wealth management –drivers of change

FOR WHOLESALE CLIENTS ONLY - NOT FOR RETAIL USE OR P UBLIC DISTRIBUTION

Wealth Management – Drivers of Change

September 2015

1 | FOR WHOLESALE CLIENTS ONLY - NOT FOR RETAIL USE OR PUBLIC DISTRIBUTION

Professionally managed U.S. market by channel


Market share by channel


RIA and dually registered asset market share growth


Top 25 RIA’s by Assets Under Management


Future drivers of change and implications (Australian Market)

Future drivers of change and implications

1. Continued and increased regulatory

scrutiny

2. Digital technology and the ‘internet of

things’

3. Empowered consumers

www.tripadvisor.com

www.etoro.com

www.vouchedfor.co.uk

4. Significant wealth transfer from Baby

Boomer to Gen-X and Gen-Y

1. More regulation

2. Emergence/evolution of new advice

models

3. Greater transparency in advice

process demanded, including

pressure on fees

4. Increased pressure on margins due

to changing cost structure and loss of

rebates

Future drivers of change in

Wealth Management Implications

Source: J.P. Morgan Asset Management. The above chart is for illustrative purposes only

.


Opportunities and threats

1

UK situation emerges where:

Rise of the ‘direct investor’ www.selfwealth.com.au

Emergence of the ‘hybrid advice models’ – adviser as “coach” www.learnvest.com

Fewer “fully advised” clients

2

Rise in demand for MDA Operator, LMDA capability,

outsourced Investment management

(under MDA or SMA)

3 Increased reliance on cash flow management advice


.


Opportunities and threats

4 Replace rebate margin with investment management margin

5 Consolidation of mid-tier boutiques and dealer groups

6 Lower practice valuations


.


Role of platforms, technology, and software

For the Client

1“Customer 1st experience”, i.e. designing a solution based on a target customer’s

investment needs and technology preferences www.helixpersonas.com.au,

www.betterment.com

2 ‘Everything’ online for many target segments

3Online design and usability excellence, without forgetting the importance mobile

phones and tablet www.personalcapital.com

4Online portfolio and cash flow management tools that deliver a sense of control,

including a view of total ‘family’ wealth


.


Clients will demand more information, transparency and ability to do more themselves


.


Successful customer experience models from other industries will influence wealth management


.


Role of platforms, technology, and software

For the adviser/dealer group/boutique:

Data feeds from external sources

(investments, bank accounts)

www.yodlee.com

Digital, the internet and mobile, offer

unparalleled new opportunities

www.moven.com

Simplify model portfolio

delivery (bulk trading,

rebalancing)

Regulatory reporting (fee

statements, etc.)

Provide access to models from

portfolio managers within

multiple business frameworks,

e.g. SMA or MDA structure

Enhanced portfolio reporting

(individual and in bulk), e.g.

volatility, benchmarking,

performance, churn

Consolidated reporting across

multiple entities


.


Digital wealth management and new tools and products for financial advisors


.


Start-ups are using multiple models to target primary retail base with a low cost offering


.


Recent robo-adviser and scalable advisor-based model offerings aim to disrupt the traditional wealth management business


.


Implications for Investment Managers

1 Model Portfolio inclusion is key

2 Outcome oriented solutions, such as target date strategies, cash plus

3 Provision of tools to assist in asset allocation process

4 Provision of tools to assist in better informed portfolio construction

5Separation of portfolios/asset classes into beta, alternative beta and true alpha

with focus on lower cost beta replication and only paying for alpha when earned


.


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J.P. Morgan Asset Management

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wealth management –drivers of change

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