Money Marketing: Turning productivity challenges into opportunity

The advice and wealth management industry has experienced significant transformation in the last five years.

From unrelenting technological and regulatory change, an increasing advice gap and evolving economic and political environments, change is only expected to accelerate. To weather the storm, firms must focus on increasing productivity to meet business goals.

Productivity plays a key role in a firm’s profitability, client satisfaction and competitive positioning. Although productivity remains top of mind for chief executives, wealth managers self-scored their productivity at a six out of 10, according to recent research we have undertaken.

While unlocking greater productivity has the potential to transform businesses, managers are experiencing significant barriers, including culture, organisational structure, poor communication, inconsistent processes, lack of technology, unreliable data and compliance burdens.

But these are symptoms rather than root causes and wealth managers should be focusing on four key areas to drive greater productivity: simplifying products and services, evolving client relationship models, effectively implementing technology and measuring productivity.

Managing the complexity of industry consolidation

At its core, wealth management can be complex. Whether offering investment management services to clients at the higher end of the market or investment products to those at the lower end, wealth managers manage a plethora of offerings in order to meet an investor’s individual needs.

However, in a period characterised by relatively strong growth, fragmentation has fueled industry consolidation – and mergers have created one of the most significant barriers to productivity. While many firms may feel the need to retain products and processes that are bespoke and complex, focusing on greater standardisation and repeatable processes can drive efficiency and scale.

Maximising client relationship management

The success of wealth management firms relies on effective client relationship management. Yet, relationship managers spend just 43% of their time on value-add tasks, including time with clients, portfolio management or business development.

Relationship management is one of the largest expense drivers for wealth managers, and firms need to focus on improving the productivity of valuable front-office resources, including aligning their incentives to business outcomes.

Firms should focus on how their teams and organisations are structured to achieve the best outcomes for both the business and their clients. As many relationship managers are burdened with administrative tasks and manual processes, investing in technology and outsourced solutions can be a simple solution to productivity challenges.

Improving technology implementations

Technology has the potential to provide a connected wealth management experience and enable business transformation. However, unless firms have addressed organisational challenges, technology will not deliver optimum value.

While updating an existing technology infrastructure can be daunting—particularly when dealing with disparate systems and legacy technology—the path forward becomes manageable when firms determine how to align technology and business strategies and build an implementation roadmap.

But technology implementations are not just about the systems. They’re also about the people and processes. A successful implementation should focus on three key areas: a clear vision and target state, a focus on desired business outcomes, and collaboration and communication to help bring everyone along the transformation journey.

Measuring productivity

Productivity is a consistent top priority for the C-suite, but measuring productivity across the industry is inconsistent. In fact, less than 10% of firms have specific productivity measures that are reported and discussed at the executive and board levels.

Without measuring productivity, progress is unlikely to be achieved. In order to measure productivity effectively, metrics must be based on the C-suite’s vision and reviewed and benchmarked over time. This approach will highlight issues early and empower organisations to implement process improvements that can enhance the end-to-end client experience.

Ultimately, wealth management firms need a plan of action to address the root causes of low productivity—not the symptoms. Addressing operational inefficiencies, aligning behaviours and incentives to desired business outcomes and adopting the right technology can enable wealth management firms to unlock higher-quality client services and power the future of wealth.

Important information

This article references research conducted by FoxRed Insight and Solve Partners and commissioned by SEI, “Maximising productivity: How wealth managers can turn challenge into opportunity,” 4 June 2024. The research incorporated findings from a survey of 65 wealth management firms and qualitative interviews with 25 C-suite individuals. The research was conducted in late 2023. The following information can be sourced to this research: 

• Wealth managers self-scored their productivity at a six out of 10.

• Relationship managers spend just 43% of their time on value-add tasks, including time with clients, portfolio management or business development.

• Less than 10% of firms have specific productivity measures that are reported and discussed at the executive and board levels.