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Wealth management IT spending

The trend in servicing wealth management clients is heading toward integrated financial solutions.
Spending by financial services firms on the information technology (IT) needs of their wealth management business in North America, Europe and Asia-Pacific will reach $28.5 billion by 2012, says London-based market research firm Datamonitor.

The build-up in spending will help financial services firms cope with market regulations and stay competitive amid an environment of increasing numbers of mass affluent investors, Datamonitor says.

The rise in the mass affluent segment is fuelling growth in new services and distribution options, which will require a more sophisticated approach to technology. Datamonitor defines mass affluent as individuals holding $60,000-$500,000 in onshore liquid assets including cash and deposits, equities, bonds and unit trusts.

For technology vendors, the opportunities lie in providing IT needs of private banks, retail banks, insurance providers, independent financial advisors, retail asset managers and retail brokerage houses.

ôWealth managers, private bankers and retail banks are no longer talking of standalone strategies for wealthy individualsö, says Jaroslaw Knapik, London-based financial services technology analyst with Datamonitor and author of the study. ôThe trend is towards integrated financial solutions, revolving around cross-selling banking, savings and investment products wrapped with advice.ö

Effective front and middle office tools, such as portfolio management, financial planning and analytical customer relationship management system, are crucial to wealth management operations, Datamonitor notes.

ôClients, particularly the more active new money segment, are demanding a more hands-on approach from their relationship managers,ö Knapik says. ôThis creates a need for advisors and front office staff to have access to more agile, automated analytical tools and presence technologies that enable client interactions to be more effective from a cost and time perspective.ö

A key priority within distribution channels will be continuous delivery of high-quality face-to-face advice while providing customers with internet-based transactional capabilities in tandem, Datamonitor notes. Retail banks looking to target this group are extending their offering beyond traditional retail banking services, including more product building, stronger and multi-channel customer and advisor service options and deeper understanding of customer data.

The presentation of data has always been amongst the top priorities of wealth managers, as data reporting often determines whether a client will stay with the company. However, increasing pressure to reduce cost is causing focus to shift to back-office improvements, such as infrastructure and governance.
¬ Haymarket Media Limited. All rights reserved.
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