, June 2014.
Case Study: Nationwide
Nationwide Building Society provides an example
of the kind of business outcomes that are possible
when Cisco video solutions are used to deepen
the level of client engagement. In six pilot branch
offices, Nationwide set up video conferencing
with four mortgage advisors who were available
as needed to consult with customers in real time.
With its Remote Advisor program, Nationwide
saw a two-thirds improvement in new mortgage
business and a two-thirds reduction in cost
of sale. Most importantly, customers reported
double-digit improvement in net satisfaction;
research confirmed that not having to wait is
what made the difference.7

5. The Future of Wealth Management 9
We are seeing two groups of opinions forming in the market, those who don’t think robo-advisors
will have an impact on their business and those who think robo-advisors are going to become
a central part of the advisory services industry. The latter group believes that robo-advisors
will change traditional advisory business models along the way, displace human advisors to a
significant extent, and capture market share from traditional wealth management businesses.
PFM v. 2.0 and Global Inclusion
So what is new about personal financial management (PFM)
software? Is robo-advisor simply PFM version 2.0? PFM
software made headlines over the past decade, for example
when Intuit and Mint joined forces. Their value proposition
centered around a simplified user interface for bank account
aggregation, spend categorization, investment tracking, and
integrated loan origination. PFM didn’t seem to threaten
the wealth management business at the time, so what has
changed?
For one, capital markets have rebounded when computing
for the masses has never been more accessible; this is a
result of global smartphone penetration and of consumer-
grade applications entering the enterprise. According to the
International Telecommunications Union (ITU), in 2015 “there
are more than 7 billion mobile cellular subscriptions worldwide,
up from less than 1 billion in 2000. Globally 3.2 billion people
are using the Internet of which 2 billion are from developing
countries.”10
The demand for financial inclusion has gone global, as we
have seen in Kenya. It has been estimated that as much as 31
percent of Kenya’s GDP is spent using the M-Pesa payments
app on mobile phones.11
In North America and in other capital
markets–intensive economies, there is a push for equal access
to markets and technology.
So we are in a perfect storm of sorts, different from anything
we have seen before in the degree the wealth management
business model is being disrupted. We have game-changing
technology available broadly from mobile phones and tablet
devices, we have robo-advisor apps for tasks such as
investment allocations and automated rebalancing, we have low
cost of entry for computing devices and network fees, and new
minimum investment levels required for money management,
with fee structures that are a fraction of what traditional
financial advisors charge at a time when the world is gravitating
toward financial inclusion and ubiquitous access to financial
information. A new financial advice market is forming and with
it a new segment of wealth clients who can be described as
almost anyone with discretionary, investable income.
At Cisco we believe that the robo-advisor development will
ultimately affect all segments of the wealth management
industry. Remember that the iPhone was launched on
June 29, 2007. In just eight years multiple industries
were completely disrupted and transformed including
the music, retail, computers and software, mobile phone,
telecommunications, banking, payments, watches and
wearables, and healthcare industries. Even ultra-high net worth
families will want some version of what we know as robo-
advisors today.
Coexistence with Human Advisors
Will software advisors replace all human advisors? Movie
theaters didn’t go away, nor will financial advisors. However,
the wealth management market will probably shift to self-
service and assisted self-service channels and platforms
for basic services, not dissimilar to what is occurring in retail
banking. As mobile retail banking expands, digital self-service
is taking over many of the tasks of the physical branch while
humans handle more complex transactions. It is likely that a
good share of the wealth market for human advisors will shift
to robo-advisors or assisted robo-advisor business models.
This presents an opportunity for established wealth firms who
offer a fee scale spanning from “freemium” to full-service
offerings. Established wealth firms will need to reimagine
their differentiation and value-add, develop new products and
services, and offer fee structures that meet the new price
elasticity curves that result from increased competition and
low-cost digital offerings.
The use of robots in healthcare gives us another way to think
about robo-advisors versus human advisors: Robots guide
and surgeons do surgery. Advisors must use trust, experience,
judgment, communication, and collaboration to differentiate
in the same way a surgeon’s value proposition takes hold
in the marketplace. Do surgeons use robots? Yes they do,
for tasks where automation helps reduce human error and
deliver service more economically. The same model holds in
financial services, where the teams of surgeons—or financial
advisors—complement the entry of robots into the marketplace
and continue to position and warrant higher margins on
the highest-risk, most complex tasks that require human
intervention, empathy, and judgment.
