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Strategies and Templates to Build A Successful Wealth Management Business in Asia

  • Publication Date:May 2006
  • Publisher:The Banking Academy
  • Product Type: Report
  • Pages:90
  • ISBN:981-05-5946-1

Strategies and Templates to Build A Successful Wealth Management Business in Asia

Wealth management is one of the most profitable and fastest growing financial services businesses, when it is well run. As banks move towards recognising economic profit as a critical measure, wealth management businesses within large integrated institutions will grow in stature.Banks that are moving into wealth management face challenges on three fronts: functional knowledge, product knowledge and relationship skills. Market specifications and cultural idiosyncrasies have made it difficult for banks to conceptualise a one-size-fits-all business model.

This Asian Banker report provides data and analysis for senior wealth practitioners and key management to execute the right strategies and implement wealth management tools effectively in order to build a successful wealth management business that is specific for Asia.

WHo should buy this report:

  • Senior executives tasked with setting up, building or improving bank?s private banking or wealth management business.
  • Heads and senior executives of wealth management and high net worth client business
  • Senior executives with management responsibilities over private client relationship managers sales and marketing
  • Heads of operations with responsibilities to support the specific needs of a mass affluent or private client business
  • Senior marketing managers and product developers from retail banks
  • Chapter 1. The Profile, Size and Character of the Business in Asia
    • In this chapter, we look at the composition of the wealth management business among Asian banks and assess the key factors driving the evolution of this industry in the region. We discuss two methods of segmenting the various markets and the business implications of each market type. We also discuss how customers themselves are segmented according to net worth in the different markets. Further, we evaluate where banks now stand and their potential compared with other players in the wealth management industry.
  • Structure of Contents
    • 1-1 Wealth management as the dominant
    • 1-2 What is wealth management'?
    • 1-3 Key drivers of wealth management business in Asia
    • 1-4 Current penetration of wealth management services in Asia
    • 1-5 Market share of banks in investment product distribution
    • 1-6 Segmenting the Asian markets
    • 1-7 Segmenting Asian customers by net worth
    • 1-8 Broadening market proposition of wealth management players
  • Chapter 2. Productisation and Sales Capabilities
    • This chapter begins by examining the choice between offering either internal or external products and offering a combination of both. Concluding that the latter is the best option, we introduce the framework, known as open architecture', in which such a productisation model operates. We then discuss how the business partnership between banks and their external providers is evolving and the feasibility of adopting open architecture productisation for different customer segments. In the final section, we show you where the customer segments vary in their preferred sales channels.
    • Structure of Contents
  • 2-1 Manufacturing internal products vs. distributing external products
  • 2-2 Demystifying open architecture
  • 2-3 Adopting open architecture in the supply chain of financial products and services
  • 2-4 Preferred modes of transaction for different customer segments
  • Chapter 3. Customer Segmentation
    • This chapter focuses on customer segmentation, which is fundamental to developing a relationship-centric wealth management business model. We evaluate the various segmentation methods adopted in Asia. We conclude that effective customer segmentation should be based on a combination of different variables and provide a checklist of major variables used across the world. To further guide banks, we outline the five key principles and operational roadmap of successful customer segmentation. We also touch on the different levels of advisory capability among Asian banks as this is influenced by the sophistication of their customer segmentation.
    • Structure of Contents
  • 3-1 Customer segmentation to support relationship-centric strategies
  • 3-2 Approaches to customer segmentation
  • 3-3 Variables for customer segmentation
  • 3-4 Key principles of successful customer segmentation
  • 3-5 Operational roadmap for achieving successful customer segmentation
  • 3-6 Implications for wealth management advisory capabilities
  • Chapter 4. Human Resource Management & Staff Deployment Strategies
