Executives Ponder Dismantling Barriers To Integration

Participants in the 2nd annual meeting of the Kehrer Bielan Wealth Management Study Group discussed the fragmented landscape of the delivery of wealth management in financial institutions, and agreed on an important barrier to integration—the practice of each component business line in the wealth management umbrella maintaining its own profit-and-loss statement.


Managers responsible for each P&L are rewarded for improving its performance, often at the expense of utilizing the services or products of other wealth management units in the institution, enterprise shareholder value, or the client experience.


The participants were reacting to the findings of a new Kehrer Bielan study—Benchmarking Wealth Management in Financial Institutions—sponsored by Cetera Financial Institutions. One finding particularly caught their attention—83% of the 102 institutions surveyed by Kehrer Bielan maintained separate P&Ls for investment services, Personal Trust, and other wealth management business lines, and 69% did not even roll up those separate P&Ls to monitor the enterprise-wide delivery of wealth management.

Interestingly, the 17% of institutions surveyed that maintained only a consolidated P&L for the enterprise-wide wealth management business were concentrated in credit unions; the banks overwhelmingly favored separate P&Ls. Participants speculated that this difference was due to the more customer-centric nature of credit unions, or that banks were more likely to have more lines of business with a longer history of reporting separately under the wealth management umbrella, such as asset management, Institutional Trust, or retirement plan services.


A client-first approach suggests a consolidated financial reporting structure, starting with both a separate and combined approach to understand the metrics during transition. The siloed approach primarily in place today is rooted in doing things the same because that is how they have always been done, and prioritizes internal financial management over how clients want to access financial advice.


The Kehrer Bielan Wealth Management Study Group brings together the top executives in financial institutions responsible for all of investment services, Personal Trust, and other services that support financial advice for consumers as opposed to institutions.


Benchmarking Wealth Management in Financial Institutions reports on two Kehrer Bielan surveys—a survey of how wealth management is structured in 102 banks and credit unions, and a survey of the executive responsible for enterprise-wide management of wealth management advice to households in 15 institutions. The study is sponsored by Cetera Financial Institutions.


About Cetera Financial Group®
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Cetera Financial Group (Cetera) is a leading financial advice firm. It empowers the delivery of an Advice-Centric Experience® to individuals, families and businesses across the country through independent financial advisors as well as trusted tax professionals and banks and credit unions.

Comprehensive services include: wealth management solutions, retirement plan solutions, advisory services, practice management support, innovative technology, marketing guidance, regulatory support, and market research.

Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), Cetera Financial Specialists LLC, and First Allied Securities, Inc. All firms are members FINRA / SIPC.