Enter the Robots
So what is a robo-advisor? Robo-advisors are simply
software applications that gather user input, profile
financial needs, and then suggest investment asset
allocations based on those needs. They have custom
algorithms or business rules that respond to user input
regarding tolerance for risk, life events, and financial
goals, and rebalance investment allocations over time.
They don’t help too much yet with financial planning,
but that’s clearly the direction they’re going in.
10
The World in 2015, ICT Facts & Figures, May 2015.
11
31% of Kenya’s GDP is spent through mobile phones, QZ.com, February 2013.8

6. 10
Enter the Robots
Getting Ahead of the Wealth Transfer Curve
Failure to embrace the robo-advisor trend could put a
significant portion of the $30 trillion in wealth expected to
be transferred over the next 30 years at risk. According to
InvestmentNews, 66 percent of children fire their parents’
financial advisor after they receive an inheritance.12
Failing to
develop strong relationships with children of wealth clients
may put assets under management at risk upon inheritance.
This can happen if the inheriting generation gets comfortable
with a robo-advisor service and brand outside the firm
that manages the family wealth today. If the inheritors like
the robo-advisor brand and the directly competing wealth
management services that the brand will provide in the future,
they may stick with the firm that captured their initial interest
in robo-advisors when they inherit family wealth. Wealth
management firms that embrace self-service investment
technologies and provide the digital experience and customer
service expected by the market will be better positioned to
capture these assets under management. These firms will
need to become accustomed to lower fee structures for
basic services and develop a robo-advisor brand as part of
a spectrum of offerings.
Robo-Analytics
Perhaps the most important value for robo-advisor providers
is the analytics that they will collect and the insights they
will derive from the analytics. As in the case of payments,
the information about a transaction has more market value
than the transaction fee itself. Having an analytics capability
will help a wealth firm understand what clients need now
and over time, what content they seek, what questions
they have, how frequently they have them, where there are
frustrations, and what market acceptance looks like for new
products and services—in near–real time. As the robo-advisor
market grows, more data will be immediately available for
firms to make same-day adjustments in service levels, in the
design of user interfaces, and the design of products and
services themselves. Collection and analysis of client data
can provide an unprecedented intelligence feed in financial
services, resulting in a treasure-trove of information used to
differentiate in the market. Client analytics capabilities is an
area that remains a challenge for wealth firms.
The challenge for traditional wealth firms is how to provide the
agility and next-generation digital experiences of new market
entrants while providing a family-office type of advisory
service. So if you are in the human advisor side of the
business, what can you do to further differentiate in the era of
robo-advisors and new, fully digital market entrants? How will
you need to “up your game” to compete with robots where
business models overlap? Figure 1 shows the areas where
humans can best differentiate themselves from robo-advisors.
12
The great wealth transfer is coming, putting advisers at risk,
InvestmentNews, July 2015.
Figure 1. How Human Advisors Can Differentiate Themselves
Analytics
Robos have the advantage with
embedded analytics and dynamic
segmentation taking place by
design. Wealth firms must double
down on analytics investments
and take advantage of
understanding household
hierarch and life events.
Simplicity
Advisors need to
continue to be great
simplifiers. Complex
software frustrates.
Empathy
Software knows
no empathy. Think of
Spock on Star Trek.
Financial Planning
and Solutioning
Robos generally lack financial
planning and solutioning
capabilities. Advisor-Client
collaboration platforms can better
deliver financial solution advice.
Timely Mobile Experiences
Getting an expert relationship
manager or advisor on a video
and interactive screen call from a
mobile device makes clients feel
more connected with their advisor.
Face Time and Service
Face time can now be virtualized
by using video channels.
Deployed properly, advisors
will strengthen relationships
based on trust, not just be
a Mayday tech support face
in a window.
Advisors Disrupted: the
Connected Advisor Vision
The Future of Wealth Management 11

7. The Future of Wealth Management 1312
Ground Transport Automation
Financial advisors are being disrupted along a number of axes including regulation, pressure
on performance, turnover due to advisor retirements, competitive hiring, being compared with
robots, and needing to provide more differentiation in the market.
How can a wealth management firm address these
issues head-on? What is the difference in the patterns
of collaboration inside the firm and with clients for high-
performing and low-performing advisors? How can success
for clients in one segment of wealth be replicated in other
segments? How can failures be avoided? How do the call-
center interactions inform the quality of the products and
services being offered, and are any new product opportunities
being identified through these interactions? Answering these
questions requires examination of the collaboration and
communication capabilities and processes across the front,
middle, and back offices for the purpose of improving business
metrics such as net new assets per advisor, advisor retention
and acquisition, cross-selling and collaboration revenue, and
client satisfaction.
