Client-centric Models in Wealth Management - Asia-Pacific

Published by: Datamonitor

Published: Sep. 19, 2006 - 47 Pages

Table of Contents

CHAPTER 1 INTRODUCTION

Who is the target reader?

How to use this report

Report Methodology

CHAPTER 2 WHY IS CLIENT-CENTRICITY IMPORTANT?

In order to be successful going forward wealth managemers will need to be client-centric

Changing socio-economic factors mean the wealth management business in Asia-Pacific is seeing new segments with differentiated needs

In developed markets the 2ndgeneration of wealthy are beginning to emerge

Affluent individuals in emerging markets are different from those in developed markets

Expatriate groups are rising in number

Remittance services

Offshore investment

Other expatriate needs

In order to attract these new wealthy segments wealth managers will need to differentiate through service and understanding

It is actual service and not the promise of product and service features that differentiate a wealth manager from its competitors

As part of its marketing any private bank or wealth manager will detail exactly what it is that differentiates them from their competitors. Each type of competitor will highlight what they believe are the attractive aspects of their products and services for clients and potential clients.

The large global players will highlight the merits of their global presence or their long history or both (it should be noted that these examples are taken from different private banks):

As well as highlighting the tailored relationship that will be enjoyed by clients:

Wealthy individuals need to feel their service providers understand their situation

When the market is not so favorable, those wealth managers that are client-centric are more likely to achieve retention

Poor investment reporting is a major bone of contention

Poor communication and a lack of transparency are key frustrations

Lack of individual treatment and responsive service

CHAPTER 3 CLIENT-CENTRIC BUSINESS MODELS

There are a three factors that wealth managers should consider when seeking to be client-centric

Client-centricity begins with segmentation

How can you service a client if you don't know what they need?

What are the major 'need' factors to consider?

The family office is the definition of client-centric

Ultimately a client manager must be perceived to be working for the client

Satisfaction comes with added value, which in turn comes through client-centricity

Empowering staff can also be a means to better client service

Incentivizing staff based on product quotas does not benefit the client

Ownership is more likely to instill an ethic of client service

CHAPTER 4 APPENDIX

Supplementary data

Definitions

AAGR

CAGR

Gini index

Liquid assets

Liquid asset bands

Research methodology

The Global Wealth Model

The UK sub model

Asia-Pacific sub model

Forecasting methodology

Datamonitor's wealth numbers compared with others' numbers

Bespoke Wealth Market Sizing

Further reading

Datamonitor Asia-Pacific Wealth Reports

Datamonitor Asia-Pacific Insight Reports

Datamonitor Global Wealth Service: Competitor Tracking

Datamonitor Financial Services Consulting

Asia-Pacific contacts

List of Tables

Table 1: Affluent individuals with more than USD1m in investible assets USD and the value of their liquid assets

Table 2: Wealth markets that have been modeled using the Global Wealth Model

List of Figures

Figure 1: Methodology diagram and report structure

Figure 2: As the 1st generation ages and passes away, intergenerational transfer increases in occurrence

Figure 3: Japanese individuals own by far the largest share of affluent wealth in the Asia-Pacific region

Figure 4: Country of origin of survey respondents

Figure 5: Money transmission is clearly an important service offering for expatriates around the world

Figure 6: Investment advisory services offered by an offshore bank are considered important by expatriates

Figure 7: Understanding of income tax position is a large concern for expatriates

Figure 8: The tax or legal implications of buying property abroad are of concern to expatriates

Figure 9: The forces behind financial complexity for HNW individuals

Figure 10: The HNW population can be segmented across a range of different dimensions

Figure 11: Essentially client-retention can be improved through client-centricity

Figure 12: There are several different ways in which wealth managers are choosing to manage their clients, but increasingly they are turning to the team-based relationship model

Abstract

As private banks seek to differentiate themselves from competitors many are turning to more customer-centric business models. This report looks at the reasons behind the client-centric approach and analyses some examples such as the franchised private bank and the family office.

• This report introduces the concept of customer centricity, looking at the argument behind it and answering the question "why?"
• This report looks at the various options for customer-centricity, analyzing each and discussing their merits.
• This report sizes the affluent population across Asia-Pacific and discusses the need for client-centricity as a means to retention of clients.

In the current global environment, the number of wealthy individuals is growing very quickly. The fact is that there is plenty of wealth being created for most of the wealth managers to find new clients. However the question is, having attracted clients to a service, how can these clients then be retained?

The fact is that relationship managers are always going to be interested in making money and will pursue whichever means they need to in order to gain the best remuneration they do not work for the love of work. What wealth managers and private banks need to do is to find a remuneration model that ultimately leads to better client service.

Wealth managers cannot just drop their own products, but there are some aspects of the family office model that can be taken on board and replicated. The biggest factor is in the way the family office offers value to the family by taking over the research function of investing and also by knowing the inherent requirements that the family has.

• Find out what factors you should look for in better-servicing your client base.
• Find out what factors irritate wealthy individuals vis-à-vis their wealth managers.
• Find out how to structure your service to offer value to clients and ensure retention.

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