    • In this chapter, we discuss the talent crunch for wealth management professionals in Asia and its implications for the sustainability of the business. We evaluate the shift towards bonus-based remuneration schemes and other innovative methods to attract and retain staff. We also provide some advice on the use of training programmes to nurture and retain staff. Finally, we assess the different customer relationship models that may be used to optimise staff deployment.
    • Structure of Contents
  • 4-1 Talent crunch for financial advisors in Asia
  • 4-2 Domain experience vs. tenure with the bank
  • 4-3 Evolution of remuneration schemes
  • 4-4 Provision of adequate training
  • 4-5 Customer relationship models
  • Chapter 5. Wealth Management Business Profit & Revenue Proposition
    • In this chapter, we start by looking at the correlation between sales volume and income and the link between product mix and margins in the wealth management business. After identifying product mix as the key to better margins, we examine how cross-selling can be used to improve product mix. We comment briefly on the effect of assets under management per employee on operating margins. We then discuss the stages in the evolution of a bank's wealth management market proposition and the key challenges.
    • Structure of Contents
  • 5-1 Impact of wealth management sales volume on income
  • 5-2 Impact of product mix on margins
  • 5-3 Cross-selling to improve product mix
  • 5-4 Impact of assets under management per employee on operating margins
  • 5-5 Stages of wealth management business development and key challenges
  • List of Figures
    • Figure 1-1-1: Most significant sources of future revenue growth in consumer banking
    • Figure 1-1-2: Industry definition of what constitutes 'wealth management'
    • Figure 1-2-1: Key drivers of wealth management business as identified by bankers in Asia
    • Figure 1-2-2: Ranking of key external drivers
    • Figure 1-2-3: Performance of selected regional and global capital markets (2004 - 2005)
    • Figure 1-2-4: Selected four Asian countries wealth breakdown
    • Figure 1-2-5: US household assets breakdown
    • Figure 1-2-6: Evolution of asset management industry
    • Figure 1-2-7: Projected growth in total household investable assets of selected Asian economies
    • Figure 1-2-8: Ranking of key internal drivers
    • Figure 1-2-9: Average lending rates (all maturities)
    • Figure 1-2-10: Allocation of household assets in Asian markets
    • Figure 1-3-1: Market share of banks in mutual fund and insurance sectors
    • Figure 1-4-1: Segmenting Asian markets by level of economic prosperity and momentum of wealth creation
    • Figure 1-4-2: Segmenting Asian markets by stock market penetration and wealth gap
    • Figure 1-5-1: Net-worth thresholds for segmenting Asian customers
    • Figure 1-5-2: Customer segmentation by net worth varies significantly in Asia
    • Figure 1-6-1: Prevailing and potential customer segments of major wealth management players
    • Figure 2-1-1: Distribution of wealth management products between internal and external sources
    • Figure 2-2-1: Open architecture platform in the context of a commercial bank's wealth management business
    • Figure 2-3-1: Evolution of open architecture from a business partnership perspective
    • Figure 2-3-2: Authentic open architecture vs. partial open architecture
    • Figure 2-4-1: Distribution of transaction types for different wealth management customer segments
    • Figure 3-1-1: Analytics track from product-centric to relationship-centric model
    • Figure 3-2-1: Our understanding of the customer segmentation approach
    • Figure 3-3-1: Customer segmentation should be based on the combination of different type of variables
    • Figure 3-4-1: Five key principles of successful customer segmentation
    • Figure 3-5-1: Operational roadmap for Asian banks to achieve successful customer segmentation
    • Figure 3-6-1: Phases in the evolution of wealth management advisory capabilities in an institution or a marketplace
    • Figure 4-1-1: Source and industry experience of financial advisors in Asia
    • Figure 4-2-1: Average domain experience vs. average tenure
    • Figure 4-3-1: Banks shift towards bonus-based remuneration
    • Figure 4-4-1: Banks training budget per customer relationship manager per annum
    • Figure 4-5-1: Customer relationship models
    • Figure 4-5-2: Relationship models adopted by different banks in Asia-Pacific
    • Figure 5-1-1: Sales volume vs. income
    • Figure 5-2-1: Margin level of different wealth management products
    • Figure 5-2-2: Traditional and alternative product penetration vs. gross margin
    • Figure 5-2-3: Alternative product penetration vs. gross margin
    • Figure 5-3-1: Customer engagement circle for cross-selling
    • Figure 5-3-2: Cross-sell ratio of selected banks in major customer segments
    • Figure 5-4-1: Operating margin vs. assets under management per employee
    • Figure 5-5-1: Our understanding of Asian markets with regard to stage of development
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