The wealth management industry is at a crossroads, as firms compare the costs of changing their business models and IT infrastructure against the risks of remaining stagnant according to a new research report sponsored by the SEI Wealth PlatformSM.
The study, ‘UK Wealth Management at a Crossroads’, is based on extensive interviews with C-suite executives from 12 of the top 50 U.K. wealth management firms with more than £500bn of assets under management. The study reveals wealth managers are facing mounting pressure to provide a distinct proposition as they all vie for the same pot of money. Key findings from the study include:
- Firms are struggling to stand out as competition intensifies and legislation leads to complex client needs;
- Failing to invest in technology poses a major threat to wealth managers in a robo-advice world,
- The future of the industry will be driven by a move towards inorganic growth and consolidation, as well as outsourcing, as wealth managers seek to reverse margin compression.
The report also divulges how firms are seeking to overcome the threats facing the industry and their own firms. The majority of those interviewed see M&A playing a role in their growth strategies in order to achieve scale, as well as to help bring the industry into the 21st century. According to one CEO, “scale is important, especially when faced with pressure on fees or an identified need to invest in new technology. The bigger firms can withstand the buffeting.”
Commenting on the report Brett Williams, Managing Director, SEI Wealth PlatformSM, U.K. Private Banking, said:
“Our latest research provides a snapshot of the challenges and opportunities facing wealth managers in 2017 and beyond. Firms are responding to the impact of change in different ways, and it is clear that many have important decisions to make when seeking to balance their business priorities in the months and years ahead.”
“Client expectations have evolved and increased so significantly, that firms need to adapt their business models in order to meet them, while at the same time keeping costs down and seizing opportunities for growth. If firms are able to control their cost bases, deliver high-quality products and services, and do so as efficiently as possible, then they have a fighting chance of sustaining a profitable business in an ever-changing environment.”