Transforming the Client Experience - Boston Consulting Group

Global Wealth 2017

Transforming the Client Experience

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Global Wealth 2017

TRANSFORMING THE CLIENT EXPERIENCE

BRENT BEARDSLEY BRUCE HOLLEY MARIAM JAAFAR DANIEL KESSLER FEDERICO MUXI MATTHIAS NAUMANN J?RGEN ROGG TJUN TANG ANDR? XAVIER ANNA ZAKRZEWSKI

June 2017 | The Boston Consulting Group

CONTENTS

3 INTRODUCTION 5 GLOBAL WEALTH MARKETS: MODEST GROWTH CONTINUES

Highlights by Region The Offshore Perspective 1 6 AN INFLECTION POINT FOR WEALTH MANAGERS Reducing Costs, Increasing Investments Players Are Starting to Act Maximizing Focus and Agility 2 5 DIGITAL IN WEALTH MANAGEMENT: TIME TO GET IT RIGHT Client Journeys 2.0: Seizing the Opportunities The Moment for Change Is Now What It Takes to Succeed 3 2 FOR FURTHER READING 3 3 NOTE TO THE READER

2 | Transforming the Client Experience

INTRODUCTION

The overall growth of global private wealth picked up momentum in 2016, allowing for a good deal of regional variation. All regions experienced positive growth, with North America, Western Europe, Latin America, and the Middle East and Africa posting stronger expansion than in the previous year, and Asia-Pacific, Eastern Europe, and Japan growing at slower rates. Asia-Pacific was nonetheless the most robust region, achieving an increase that was just shy of double digits. We expect sizable growth to continue.

This report, The Boston Consulting Group's 17th annual analysis of the global wealth management industry, includes two topics that we reexamine every year--the global market-sizing review and the wealth manager benchmarking study--as well as a special chapter about the impact of digital technology on the industry.

The market-sizing chapter outlines the evolution of private wealth from both global and regional perspectives, including viewpoints on different client segments and offshore centers, and takes a fresh look at private-banking revenue pools. The benchmarking analysis stems from a survey of more than 125 wealth managers and involves more than 1,000 performance indicators related to growth, financial performance, operating models, sales excellence, employee efficiency, client segments, products, and trends in different markets.

In our benchmarking, we focused on issues surrounding the decline of what for many years was a highly profitable wealth management business, lightly regulated and with low capital requirements. To be sure, since the financial crisis of 2007?2008, institutions have been dealing with more sophisticated and circumspect investors who demand reduced fees and commissions in order to increase returns in a low-yield world. Wealth managers have tried to reduce costs to ease the squeeze on profit margins, but a more forward-looking approach will be required in the future. On the positive side, we have observed an inflection point over the past year, with more wealth managers beginning to increase strategic investments to transform their businesses.

Our benchmarking chapter also takes a detailed look at the everevolving role of the relationship manager and how that critical position is shifting--indeed, how it must shift--in the search for competitive advantage. Overall, it is our view that wealth management, despite considerable challenges, will remain a very attractive business as long as institutions take steps to adapt to the changing environment. Determining investment priorities and following through on them will be critical to success.

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