Technology
Wealth Firms Changing, Or Want To Change How They Segment Clients - Refinitiv Study

The organisation released a new White Paper mapping out a series of trends and challenges for the global wealth management sector over the next year and further in the future.
A study of wealth management firms around the world shows that
the vast majority (90 per cent) of them have reviewed or changed
how they segment clients, moving away from an approach of placing
clients based on minimum asset sizes, a new report by data and
analytics provider Refinitiv says.
A White Paper from the organisation, entitled The
Transformation of Wealth Management – Five Trends For 2020 and
Beyond (see full details
here), also finds that all (100 per cent) of respondents to
its survey think that the transfer of wealth will be one of their
top-three concerns. As a result, organisations are changing the
way in which they are set up to handle this multi-trillion shift
in assets from Baby Boomers to succeeding generations. (The
report is based on views taken from 46 firms (19 Americas,
16 Europe, and 11 Asia).
And another headline finding is that 65 per cent of people
interviewed said that operational scale is “very important”,
suggesting that advisor productivity – more clients per advisor –
will need to increase.
And such a productivity imperative plays into the strengths of
data-driven organisations, which is where a firm such as
Refinitiv, with its technology to serve the wealth industry,
comes in. Some 61 per cent of respondents said that analytics and
creating insights were “very important” and 39 per cent of them
said this would be “important” for firms over the next 12 to 18
months.
Large wealth transfers, digitalisation of financial services,
changing client expectations and intensifying regulatory
requirements continue to drive the industry. A rising equity
market since 2009 may have lifted assets overall, but pressures
such as very low/negative interest rates, and compliance costs,
for example, have prompted wealth managers to seek efficiencies.
At the same time, they want to draw in new clients and extract
more value from existing ones.
Discussing its findings about client segmentation, the report’s
authors said that if firms want to move away from only using AuM
minimums as a criterion, and use other factors to decide where to
put customers, this will require more data and analytics than
firms typically have.
And regulations don’t help with this, Refinitiv’s report said.
“While aiming for mass customisation would suggest that firms
would have to expand their product lines to meet the needs of a
diverse client base, the opposite has been observed,” it
continued. Regulations such as the European Union’s MiFID II
rules have actually prompted firms to narrow their traditional
product offerings.
Fewer than half (46 per cent) of respondents said they were only
partly satisfied or not at all satisfied with their digital
offerings, suggesting potential spending to shake up systems if
the budget is available. In a related point, 80 per cent of
respondents said there had been a rise in spending related to
“change the bank” over recent years.
The study said that a “significant” 86 per cent of respondents
ranked servicing clients (including managing daily tasks, account
opening and onboarding) as a highly important digital capability,
followed by 69 per cent who view the provision of
information…..as “highly important”.
“While over 70 per cent of the firms surveyed in this report say
organic growth is a high priority, over 25 per cent state
inorganic [growth] as the primary source of growth over the next
five years,” Christopher Sparke, global head of front office and
digital, wealth management at Refinitiv, said.
Refinitiv commissioned global research and advisory firm, Aite
Group, to conduct executive interviews with leading wealth
management firms around the globe.