Wealth Management and Private Banking: Building a Proactive Model

Wealth management and private banking divisions are increasingly gaining importance in the banking sector, as banks in India are being considered a one stop shop for providing financial solutions by the customers. Changing investor demands and tax regulations are helping banks in providing a complete portfolio advisory module in addition to traditional banking products. The structure of the banking industry is shifting by attracting talented advisors and helping in client retention and penetration aspects.

Banks are currently looked upon by both corporate and individual investors in providing innovative financial solutions like selection of best managed products and structured products.

Differences between the traditional type banking players and complete solutions providers can be noticed in the existing industry players based on the fee income these players generate from wealth management and private banking services. The quality of advice and level of service play an important role in building a winning business model for banks.

Various wealth surveys conducted in the recent past suggest that investors need broader wealth management advice on tax planning, business succession planning, international Wealth Management and Private Banking Building a Proactive Model investments, art, real estate and other innovative investment options. Managing investor needs, aspirations and goals are the three key drivers for all the players to ensure customer retention and further penetration. Customer confidentiality is increasingly gaining momentum in the Indian space and is being promoted as important criteria by most players in their positioning.

Sophisticated financial products and solutions are no longer seen as value proposition by the ultra affluent investors, as these products with little variation are available from all the players in the market. The real difference stands out in the personal touch and technology of the service provider. Offering investors online purchase, sale and tracking capability in addition to personal touch are critical drivers of this business.

Right quality of advice and experience of the advisor are two important drivers of wealth advisory business. With more number of banking players now offering advisory services, attracting the right quality of advisors with good understanding of capital markets and experience becomes critical in developing a strong advisory model. Unfortunately, many players are experimenting with new talent in this space as there is a shortage of experienced talent.

Currently, banks are investing very little in training their advisors on market and economic trends. Very few players have invested in developing internal on the job training grounds for their wealth advisors. Moreover, very few banks have the so-called product specialist to guide their wealth advisors and clients. Product specialists help both internal advisors and clients in identifying market trends and opportunities well in advance. Portfolio regular reviews with product specialists help in building the client’s confidence and rebalancing the portfolio on regular intervals.

Attracting and retaining clients, places an enormous demand on expertise, technology and product capabilities. A complex range of services needs to be provided online and off-line. Personalized advice covering a diverse range of investment alternatives and related services (at a minimum, tax and inheritance planning and extending to real estate, art and gems) needs to be matched with sophisticated financial advice. Most individual investors believe they have a better understanding of their assets than their relationship managers do. They value personalized, timesaving service and expert advice on a wide range of investments. The challenge lies in dynamic implementation of investor suggestions and feedback and building a proactive model.