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Clients Say Firms Fail to Stand Out

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As wealth management firms try to outdo one another in the battle to offer ever-more comprehensive financial planning, they're discovering a new problem: They're starting to look identical in the eyes of clients.

"It is increasingly more difficult [for clients] to differentiate between a trust, a bank and a brokerage firm," says Bruce Holley, a senior partner at Boston Consulting Group.

Wealth managers have reaped the benefits of strong markets as American households are expected to accumulate nearly $11 trillion over the next five years. But business models have converged, and the playing field is more level than it once was – leaving firms facing fresh challenges when trying to bring in new assets, the Boston Consulting Group finds in its annual study of the industry.

"Markets going up can still mask a weak engine for capturing net new assets," Holley says.


The total wealth of U.S. households is projected to hit $57 trillion by 2019, up from $46.3 trillion in 2014, the study found. The gains continue to be strongest among the rich.  Over the next five years, the number of households with more than $100 million will grow 12%, the authors said.

The keys to capturing that future growth lay partially in better branding and digital offerings, the consulting group finds.

"People believe that because I'm a bank or a broker or a multifamily office that that conveys value in the eyes of the client. But the client doesn’t know what the difference in value is," Holley says.

Branding isn't just a matter of making clients aware of the firm name, Holley says.

"You want them to make a decision [to work with you], to enjoy the experience of working with you and then to recommend you to others. That's the economic power of a brand," he says. "So many wealth managers focus on the awareness and not so much what a brand can do for you down the road."


Clients' digital experiences are setting new standards in terms of what they expect from their wealth management firm. But these new expectations vary depending on the client's generation, Holley says; digital can mean different things to clients of different ages, Holley says. "Understanding who your core [client] segment is, and how you can address that segment, is important," he says.

However, wealth management firms are still working out what they want their digital experience to look like and how it will integrate with their existing advisors, Beardsley notes.

Putting forth the right offering for the appropriate client segment is only half the battle; it will also need to be integrated with the work done by the firm's advisors so that the client has a seamless transition between the two.

"I think every wealth player I talk to in North America, they all have conversations about robo advisors. Everyone is trying to figure out what to do," he says.

An engaging digital experience will be a key selling point with younger clients. But, Beardsley says, some firms are already building bridges to the younger generation through other avenues, such as by taking a more family planning orientation.

"How do the dynamics of wealth impact the family dynamics?" Beardsley says.


Global wealth creation has been accumulating to households with more than $1 million in assets, the Boston Consulting Group's study showed. The world's total wealth has risen to $164.3 trillion in 2014 from $130.7 trillion in 2012.  Households with less than $1 million in assets held 59% of that wealth in 2014, down from 62% in 2012.

This was largely due to different growth rates. Between 2012 and 2014, millionaire and billionaire households grew their total wealth by 16% compared to just 9% for non-millionaire households, according to the study.

In North America, almost 60% of private wealth was held by households with more than $1 million in assets in 2014.

The U.S. continues to boast the most millionaire households: 6,906. By comparison, China had the second highest number at 3,613 households, the authors said.

The authors expect the Asia-Pacific region, excluding Japan, to surpass North America as the world's wealthiest region. By 2019, the Asia-Pacific region is projected to have $75.1 trillion in private wealth, North America will have $62.5 trillion and Western Europe will have $49 trillion.

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