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04:35 PM

Going for Gold: Winning the Race for High-Net Worth Clients

The global high net-worth market is currently estimated at around 7.2 million individuals and one-half of all of their financial assets are not professionally managed (1), resulting in an attractive, underserved market. Competition to manage these assets is increasing through mergers, acquisitions and the introduction of non-traditional players. As a result, wealth management businesses are under extreme pressure to focus on customer retention and new business development.

AMS believes that the wealth management industry needs to shift from being product driven to becoming more advice oriented and client focused. The crux of this transition will be the role of the Financial Advisor, as they shift from traditional responsibilities to focusing on offering valuable advice and personalized services. Wealth management firms face the challenge of determining how technology can support this new business model and to what degree technical developments are necessary. Wealth management executives will need to clearly link the business strategy to the technology that best supports the strategy. Managers will also need to develop business cases around high-priority business issues. AMS works with wealth management businesses in pinpointing their organizational needs and challenges and then developing a customized solution. Through expert implementation skills and an extensive repository of industry knowledge, AMS builds the bridge connecting a business vision with a technical complement.

Critical Strategic Questions

AMS views the following as critical questions that financial institution executives need to address:

  • Who is my High Net Worth (HNW) customer?
  • What products and services do I offer my HNW customer?
  • How do I position myself competitively in the marketplace?
  • What is a successful organizational model?
  • What infrastructure do I put in place for a successful wealth management offering?
The answers provide a framework of useful ways to think about how to provide services to the affluent segment successfully, while creating specific strategies based on an individual organization's circumstances.

Who is my HNW customer?

Each institution must recognize that the affluent market has key customer segments and that the characteristics and needs of the customer are different by each of these segments.

The number of potential customers in each segment (Mass Affluent, High Net Worth, Ultra High Net Worth) and assets per segment are quite different. There are nearly ten million households in the U.S. in the mass affluent category, with $9.6 trillion in discretionary financial assets. In contrast, there are only 2.8 million households in the other two categories described; however they have $10 trillion in discretionary financial assets (2). Institutions will need to have a different strategy for whichever segment(s) it chooses to serve.

What products and services do I offer my High Net Worth customer?

The addition of more complex investment options in the past 10 years has provided a rich set of products and services that are being offered to the affluent market place.

Products and services for the HNW marketplace can be divided into three categories:

I) High Volume - Low Complexity

II) Medium Volume - Medium Complexity

III) Low Volume - High Complexity

As part of their strategic assessment, institutions need to figure out which of these products they will manufacture, which they will outsource from third parties and which they will offer through a network of specialists. The key challenge around products and services is for institutions to determine how to package advice to the affluent segment in a way that earns them the "trusted advisor" status. However, at the same time, they need to figure out the economics of advice, which, until now, has been the most difficult problem to solve.

How do I position myself competitively in the affluent market place?

Following all of the consolidation that has taken place within the financial services industry, a convergence of capabilities is beginning to occur. Banks are gaining brokerage capabilities and vice-versa. It is becoming increasingly difficult to distinguish a financial institution in this market place from an affluent market perspective.

While there are several long-standing traditional business models, AMS believes that the winning strategy will be the open architecture model. This model in the HNW marketplace is the one where the successful institution 'owns' the direct client relationship with the HNW individual. In effect, these institutions are unbundling manufacturing and the distribution of products and services. Adopting an open business architecture model, the successful strategy will retain and enrich the HNW client relationship and be agnostic to the source and economics of the products themselves.

"Our HNW clients most recently seem to be interested in two major areas - alternative investments and philanthropic services and we feel ill-equipped to provide either" - Wealth Management Division of Regional Bank

What is a successful organizational model?

The successful organizational model for HNW today appears to have the following attributes:

  • A trusted advisor orientation
  • A cross-functional team approach supporting the advisor
  • An open business architecture model
  • A service strategy by customer segment
  • A shared services platform across the overall financial institutions

"Very early on we learn to work in teams. Individual success (and bonus payout) rests with how well the team does in attracting and retaining assets over the long run." - Financial Advisor at Private Wealth management arm of Investment bank

What infrastructure do I put in place for a successful wealth management/high net worth offering?

HNW management leaders are adopting a new framework of technology implementation with the following trademarks:

  • The framework is relationship-centric, empowering RMs to focus on personalized interactions with the customers
  • Offering effectiveness improvement tools across all high-impact activities in client interactions
  • Enabling a share-of-wallet focus by giving RMs a consolidated view of their clients' finances.

AMS Services for Wealth Management Institutions

AMS helps wealth management institutions develop strategies and implement operational and technical solutions throughout the affluent market spectrum. We help organizations serve the Mass Affluent, the High Net Worth and the Ultra High Net Worth markets. AMS also provides services throughout the lifecycle of a Wealth Management project. AMS offers a full range of business and technical solutions for clients in the wealth management and financial planning space.

4050 Legato Road
Fairfax, VA 22033

Contacts: Philip Gow
[email protected]
(973) 597-4128
Surya Kolluri
[email protected]
(212) 612-3663


"The Mass Affluent customer values advice like the rest of the affluent customer base; the trick is how to provide this in a scalable, economically justifiable way." - Major U.S. based Brokerage

"We do not want any technologies, business process or initiatives to come between the relationship manager and the client. The relationship between the advisor and the client is paramount and everything that we do should support that" - U.S. Brokerage

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