While the COVID-19 pandemic has negatively affected a great number of industries, business organizations, and individuals in the past year, there are a few of each of these categories that have been shielded from the economic impacts of the changes brought about by this global event. One of these is wealth management. According to news reports, the world’s billionaires collectively grew their fortunes by 54% since the global health crisis began. The assets controlled by billionaires increased from USD 8.04 trillion in March 2020 to USD 12.39 trillion by the same month the next year.
The growth in the wealth of high-net-worth individuals requires wealth managers to adjust their strategies accordingly. In light of the ongoing changes and the level of uncertainty that continues to permeate the current milieu, wealth managers are tasked with two important goals: help their clients retain generational wealth, and meet the expectations of tech-savvy clients. At the same time, they should be cognizant that the current developments—including the technological innovations that many financial establishments are actively adopting—have also profoundly affected all the players in the chain of service. To improve their revenue without sacrificing the quality of service that they offer their clients, it’s a must for wealth managers to look into new technologies, such as cutting-edge billing management solutions, to reduce the cost of meeting client expectations.
Here are 3 tips that wealth managers can use to make the most out of the current conditions and maximize their revenue:
Explore New Technologies That Will Benefit Their Business
The pandemic has made it clearer than ever that financial institutions should be at the forefront of embracing the digital revolution. While wealth managers have long incorporated digital solutions into their practice, it’s a must for them to remain on top of innovations that will allow them to support sophisticated pricing systems. According to a survey done by business advisors, the aid of such a system can significantly improve a business’s operational efficiency, increasing revenues from 6 to 15%. Among the challenges that wealth managers should be keen on solving using digital technology include:
- IT efficiencies and spending
- Product setup time
- Revenue cycle leakage
- Cost of improvements
Also, investing in technologies that aim to improve customer experiences can provide significant benefits to the business. It’s something that traditional wealth managers who are anticipating higher demands from digital-native clients should look into as soon as possible.
Use Smart Pricing to Their (and Their Clients’) Advantage
While more traditional wealth managers are backed by reputations built on years of experience, they are not immune to the threat presented by startups, many of whom present tech-savvy clients with more options. On top of responding to the changing needs of the market from the get-go, these startups also operate their businesses using lean systems, so their operations cost much less than those of traditional companies.
This, in turn, enables these newer establishments to offer better prices. For example, instead of just offering reduced Asset Under Management (AuM) percentages with increasing amounts of capital, many forward-looking wealth managers now offer value-based fee models. Instead of paying a fixed percentage of their profits, clients can choose to pay a one-time fee for the wealth manager’s advice or pay depending on the performance of their assets. This pricing model gives the clients more options and value for money.
To level the playing field, seasoned and new wealth managers alike should optimize their pricing strategy. This means treating the selection of pricing options that the company offers as a capability or a value proposition that they should market to their clients.
Focus on Understanding the Needs of the Clients
Last but not least, wealth managers must make an effort to improve their understanding of the changing needs of their clients. Aiming to provide clients with personalized services is key to determining their needs, investment behaviors, and what it is that they are expecting from their wealth managers. Taking all these elements into consideration can lead to wider customer segmentation as well as the delivery of personalized services. This will also result in acquiring deeper insights on how wealth managers can continue to anticipate and meet the demands of the times.
Central to the adoption of these tips is a versatile revenue management and billing solution that can be customized according to the needs of the specific wealth managers, the entities that make up their clientele, and the current goals of the financial organization. It’s not enough to survey the market for the right technological solution; it’s also a must for wealth managers to test prospective programs for a period to see how well their current options can be matched to their goals and overall strategies. It can be a time-consuming process, but it is well worth it. With the aid of the right set of tools or an enterprise-level solution, wealth managers will be able to make timely, data-driven decisions that will allow them to turn crisis into opportunity and empower their clients to reach their long-term financial goals, even in the face of uncertain situations.