In the past few years, the global economy has been through a lot. Additionally, a new age of technology took over the world and introduced automation. Everything from advertising to offered services has changed in regards to wealth management firms. Even large companies like J.P. Morgan wealth management are looking for ways to appeal to new demographics. Some changes are in response to regulatory updates from the government. Many of the industry’s differences have come about for the better of the client. At the very least, there is a greater degree of transparency worldwide.
Cost Versus Income
Wealth management and private banking go hand in hand. Private banking entails many perks for high net worth clientele. However, the cost of those services is very high. In recent years, banks have seen a loss of income and have had difficulty finding a balance between their service expenses and incoming profit. The recent growth in the wealth management industry supports the trend that those providers who pay special attention to their clients do better holistically. This results in a heavy pressure to keep amenities and find new sources of income.
Dramatic Regulatory Changes
In the aftermath of the financial crisis, the wealth management industry has experienced an unprecedented level of regulation over:
- Proprietary trading
- Corporate governance
- Offshore transparency
A manager’s major regulatory challenges deal with client protection and suitability along with taxation and transparency. This radically changed the structure of tax heavens and foreign banks, which are now obligated to reveal the identities of American clientele to the United States government. Notably, international financial bodies have shown a greater degree of cooperation with each other.
The Threat and Promise of Digitization
New digitally based providers are showing up in the wealth management industry. Investment advisors are able to give clients real-time updates and customized advice via digital means. Additionally, clientele can use online tools to monitor performance, investments and financial goals. At the moment, digital providers offer free services, but this does not bode well for long-term profitability. Established Internet brokers are another serious threat to the traditional system. They can give both transactional expertise and wealth management service in a convenient way.
Changes in Advertising
The old “smile and dial” tactic built many wealth management enterprises, but it doesn’t work the way it used to. Bankers used to rely on dinner seminars to bring in prospects. Now, the Internet is the place to advertise. Instead of cold calling, firms are relying on Search Engine Optimization strategies and website blogs to reach a broader client base. Billboards are still worth the money in the right location, but dinner seminars are a thing of the past. Social media is now a legitimate and necessary form of representation for any business.
Even at older and well-respected firms like J.P. Morgan wealth management, the industry has changed dramatically from what it used to be. Recent regulatory upgrades prevent unsavory business and promote a much greater degree of global transparency. International financial bodies are working more cohesively and the entire field is making a reluctant move towards digitization. Most of these changes can be considered improvements and serve to benefit clientele.