Wealth management is seeing a paradigm shift away from being product focused towards the provision of client centric services, according to ...

Wealth management is seeing a paradigm shift away from being product focused towards the provision of client centric services, according to the respondents of WealthBriefing’s latest poll. Last week's poll of week asked the question “Is the future of wealth management increasingly providing an advisory service rather than manufacturing and distributing products?” The results were unequivocal. Yes, this is a trend that is well advanced, answered 44 per cent, and a further 44 per cent thought that the trend will start to gather pace in the next few years. Only 12 per cent of respondents answered that wealth managers should stick to being product rather than client focused. Wealth management consultant Ian Woodhouse, who has recently de-camped to Ernst & Young from IBM, was not surprised by the results of the poll. “We can see a trend towards wealth managers providing more advice as the range of products and services available becomes increasingly complex,” he told WealthBriefing. “With the provision of advice comes new challenges for wealth managers around ensuring suitability and whether they provide all the advice in house or work with third party providers for specialist advisory services such as, for example, tax advice,” he said. The large players have expressly taken this on board. "We believe that the most effective wealth managers are moving towards a holistic approach. This is an integral part of Merrill Lynch's offering as it provides increasingly sophisticated high net worth investors with client-focussed solutions and services, underpinned by the open architecture provision of products," said Eva Castillo, head of Merrill Lynch Global Private Client, UK & Europe. The move towards an advice-driven model is also clearly in the interests of the product platforms. “We believe that with clients having access to the internet, products are becoming commoditised. The real value that wealth managers can add is providing the advice rather than by manufacturing,” said David Hazelton, the newly-appointed head of business development at Raymond James Investment Services. “A key requirement in Treating Customers Fairly is to understand the client’s needs and deliver the solution appropriate for the client rather than developing a product and then trying to make it fit the client’s situation,” he said. But it’s not just for compliance - being client-driven is good for business too according to UK-based wealth manager Ansbacher’s chief executive Hugh Titcomb. “How can a bank like Ansbacher compete with the likes of UBS when it is much smaller and with a less well-known brand? The only way is to compete on service – find out what the client wants and provide them with it. When a client comes to us for a service we try to establish the whole client picture and service them with a suite of products whether in-house or outsourced,” he told WealthBriefing. “A true wealth manager will look outside the box and always have his client’s needs as his first priority,” says Peter Ostacchini, deputy managing director of UK boutique private bank Duncan Lawrie, known for its literary and artistic client base. “This will not always be achieved with a product-driven approach which stifles creativity and is essentially lazy. Don't give your clients 'painting by numbers' when what they really seek is a Rembrandt.” But the future may not be quite so straightforward. “The interesting and immediate challenge facing private banks relates to the migration of the relationship to multi-family offices, independent asset managers, independent trustees and others able to provide the continuity that private banks are finding it difficult to offer given the mobility of relationship managers,” says Philip Marcovici, global head of Baker & McKenzie’s private banking practice. "This has a major cost (perhaps 50 basis points or more), and is accompanied by the movement of the "manufacturing" side to hedge fund and other asset managers able to build scaleable businesses with very little investment.”