Wealth Management Business and IT Priorities for 2010: A Global Perspective

by Arin Ray,  Isabella Fonseca, January 6, 2010
Product Trends/ Reviews
Global, Asia-Pacific, EMEA, North America

Abstract

Celent expects a recovery for wealth management technology spending in 2010, with spending reaching US$3.7 billion by the end of 2010, a 5% increase over 2009.

The market crisis has made wealth management firms reevaluate their way of targeting and servicing clients across all customer segments. In a new report, Wealth Management Business and IT Priorities for 2010: A Global Perspective, Celent provides an overview of the evolution of the wealth management industry after the financial crisis, with a focus on business and IT priorities on a global basis. A number of strategies are followed by financial institutions to survive in the current environment and remain their clients’ trusted advisors.

Celent completed interviews with a total of 46 financial institutions, which included Celent's prospects and clients as well as a list of representative clients of vendors drawn from all the main markets (Europe, North America, and Asia). To provide an analysis for this report, the interviews examined these institutions’ business models, product offerings, client base, and general client acquisition strategy.
Main findings of the study include:

  • Firms are looking into expanding their technology projects to target a broader customer segment as well as extend their service offerings.
  • Technology spending budgets at financial institutions will either hold steady or increase in the next 12 months. In 2010, spending will increase between 5% and 20%.
  • Financial services firms will continue to focus on the high net worth and ultra-high net worth individuals, but expand and develop more opportunities in the mass market and mass affluent segments.
  • Firms are looking at ways to reach out to lower net worth clients with self-service models.
  • Firms will invest mostly in technology around front office and back office requirements, including advisor platforms, compliance, reporting, self-service, and integration.


“Although wealth management projects are at different stages globally, firms of all sizes are reevaluating their wealth management infrastructure to fix their immediate needs,” says Isabella Fonseca, senior analyst and coauthor of the report. “We expect the majority of the spending to be allocated at the front office, followed by the back office."

"Projects that were put on hold in 2008-2009 will likely restart in 2010,” says Arin Ray, analyst and coauthor of the report. "Firms will focus on reducing costs and augmenting advisor productivity through the use of technology, carefully evaluating the ROI before making any investment."

The report begins with an overview of the wealth management market after the financial crisis and discusses the main drivers for wealth management projects. It presents a comprehensive analysis of the population and asset growth of different client segments by their geographies, as well as their product selection and composition. The report also presents technology and business trends, wealth management technology spending, and a detailed section on the results of the financial institution survey. The last section includes Celent’s future considerations for the wealth management market.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

4

 

The Market Post-Meltdown

4

 

Drivers for Wealth Management Projects

6

Market Overview

8

 

Market Trends

8

 

Technology Trends

9

 

Growth by Client Segments

11

 

Onshore/Offshore Asset Mix

17

 

Investor Product Selection

19

Technology Spending

22

 

Technology Differentiators

22

 

IT Spending Definition

23

 

Snapshot

24

Results from Interviews

31

 

Background

31

 

Wealth Management Strategy

33

 

Customer Segments

35

 

Technology Deployment and Applications

37

 

Technology Spending

40

 

Future Plans

42

Looking Forward

43

Leveraging Celent’s Expertise

45

 

Support for Financial Institutions

45

 

Support for Vendors

46

Related Celent Research

46

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