Asset And Revenue Growth Fall Short

Participants at the Kehrer Bielan Wealth Management Study Group in Chapel Hill last week confronted an uncomfortable reality – the collective wealth management businesses in financial institutions continue to disappoint the C-suite in their host institutions. Looking at the collective asset and revenue growth of all of an institution’s separate wealth management businesses – retail brokerage/investment services, Personal Trust, and asset management – both asset and revenue growth are underwhelming.

The aggregate assets under administration of bank wealth management businesses grew briskly in 2016, spurted in 2017, before falling with a thud at the end of 2018. Altogether, the growth mirrored the changes in market valuations, with little growth in the underlying assets.

On the revenue side, revenue fell short of the 8%+ growth targeted by most financial institutions, sometimes by a wide margin.

The Kehrer Bielan Wealth Management Study Group views wealth management from the enterprise perspective. Unlike other peer groups that focus on just the business of retail brokerage/investment services, or Trust, or asset management, this study group is working to understand how to boost the collective customer penetration, wallet share capture, asset and revenue growth, and client experience of the institution.

The group attracts executives who have responsibility for managing all of their institution’s wealth management businesses and are looking for ways to rationalize a fragmented delivery model to improve client acquisition and retention and enhance shareholder value. Many of the study group participants have already launched initiatives to integrate the front, middle, or back offices of their wealth management businesses, and they share the rationale for their strategy, as well as their progress in implementation. The group discusses ways to overcome the barriers to a successful integration, and debates emerging best practices, in the context of the data Kehrer Bielan produces benchmarking the performance of the different initiatives.