So, what capabilities do wealth firms need to capture such
growth? Cisco’s Connected Advisor vision is one where
advisors are connected to the people, process, data, and
things that they need to serve clients in real time. The
Connected Advisor can find other experts on-demand within
the firm and quickly assemble the right team at the right time.
The Connected Advisor can engage clients on any channel
using video, audio, and document browsing for remote expert
meetings. Calls coming into the call center can be routed
in real time to the Connected Advisor and—in many cases—
converted into sales opportunities.
Connected Advisors have access to the people they need
to serve clients. The Connected Advisor uses business
processes that were designed based on the workflow of the
business, not limitations in technology. The Connected Advisor
has access to data across the organization with context,
including client transaction data (data at rest) that has been
correlated with client interaction data (data in motion) from
activity across channels including branch, help desk, and
mobile. The Connected Advisor is able to visualize client,
market, and historical data in the form of actionable insights,
and compare business analytics with other advisors across
the firm. The Connected Advisor has access to applications
powered by software services and analytics that help predict
what a customer needs based on life events, financial goals,
client activity feeds, and an expanding understanding of the
financial household. The Connected Advisor is accessible
anywhere by colleagues and clients through mobile device,
network access, and software capabilities. The Connected
Advisor does not sell products or transactions. The Connected
Advisor positions financial solutions around a client’s life
events with a deep understanding of the needs, goals,
aspirations, and potential of the individual, family, or franchise.
The concept of the Internet of Everything, or IoE, is about the
networked connection of people, process, data, and things.
As the world moves towards 50 billion Internet-connected
objects and devices in coming years, wealth clients will have
access to even more financial information than they do today.
According to Cisco research, mobile data traffic will grow at
a CAGR of 57 percent from 2014 through 2019. Only those
firms that can deliver the secure and optimized infrastructure,
data architecture, and applications that financial advisors need
to serve the wealth client of the future will be market leaders
as IoE takes hold across industries. In other words, enabling
the Connected Advisor by using IoE capabilities will create
competitive advantage in the market.
Beyond concept and thought leadership, the successful
wealth management firm of the future must have a holistic
business architecture design whose implementation must
take into account people, process, policy, and governance
models. Doing so will allow the deployment of technology at
scale, which can create a force multiplier in the marketplace.
Technology can disrupt the cost structure of the firm,
materially reduce risk, improve security and compliance, free
up capital, and—by fueling a culture of innovation—delivering
next-generation experiences for both financial advisors and
wealth clients.
The technology exists today to create a single view of a client
with real-time inputs that enable wealth management firms
to predict and anticipate client needs. However, many firms
in the current market have high ratios of clients to advisors
and often can only react to client problems, questions, issues,
and opportunities.
The Connected Advisor is powered by an IoE analytics–
software-driven approach to better serving wealth clients.
Such a holistic approach can have a material impact on
a firm’s ability to anticipate client needs, orient solutions
around financial goals and client life events, and establish an
omni-channel engagement capability. Doing so will create
competitive advantage in the wealth industry over the next
three years, at a time when the battle over winning new and
existing wealth clients has never been more fierce.
Figure 2 shows the importance of providing the Connected
Advisor with contextual insights, with client intelligence
embedded at the foundation of the technology architecture.
Cisco has developed a vision to help address gaps and opportunities in the wealth management industry. The
continued importance of the financial advisor role and the opportunity for market expansion is underscored by
the Boston Consulting Group report stating that in 2014, global private wealth grew 12 percent to $161 trillion
and is projected to grow to $221 trillion by 2019.13
The ultra-high net worth segment is projected to grow the
fastest—19 percent growth in the number of households and 12 percent growth in total wealth through 2019.
13
Global Wealth 2015, Boston Consulting Group.
Figure 2. The Connected Advisor
Lake Blue
C100, M75, Y0, K6
River Blue
C98, M24, Y1, K3
Behaviors, context, location,
preferences, relationships
Mobile
Web
Branch
Call Center
Voice
Video
Email
Text
Experts
Advisors, PMs,
Product
Specialists
Analytics
Client and Market
Data in Motion
with Analytics
Driven Insights
Call Centers
Connected
Call Centers
Context Data
Single View of
Customer Data
Software
Module Wealth
and Risk
Applications
Events
Personalized
Predictive Actions
Around Market
Events
Preferred Channel
Advisor
Wealth Client Channel Smart Advisory Platform
Embedded intelligence enables the financial institution to learn and anticipate client behaviors, needs and preferences.
