Meeting Diverse Client Needs in High Net Worth Growth Markets Requires Flexible Service Models and Technology Strategies

Business Wire, June 24, 2008

NEW YORK -- The worldwide pool of high net worth individuals (HNWIs) is shifting as global economic and demographic trends bring entirely new investors into the HNW bracket, creating strong growth potential for wealth management firms that can best adapt existing market strategies to meet the unique needs of new markets, according to the 12th annual World Wealth Report, issued today by Merrill Lynch (NYSE: MER) and Capgemini.

Leading wealth managers recognize the extraordinary growth opportunities presented by new markets of high net worth individuals, yet they understand that gaining market share and transitioning their business service models accordingly will be highly challenging. To meet the challenge, wealth management firms need to address a host of complex factors, starting with an effective service model and technology strategy that will enable them to pursue growth rationally, flexibly - and ultimately, successfully. To effectively make the transition,firms are "getting back to basics" and need to:

* Define short- and long-term growth strategies by first making an assessment of their current strengths and liabilities, and then clearly defining their future aspirations;

* Comprehensively understand client needs in new target markets and identify a highly tailored approach to meeting those needs;

* Assess their existing business strengths and unique heritage and capitalize on those assets in developing unique tools and service offerings for both existing and new growth markets;

* Align their service delivery models with the right technology applications and infrastructure.

"Some wealth management firms are already successfully growing and transitioning into new markets, but for many others, the transition is far from easy--or viable--given existing service models and infrastructures," said Bertrand Lavayssiere, Managing Director, Capgemini Global Financial Services. "To accommodate the needs of diverse clients and advisors in both established and new market segments, firms must design flexible service models. 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. Ultimately, those firms that best understand their clients will be most effective at capitalizing on existing strengths to transform and adapt their service delivery to meet the needs of clients in a target growth market."

In designing a winning growth strategy, the Report found that wealth management firms need to look at six complex dimensions: target-client needs, firm identity, service delivery model, operations and technology, the external environment and their products and services.

Some keys to successfully capturing growth opportunities include:

1) Growth Depends on Winning Over the Client

Wealth management firms should make strategic investments that are tailored to local client needs, and which differentiate their service offerings, particularly when expanding into new regions. For example, firms can make investments in "client experience" initiatives to bring a more personalized, family office-like service to HNW delivery, or introduce customizable client solutions to respond to the growing demands of clients, who want benefits, such as improved visibility into embedded risk and a holistic analysis of their assets. Reporting capabilities with a detailed analysis of clients' comprehensive holdings enable firms to distinguish themselves and better serve HNWIs. Furthermore, a qualitative understanding of clients' traits enables firms to tailor their investment approach, complementing client retention and offering potential for organic growth.

2) Growth Can Elude Firms that Aim to Be Something They are Not

While many firms claim to be capable in all aspects of wealth management, they tend to excel in one area or another based on firm heritage. Additionally, the approaches and models that have driven success in one market may not form the best basis for an appropriate and effective strategy for targeting growth in new markets. Before targeting a new market, firms must first understand their perceived identity, capabilities and the value proposition they offer clients. An honest self diagnosis provides insight as to what capabilities are missing or underdeveloped. Once their offering is bolstered, firms can showcase the value and product offerings for prospects and existing customers.

3) Aligned Service Delivery Models Can Drive Significant Value

Since service delivery models can be directly influenced, they offer significant potential for driving value in new markets. Leading firms have always known one-size-does-not fit all in the HNW segment, but the imperative is that service models must be flexible enough to accommodate advisors and their diverse pool of clients. Additionally, as firms move into new markets and adapt existing service models -or deploy new ones -proper management of different advisory approaches is essential to delivering clients excellent service.