What Successful Wealth Managers Can Do To Stand Apart From The Rest

The best performing wealth management firms are those that focus on efficiency.

We recently published a blog on emerging challenges for wealth managers, based upon a whitepaper titled Outperform – Beat the Average: Key Levers for Top Performers in Wealth Management by Anna Zakrzewski and Dean Frankle of the Boston Consulting Group. The most interesting aspect of that report collated lessons from wealth managers of different sizes and business models around the world. Analysts believe there are profiles of successful firms for wealth managers to focus on, which can yield better results in the current environment. These include the size of an organisation as well as how it is set up, a firm’s presence, as well as its geographical and client focus.

Here are some of the things we learned from the report, along with pointers on how technology —specifically CRM — can help financial services firms gear up for uncertain times.

Is A Bigger Firm Necessarily Better?

Size will always matter to wealth management firms because it has a direct impact on cost efficiency. According to the BCG report, wealth managers with AuM less than USD 10 billion are at a disadvantage due to a lack of economies of scale. This isn’t to say small and medium-sized firms are locked out of access to great products or solutions, of course. NexJ has long offered CRM for Wealth Management products with built-in vertical market functionality leveraging the experience and expertise gained in delivering solutions to notable financial services firms including Wells Fargo, UBS, and RBC.

Having said that, larger firms can make larger investments, leading to a flattening of cost margins, an increase in revenue margins, and faster growth in profitability. Well-known brands can also demand premium prices while offering fewer discounts and providing higher-margin products and services to their clients.

Organizational Set-up And Profitability

Are standalone players more successful than wealth managers who belong to larger banking groups? The latter tend to be more profitable because being part of a larger group means sharing of infrastructure, coordination costs, and platforms, leading to cost advantages. However, standalone players may have an edge in terms of revenue margins and can offer high-margin products along with better services.

Today, smaller players also have access to the advantages offered by the effective harnessing of Artificial Intelligence. For example, NexJ’s Nudge-AI suite of digital assistants leverages Artificial Intelligence, Machine Learning, and Natural Language Processing to make intelligent investment recommendations, suggest next best actions, share relevant information and analyse data for insights to help advisors engage with clients better.

Choosing The Right Market

The market that wealth managers choose to operate in can determine asset growth and profit. Mature markets can lead to higher revenue margins, but growth markets that show increasing personal wealth can mean higher net new asset growth. Emerging markets can also offer advantages in terms of profitability derived from strong organic growth and lower costs across functions.

Identifying Opportunities

Most wealth management firms have spent the past few years attracting Ultra High Net Worth Individuals. By comparison, the affluent segment has been relatively overlooked and not serviced as efficiently. This may change in the future as the affluent segment continues to grow. It is more expensive for wealth managers to concentrate on UHNWIs because they have a much higher cost-to-income ratio and offer lower revenue margins.

What firms need to do is increase efficiency while focusing on the affluent segment and implement low-cost models to better service this client base. Technology can make this happen as big data yields more actionable insights. Wealth managers also need to choose between cross-border business and domestic markets based upon how each affects costs and revenue.

Sales Effectiveness Can Always Be Improved

The effectiveness of a firm’s sales force cannot be underestimated. When managed well, it implies that an advisor can acquire and service clients, and is empowered with the right data and tools to offer better engagement. Successful advisors enhance their offerings with product mixes, and the deployment of CRM, along with actionable insights, can lead to lower client attrition rates along with actionable insights.

Wealth management firms need to choose between general horizontal CRM and vertical-specific solutions that offer tools for Process Management, Lifecycle Management, and Opportunity Management. Vendors like NexJ also offer digital assistants such as our Nudge-AI suite to help wealth managers suggest next best actions, share relevant information, and analyse data for insights to better engage and service clients.

What Do Clients Really Need?

Successful wealth managers focus on more than just their clients’ level of wealth. They employ broader segmentation criteria that consider individual needs and behaviours as well. Firms can understand clients better than ever thanks to CRM tools offering advanced data analytics.

NexJ’s Comprehensive Customer View provides advisors with a 360° view of their contacts in an easy-to-view and navigable format. Front, middle, and back-office information is presented as a single application, allowing advisors to quickly and effectively leverage data and applications. This also enables effective segmentation and helps them better understand, sell to, and service clients. Our Engage digital assistant delivers next best actions that help advisors offer better service and remain compliant. Our Insights assistant delivers sentiment information, interests, life events and product opportunities, from notes, emails, and call records to the advisor. In doing this, it creates greater awareness of client status and desires, dramatically increasing advisor efficiency.

Efficiency Is A Critical Differentiator

The best performing wealth management firms are those that focus on efficiency. NexJ CRM for wealth management offers tools that enhance advisor capabilities in all kinds of ways. Our new digital assistant Inform leverages all information a firm has about a client such as demographic and transaction data to build a unique client interest profile. It then allows advisors to automatically or manually deliver content that is hyper-personalized to each recipient, managing the unspoken expectations of clients and prospects in a cost-effective manner.

NexJ Enterprise Synchronization for Microsoft Exchange also has a positive impact on efficiency because of how advisors rely upon their schedules. Firms need an efficient and reliable synchronization solution that keeps their CRM schedule, Outlook, and all mobile devices in sync. Advisors can quickly add email to the client record directly from Outlook. With NexJ, advisors have access to all the information they need when and where they need it.

We are the trusted choice for Vertical CRM products by global financial institutions due to our deep domain expertise. Our suite of digital assistants leverages Artificial Intelligence, Machine Learning and Natural Language Processing to help firms increase user productivity, optimize customer value, and improve customer loyalty.

To learn more about how CRM can address challenges faced by advisors in a post-pandemic world, read our blog and get in touch for more information.