Advisors Disrupted: the Connected Advisor Vision

8. The Future of Wealth Management 15
Ground Transport Automation
The financial industry is undergoing historic and disruptive
change from increased regulation in the post-2008
crisis environment, changing client expectations and
demographics, new market entrants, and game-changing
technology that is fueling challenges to traditional business
models. Digital payments are transforming the way
consumers and businesses transact; P2P loan providers
are changing the face of the lending business; telematics
is changing risk models, reducing bad driving behaviors
and therefore reducing premiums in the auto insurance
industry; neo-banks are challenging the assumption that
buildings are required to run a bank; and robo-advisors
are challenging the value proposition of traditional financial
advisors in the wealth management business. Clients and
advisors are getting digital and mobile experiences in other
industries and wondering why they can’t have, or deliver,
the same kind of experiences in the financial industry.
At the same time, the wealth management industry faces real economic
pressures. To reach expected financial targets such as return on equity (ROE)
and improve operational efficiency, boards of directors have faced challenging
decisions about whether to close buildings, sell real estate, or reduce
headcount. This pressure combined with the burdens imposed by regulatory
compliance are taking valuable time, focus, and capital away from innovation
at a time the industry needs it the most.
At the board level, budgets are being categorized in the areas of “run the
firm” and “change the firm”. The conundrum is that as much as 80 percent of
the focus and funding is on “run the firm.”
The good news is that boards are increasingly looking at the wealth
management and private banking businesses as franchises in which to
carry the future of profitability of the firm. We are seeing investment banking
functions being trimmed while wealth management businesses are being
expanded.
At Cisco we believe that the investments that wealth management firms
need to make in business and technology architecture for meeting
increasing client, advisor, risk, security, and compliance demands will yield
material benefits both to the business lines in the firm and to the clients
being served. Therefore, we see an opportunity where digital disruption of
the “run the firm” budget allocations can result in “change the firm” business
outcomes as measured in ROE, profitability, client acquisition, and lifetime
client value, among other board-level metrics.
Business Outcomes and the
Role of the Board of Directors
14

9. The Future of Wealth Management 1716
The 5 Pillars of Success
Wealth Transformational Readiness Assessment
We’ve developed a high-level readiness assessment to help you think through your ability to
react to changes in the industry and challenges to your business. On a scale of 1 to 5, 5 being
the best, rate the ability of your wealth management business to deliver the required business
outcomes in its board-level strategic plan. Total each score and divide by 10. A score below 4
suggests that your firm might reassess its capabilities and formulate a plan of remediation.
People
To what degree does your wealth management business have the necessary skills and partners to meet
its strategic objectives for the next three years?
To what degree does your firm have the right culture and organization structure?
Process
How well do client-facing business processes align with the IT processes that support the business lines?
Has a failure in process created a material impact in the wealth business within the past three years?
(1 means high impact of failure, 5 means low impact)
Policy
How well-known and adhered-to are sales policies for marketing, client interaction, information systems access,
risk, security, and compliance at your firm?
Has a failure in policy or security created a material impact in the wealth business area in the past three years?
(1 means high impact, 5 means low impact)
Governance
How well-documented, adopted, and enforced is the governance program at your firm relative to client engagement
across all touchpoints?
To what degree do business governance rules and methods align with IT governance capabilities?
Technology
To what degree is the current IT capability able to meet the client experience, engagement, and information security
needs of the firm for the next three years?
To what degree is there a digital and mobile-first approach to strengthening client relationships while equipping
financial advisors with innovative, productivity-enhancing capabilities?
The 5 Pillars
of Success
14 AIPMM September 2013 Slideshare
15 Implement Video Banking to Drive Digital Sales, Forrester, August 2015, and
Albert Mehrabian, Nonverbal Communication, Aldine Transaction, 2007.
McKinsey once estimated that 70 percent of transformation programs fail.14
In our experience
there are five pillars that can determine whether a transformational investment will succeed. You
may be surprised that we see technology as just one of the core pillars, of equal importance to the
others. As wealth management firms embark on transformational programs, it is imperative they
take a holistic approach and establish clear business outcomes, milestones, and success criteria.
