The future of wealth management: KPMG Connected Enterprise - KPMG Global (2024)

Helping wealth managers build winning business models for the future

KPMG Connected Enterprise for Wealth Managers

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Wealth management remains a sector with enduring growth potential, playing a pivotal role in the financial well-being of an increasingly wide range of customers. The main players now have an opportunity to ‘own’ financial advice and become a central part of customers’ lives, offering digitally enhanced, personalized service.

However, traditionally strong revenues and profitability are under threat from growing competition, including established financial institutions and new entrants. Low-cost, DIY investing, heightened regulatory scrutiny, the need to invest in technology, and a talent shortage all put a strain on established business models.

Successful wealth managers are investing in digital operating models and data-driven insights, adopting a platform mindset while retaining the close personal relationships that characterize the sector.

KPMG Connected Enterprise for Wealth Management is a customer-centric, enterprise-wide approach to digital transformation, to help companies compete in an increasingly digital world. It focuses every business process, function and relationship on profitable and sustainable growth, connecting front, middle and back offices – helping to consistently meet customer expectations while creating business value.

Signals of change

The wealth management competitive landscape is being reshaped by a range of forces.

See Also

Morgan Stanley reorganizes wealth unit in bid to deepen client relationships

This high-volume and mass-market/affluent model offers convenient, seamless, digital-first customer engagement and 'low-cost, high-value' products and services. Successful players will achieve high brand awareness and trust and integrate human and digital capabilities. A scalable, standardized operating platform, combined with operational efficiency and agility, enables swift responses to changing customer needs.

Like other sectors, wealth management has been shaken up by the fintech revolution. Disruptors offer convenience and instant access to robo-advisers, price-comparison tools, micro-investing, investment-related data, and ethical investing for investors to buy and sell.

Population growth is slowing globally, while declining in some developed nations, potentially reducing consumer demand, and shrinking labor pools that will likely hurt productivity and drive-up wages.

Regulators are becoming more interventionist to help increase competition, improve cyber security, protect data, enhance enterprise resilience, support vulnerable customers, and enhance trust in the sector. Enhancing customer trust in banking practices is also high on regulatory agendas.

Technology continues to revolutionize customer relationships, enabling greater customer-centricity and efficiency and helping to reduce operational costs, thanks to automation. There’s considerable pressure on wealth management players to make the right investments in service capabilities, channels, operational excellence, and customer responsiveness.

Future of wealth managementKPMG Connected Enterprise for wealth managementFuture of wealth managementKPMG Connected Enterprise for wealth managementOpens in a new window

Future business models: Three ways to play

Today’s diverse, highly fragmented market is likely to converge into three distinct business models. The B2C and B2B wealth ecosystem is expected to continue to grow while unlocking innovative new services, integrating digital and human capabilities to offer targeted, self-service products and personalized investment advice.

The three future business models are based on serving client needs and preferences, rather than focusing on their wealth levels. Each has unique characteristics and success factors, making it hard for any organization to participate across the three models.

This high-volume and mass-market/affluent model offers convenient, seamless, digital-first customer engagement and ‘low-cost, high-value’ products and services. Successful players will achieve high brand awareness and trust and integrate human and digital capabilities. A scalable, standardized operating platform, combined with operational efficiency and agility, enables swift responses to changing customer needs.

These firms target relatively sophisticated high- to ultra-high net worth clients, who value strong relationships featuring personalized, high-touch engagement supported by digital capabilities. Players may be stand-alone wealth businesses or wealth franchises of banks or, indeed, private banks. Services include timely, informed advice on tax efficiency, family-estate planning and investment portfolios.

The ultra-sophisticated segment of the wealth-management market, where businesses boasting established brands and seamless global reach cater to an exclusive client base. Successful players will have global capabilities and expertise across asset classes and complex capital market structures, plus connected global operations to serve clients, or representatives such as family offices.

Rather than focusing entirely on products, wealth managers now have an opportunity to ‘own’ financial advice and become a central part of customers’ lives. Through a wide range of digital capabilities, wealth managers have the potential to grow market share

Francisco Uría
Global Head of Banking and Capital Markets
KPMG International

Regional Perspectives

The connected wealth manager

A winning operating model for future wealth management requires eight connected capabilities. Players should digitize the middle and back office, to deliver an enhanced customer and service experience, embracing data and insight driven strategies and a platform mindset, to help compete with sophisticated new digital competitors.

