In Practice June 25, 2008

New HNW Markets Require New Strategies

Wealth management firms need to adapt existing strategies to meet the needs of new markets in the high-net-worth bracket, according to the ‘World Wealth Report.’
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Wealth managers are recognizing the growth opportunities presented by new markets of high-net-worth individuals, according to the report, released by Merrill Lynch and Capgemini (see Merrill Lynch Releases World Wealth Report).

“Some wealth management firms are already successfully growing and transitioning into new markets, for many others, the transition is far from easy—or viable—given existing service models and infrastructures,” said Bertrand Lavayssière, managing director at Capgemini Global Financial Services, in a news release.

To capture growth in new markets, firms will need to deploy the right strategy and the adequate technological capabilities.

The report suggests the following tips to prepare for expanding into high-net-worth markets:

  • Win over clients: Firms should make strategic investments tailored to local client needs, particularly when expanding to new regions. For instance, making investments in initiatives that bring a personalized experience to HNW delivery is key.
  • Stick to your strengths: Before targeting a new market, firms should understand their perceived identity, capabilities, and the value proposition they offer clients, in order to showcase this to prospective clients.
  • Increase flexibility of delivery models: While leading firms have always known one size does not fit all in the HNW segment, it is imperative that service models be flexible enough to accommodate advisers and their diverse clients, especially as firms move into new markets and adapt to new service models.
    “To accommodate the needs of diverse clients and advisors in both established and new market segments, firms must design flexible service models,” Lavayssière added. “Service models that align IT and growth strategies will enable wealth managers to leverage their current business platforms and enhance their operational capabilities, which substantially reduces the risks of entering a new market.”
  • Deploy the right technology: Pinpointing the extent to which existing IT capabilities must evolve, or which capabilities are necessary to support the service delivery in the target model is essential.

 

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