The rapid expansion of regulatory change is overwhelming wealth managers and financial planners, according to a new report from PwC entitled Navigating to tomorrow: serving clients and creating value.
“The thing that is unique to the market this time with the data is the rate and pace of change. Change is coming to the industry at a torrential rate,” explains Steve Crosby, senior managing director and Americas Wealth Leader. “It overwhelms their ability to do their job and overwhelms their infrastructure and the proof points are that people don’t have the time to talk to clients that they used to.”
Because the U.S. has a fragmented regulatory system and is coping with issues like Dodd-Frank, Volker, Foreign Account Tax Compliance Act and Resolution Planning, for example, wealth managers and planners are forced to take an already reduced head count, moving some employees from client relationship management to regulatory compliance.
“People need to maintain an eagle eye on the federal code of regulations. They have to employee lobbyists to ensure they are head,” he adds, saying the environment can be very frustrating for wealth managers to operate in.
Also, notes Crosby, the client is changing. Clients are moving to more of a hybrid model where a lot of research is already done online and then go to adviser for advice. Crosby says that clients will now go back to advisers to discuss succession planning or deal with the creation of a foundation for example. “They are asking for consulting advice that the wealth management community is, by and large, not up to, that’s what CEOs told us,” says Crosby. “And so there is a need to train people, to get the very best relationship executives…that function needs to grow and evolve.”
Another point the report stresses, and this acts as a potential opportunity, is the movement of capital from the West to the East. Says the report: “We are in a multi-polar world – countries are at varying stages of growth and evolution…Adapting to these short and medium-term issues is essential. Agile organizations that can adapt their market and client approach, serve their target clients and stakeholders well, protect their margins and transform their business models will achieve differentiation. They are poised to become the industry leaders of the future.”
Overall, notes Crosby, ensuring a focus on the entire wealth picture of a client is key. A major shift in thinking for wealth managers is to meet their clients’ needs and focus on an entire family over a lifecycle rather than just the patriarch or matriarch of the family.
Joel Kranc is Director of Kranc Communications, focusing on business communications, content delivery and marketing strategies. He has written and worked in the retirement and institutional investment space for 17 years covering North American markets, large institutional pensions and the adviser community. firstname.lastname@example.org
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