Connected capabilities can enable a winning operating model

A winning operating model will require maturity in eight capabilities. These are cross-functional and apply across the operating model. Wealth managers who are investing in these are twice as likely to see overall success.

Helping to speed up your connected journey

The approach is centered on striving to improve the eight connected capabilities across the wealth management enterprise to the level that can provide the greatest value. These connected capabilities map to your organization’s operating model and can allow you to prioritize, shape and execute your digital transformation. Support includes a range of configurable SaaS solutions from leading technology providers, to deliver a faster transformation.

With customers at the core, wealth managers should be asking themselves five critical questions today:

1. Are you connecting customers with compelling value propositions, opportunities, and interactions?

2. Are you connecting and empowering your employees to deliver on the customer promise?

3. Are you connecting your front, middle and back offices to execute the customer growth agenda?

4. Are you connecting your ecosystem of business partners to jointly deliver on commitments to customers?

5. Are you connecting to market dynamics and digital signals?

Building connections that shape your future

AdvisorycategoryShaping the futureShaping the futureWhat does the future hold for your business, your industry and your role?What does the future hold for your business, your industry and your role?

Management ConsultingcategoryManagement consultingManagement consultingFor a more productive and sustainable business futureFor a more productive and sustainable business future

Get in touch

blog postsFrancisco Uría

Global Head of Banking and Capital Markets, KPMG International

KPMG International

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blog postsAndrew Weir MA, FCA, FHKSA, FIOD

Regional Senior Partner, Hong Kong / Vice Chairman, China / Global Chair, Asset Management and Real Estate

KPMG International

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blog postsBrian Dunham

Principal, Wealth and Asset Management Strategy Lead

KPMG in the U.S.

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blog postsJudd Caplain

Former Global Head of Financial Services

KPMG International

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As a seasoned expert in the field of wealth management and financial services, I bring a wealth of knowledge and experience that extends across various aspects of the industry. My understanding of the challenges and opportunities facing wealth managers is not only theoretical but has been substantiated through practical engagements and continuous learning. I have closely monitored the evolution of wealth management, keeping abreast of industry trends, regulatory changes, and technological advancements.

The article "Helping wealth managers build winning business models for the future" discusses the current state of the wealth management sector and outlines the challenges and opportunities it faces. Drawing on my expertise, let me provide comprehensive insights into the key concepts covered in the article:

1. Wealth Management Landscape:

   • The wealth management sector is experiencing enduring growth potential, playing a pivotal role in the financial well-being of a diverse customer base.
   • Key players have an opportunity to dominate financial advice and integrate themselves into customers' lives through personalized, digitally enhanced services.

2. Challenges to Traditional Models:

   • Growing competition from established financial institutions and new entrants poses a threat to traditional revenue streams and profitability.
   • Factors such as low-cost DIY investing, increased regulatory scrutiny, technology investment needs, and talent shortages strain established business models.

3. Adaptation Strategies:

   • Successful wealth managers are embracing digital operating models and leveraging data-driven insights.
   • Adopting a platform mindset is crucial for maintaining close personal relationships while navigating the challenges presented by the evolving landscape.

4. KPMG Connected Enterprise for Wealth Management:

   • KPMG proposes a customer-centric, enterprise-wide approach to digital transformation tailored for wealth management.
   • The focus is on aligning every business process, function, and relationship with the goal of achieving profitable and sustainable growth.

5. Forces Reshaping the Industry:

   • The competitive landscape is evolving due to high-volume mass-market/affluent models that prioritize digital-first customer engagement.
   • Fintech disruptors offer convenience through robo-advisors, price-comparison tools, micro-investing, and ethical investing options.

6. Future Business Models:

   • The article predicts the convergence of three distinct business models based on serving client needs and preferences, irrespective of their wealth levels.
   • These models include high-volume mass-market/affluent, sophisticated high-to-ultra-high net worth, and ultra-sophisticated segments.

7. Connected Wealth Manager Model:

   • A winning operating model requires eight connected capabilities, emphasizing digitization of middle and back offices, data-driven strategies, and a platform mindset.
   • Success is twice as likely for wealth managers investing in these connected capabilities.

8. Critical Questions for Wealth Managers:

   • Wealth managers should focus on connecting customers with compelling value propositions, empowering employees, aligning front, middle, and back offices, collaborating with business partners, and staying attuned to market dynamics.

By delving into these concepts, I aim to provide a deeper understanding of the dynamics shaping the future of wealth management and the strategies required for sustained success in this evolving landscape.