Wealth Management is a retail fiduciary function that combines financial advisory, estate planning, and ad hoc advice. Wealth Management can be profitable. Since most managers take a percent of AUM, as AUM grows, so does take home wealth manager pay. There are, however, significant challenges facing wealth management when it comes to information and technology. As a fee based--over commission based--business, wealth management is growing in the US and abroad. Barron's typically ranks Wealth Managers and ranking generally depends on earned revenues and managed assets. Thus, firms are seeking to increase top line by hiring more fee based advisors to capture more accounts and subsequently increasing firm revenues. They may also be looking to offset the costs due to increased regulation.
Solutions and Discussion
Services like FIS seek to increase transparency between wealth managers and their clients. It acts as a 'hub' of sorts to provide both parties with information regarding managed accounts. Such technology allows the Wealth Manager to focus on managing and advising over administrative tasks. Instead of spending time calculating NAV and putting together documentation, managers can work on Front Office activity. This is especially important for smaller shops where managers work on administration to sales to advising. Even more important is transparency increases legitimacy and trust. KPMG has written extensively on the need for Wealth Managers to focus on trust with clients, but is confident that if certain conditions are met the market could flourish as private wealth will reach ~150trillion (led mainly by ultra high net worths). Capturing a fraction of a percent could result in attractive yearly income. Even accounting firms like Ernest & Young have entered the space. Would expect more firms to enter this space over the next 5 years.
- Nile C.
5/1/14 4:40pmEST
Solutions and Discussion
Services like FIS seek to increase transparency between wealth managers and their clients. It acts as a 'hub' of sorts to provide both parties with information regarding managed accounts. Such technology allows the Wealth Manager to focus on managing and advising over administrative tasks. Instead of spending time calculating NAV and putting together documentation, managers can work on Front Office activity. This is especially important for smaller shops where managers work on administration to sales to advising. Even more important is transparency increases legitimacy and trust. KPMG has written extensively on the need for Wealth Managers to focus on trust with clients, but is confident that if certain conditions are met the market could flourish as private wealth will reach ~150trillion (led mainly by ultra high net worths). Capturing a fraction of a percent could result in attractive yearly income. Even accounting firms like Ernest & Young have entered the space. Would expect more firms to enter this space over the next 5 years.
- Nile C.
5/1/14 4:40pmEST
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