Alpha FMC - Wealth Managers

Wealth Managers

At a challenging time in the market, clients are turning to their Wealth Managers more than ever for advice on how to mitigate the market uncertainty and begin investing in a more sustainable manner. To support this, Wealth firms are focused on embracing new digital technologies, modernising their operating platforms and driving to deliver value for money for their clients. At Alpha we work with Wealth clients across their entire businesses to help them adapt for the future, by offering specialist understanding of industry challenges and knowledge of the levers that drive success.

How we work with clients

Alpha has deep experience working on the most challenging and complex initiatives in the Wealth market as a trusted partner to our clients, who manage a significant proportion of the Wealth Management assets in Europe (including 60% of Private Wealth assets in France and 40% in the UK).

Our support includes:
  • Target Operating Model: Working with many of the largest Wealth Managers and Private Banks across European markets to restructure and optimise their operating models, core platform technology and business processes
  • ESG: Advising a leading Wealth Manager on developing new ESG capabilities. This included: defining their ESG investment philosophy and strategic operating model, and leading a vendor selection across data providers
  • Digital Advisory Platform: Driving the launch of a global ‘digital first’ investment service for end users. Offering was cloud based and included digital advisory capabilities
  • Client Management: Partnering with a leading software vendor to build a Wealth Client Relationship Management best practice accelerator in order to support clients in commercialising the client management opportunity.
  • Benchmarking: Providing an in-depth rate card assessment of the Custody and Asset Servicing costs for one of the UK’s largest Wealth Management businesses

Our clients value Alpha’s in-depth industry knowledge, having worked with a wide range of Wealth firms including Global Private Banks, Regional Banks, Private Client Wealth Managers, Discretionary Fund Managers and  Brokers.

Alpha FMC - Why Alpha

Why Alpha?

Alpha has a track record of delivering consistently superior results, which has made us a trusted advisor and strategic partner to our clients. Alpha’s consultants are skilled at navigating complex organisations and building strong relationships to rapidly generate value for clients.

Our rich Wealth Management industry understanding and insights are grounded in strategy definition and implementation experience, as well as independent research and survey-based publications, ensuring that Alpha is kept at the forefront of new industry demands.

Q&A with Kenn Taylor, Head of Wealth Management, and Vanessa Bingle, Head of ESG & Responsible Investing

What are the key industry trends you see in the wealth market today?

1. Digitisation of Wealth: Seen as an essential part of enhancing the client experience, providing convenience and enhanced service for clients (as well as reducing the firm’s bottom line)

2. Growth of Advice: Financial planning and advice has been identified as a key growth area for the Wealth market and has proven a resilient revenue driver during market turbulence throughout the Covid-19 outbreak

3. Core Platform Evolution: Many Wealth Managers are actively looking to upgrade and simplify their outdated technology stacks to optimise their operating model and generate business efficiencies, including moving to SaaS or partially outsourced models

4. Data is Everything: Wealth Managers are actively working to break down silos within their organisations by building centralised data solutions in order to generate a ‘single client view’

What are the key drivers for change in Wealth Managers right now?

1. High Cost of System Change: The legacy nature of technology in the Wealth industry has resulted in complex, siloed and highly bespoke platform and system architecture. As such, any change to systems requires a high level of effort from Technology teams and external contractors with specialist knowledge

2. High Operating Cost and Operating Risk: Old fashioned technology, siloed systems and lack of automation have resulted in highly manual processes. This has led to significant increases in FTE numbers within Technology and Front Office teams as AUM grows, resulting in firms running with a high level of operating risk due to human error

3. Competition: Wealth Managers face continuing threats from across the spectrum of financial services incumbents, as well as from new market entrants and ‘non-traditional’ players

4. Changing Preferences: Clients are demanding ever increasing accessibility and transparency through digital interaction platforms based on their experiences in the wider market

How are Wealth Managers addressing sustainability in their investment strategies?

As demand for sustainable investing continues to increase, Wealth Managers are seeking to implement comprehensive and compliant Responsible Investing models. The industry has not made the same strides as peers across the investment industry in embracing ESG and remains somewhat uncertain about how to proceed – but there is a strong appetite to improve.

Alpha sees the following areas as key priorities for Wealth Managers:
1. Act as an industry, learning from early movers – Introduction of common standards and language across Wealth Managers to enable clients to compare ESG offerings in a meaningful way

2. Decide the role of ESG in the firm’s brand and proposition – Executive level decisions are needed on the role of ESG, including how the firm will differentiate its proposition while complying with ESG industry standards

3. Prepare Your data and technology architecture – There will be a need to match client preferences and portfolio holding data together to compare against internal and external ESG data sets, but the infrastructure to support this still needs to be designed.

The majority of Wealth Managers are pursuing a “wait and see” approach with regard to ESG and Responsible Investing, either by accident or design. Failure to act quickly presents significant, enterprise-wide risk to compliance, investment performance and commercial success.

Is now a time for greater consolidation in the Wealth industry?

Despite the recent economic downturn as a result of Covid-19, the revenue generated from advice within Wealth firms is expected to remain resilient. Clients will rely on their advisors more than ever for guidance on how to manage their portfolios to best weather the storm and plan for their futures, including any amplified tax considerations of future wealth planning driven by the stress on national finances of the Covid-19 response.

Consolidators have been active for some time, attempting to create platforms for advisors to operate across the planning and investment management disciplines and with the scale to afford the investment in better technologies, but valuations have often appeared challenging in recent times. The current conditions may bring more opportunities to the market with more appealing investment criteria.

Alpha FMC - Wealth Managers