Last week we looked at how the role of the wealth manager is evolving in the face of significant industry disruption, especially in the face of a massive wave of regulation (breadth and depth) as well as shifting client needs away from more profitable businesses and behaviors, all against a backdrop of significant disruption from digitally-enabled new entrants.
As part of the research for the Capgemini RBC Wealth Management World Wealth Report 2015, I spent some time in Geneva earlier this year in order to meet leaders from some of the key industry players there.
What struck me was:
- How quiet the city centre of Geneva is. Though if I had one of those magnificent lakeside villas I might spend all of my time there as well!
- How the regulatory-driven business model evolution continues to keep firms awake at night, with the notable exception of some of the very largest firms who have more diversified businesses and more holistic wealth management capability that is still a source of value (and especially those who are already some way or all the way through the settlement cycle for past sins). What you read in the abstract about Swiss private banking in the news is absolutely backed-up by what I saw on the ground.
- How sophisticated the nature of expertise is, at least for those clients who can afford it. One firm I spoke to, on top of their existing strength in full-scale goals-based wealth management, told me about their training initiatives. Over the past couple of years, the firm has ramped up delivery of targeted classes and ensured formal certification for all wealth managers on the topics of multi-jurisdictional rules and planning procedures, to better ensure that wealth managers are able to deliver full-scale planning for clients with global interests. The investment is not small, with an average of 120 hours of such training per year per wealth manager.
- How skeptical many firms are on the need to change the business model towards hybrid advice models. I still sense a lot of shock at the ongoing crackdown on legacy business models. As a result, discussions on new digitally-enabled hybrid advisory models are still very nascent, and perhaps unsurprisingly, discussion around the threat of new entrants seems to be a far-away concern. I read something very interesting the other day, that the Swiss private banking industry needs to be able to adapt as the Swiss watch industry did several years ago. So on the one hand you will have the basic, digital-led, price-accessible core investment services in the manner of a Swatch watch, and on the other hand there will remain a market for the high-value premium advisory services of the full-service private banks, equivalent to the Rolex and Patek Philippe’s of this world. Obviously such a transition would not be pain-free, as the ongoing wave of consolidation attests.
Anyhow, I leave this brief post with a doctored image of a lovely day in Geneva.