The success pillars and some of the key questions within each pillar include:
• People: This is the most important pillar of success. Does
the organization have the right people in the right jobs?
What are the people gaps and how must they be filled?
Is the right organization structure in place? Are cultural
changes required? Do career development and training
programs need to be adapted to implement a client-facing
digital strategy? Forrester underscored the importance
of training agents to communicate effectively via video,
referencing research that showed 55 percent of human
communication is seeing another person, 38 percent is
tone of voice, and 7 percent is spoken word.15
• Process: What processes are in place today for all things
client-facing, including risk, compliance, and security?
What processes need to be removed, added, or changed?
Does the organization model fit the process model? Are
business and technology processes documented and
well-understood? How does the IT architecture support the
necessary business processes? Do business processes
and IT processes align?
• Policy: What policies are in place today regarding risk,
compliance, and security? Who has access to what and
when? How are policies audited? Are there policies that
need to be removed, added, or changed? Are policies
well-understood and documented? Do internal policies align
with external policies and the upcoming regulatory roadmap?
Do HR policies align with the risk, compliance, and security
policies both across the business and across IT?
• Governance: A firm can receive high marks in the first
three pillars of people, process, and policy, but the firm
risks system-wide failure if it doesn’t have a proper
governance framework in place. Is the current governance
model sufficient to manage future risks? What needs to
be removed, added, or changed within the governance
model? Is the governance model well-understood and
documented across the firm? Do the business governance
and IT governance models align?
• Technology: Does the firm have the latest in technology
capabilities to meet its client experience, risk, and
compliance objectives? Are there technology obstacles that
remain unresolved due to past mergers and acquisitions
events? Have opportunities and liabilities been quantified in
comparison to the investments required to modernize IT in
a modular fashion to meet the goals set by the board? Has
the infrastructure been designed for application-centricity,
to scale to the future IoE, security, compliance, and data
growth forecasted in coming years?

10. 18 The Future of Wealth Management 19
Internet of Everything
What should wealth firms be doing now and over the next three years to achieve client-centric
goals while managing risk and compliance requirements? How can investments in wealth
management platforms and solutions help in delivering a next-generation client experience in
the era of digital and mobile-first?
A once-in-a-generation opportunity exists for wealth management firms to re-architect business models, processes, client
experiences, and to modularize technology infrastructure in a way that will satisfy regulatory demands while taking advantage of
game-changing digital technologies.
Cisco believes that the wealth management industry should embrace disruption and take a business outcomes approach to
landing board level imperatives while innovating across both the “run the firm” and “change the firm” operating models. This
requires the construction of what we call a business architecture roadmap.
We at Cisco recommend the following steps to build a business architecture roadmap and plan of execution that will yield
measurable business outcomes from wealth management solution investments.
1. Document the state of business and technology
architecture as-is, relative to client-facing business
imperatives
2. Identify business objectives and board-level
performance metrics that are affected by the wealth
management business
3. Develop a Value-at-Stake business return on investment
model to include hard and soft returns expected by the
business
4. Document the capabilities required and map those to the
business imperatives and metrics
5. Develop a technology architecture and vision
6. Perform a gap analysis that identifies and prioritizes
deltas between the state of the technology architecture
as-is and the vision you developed
7. Develop a business architecture and vision including
the desired next-generation client experience and the
advisor experience
8. Develop a plan of execution, with business outcome
success criteria defined for each milestone
9. Validate the plan and roadmap across executive
leadership stakeholders, lines of business, IT, and
external clients
10. Assign resources to, budget, staff, execute, and then
measure the plan
Business Architecture Roadmap for Achieving Business Outcomes
Business Architecture
Roadmap for Achieving
Business Outcomes
Conclusion
Wealth management firms face unprecedented
challenges to margins, profitability, and ROE given
changing client demographics and expectations,
increasing regulation, new security threats,
game-changing technology, and new digitally
savvy players entering the market.
At the very foundation of change within the
wealth management industry, the most important
considerations are how clients, advisors, and
robots—along with software-driven self-service
models—are shaping the future of the industry.
Which are the disruptors? Which are being
disrupted? Are you driving the new CAR to its,
and your, full potential? If so, you will be an
industry leader three to five years from now.
For more information on how Cisco and our
partners can help transform your business and
help you drive the new CAR, please contact us at
FinancialServices@cisco.com.

11. 20
Conclusion
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