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Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail?

June 14, 2012

In my June 6 post 9 of 10 Banks Are Mulling an Overhaul I linked to the American Banker article that cited the findings from a KPMG study that also said:

Forty percent of the respondents said that asset and wealth management would be essential to expand revenue over the next few years.

But another article in the same issue of  American Banker (Missed Opportunities Abound in the Bank Channel) reported from the Prudential Wealth Management Leaders Forum in New York, which I also attended:

…banks haven’t exploited the opportunity too well. From 2009 to 2010 banks’ and insurance broker-dealers’ assets under management shrank to $600 billion, less than 5% of the $14.5 trillion wealth management market. Meanwhile, discount brokers grew to $2.5 trillion, cornering 19% of the market. Also growing in that time were registered investment advisors, which command 13% of the market, and private banks and trust firms, which command 8%.

Is Wealth Management the New Holy Grail?

Bankers seem to be acting like Indiana Jones in his Last Crusade (…well, last until he sought the Kingdom of the Crystal Skull, but that’s another post… OK, probably not.) in their pursuit of the Holy Grail and its promise of immortality.

A flat (and further flattening) yield curve, low loan demand and regulatory pressures on fee income and capital needs are causing bankers to seek new avenues for growth. (See also Is Bank Merger Mania Imminent?)

It’s easy to be attracted to the net overall growth of the affluent, high net worth and ultra high net worth segments and the impending transfer of $17 trillion in wealth from the baby boomers to younger generations.

But as the American Banker article points out, there is a huge gulf between “opportunity” and “success”. Over the past thirty years, a ‘build it and they will come’ strategy worked at some level for nearly everyone. Those days are long gone and they won’t be coming back.

No Easy Fix

Firms that want to gain market share from others will need to deliver true value to clients.

At the same Prudential Wealth Management Leaders Forum, Wallace Blankenbaker of the VIP Forum described the key drivers to loyalty– serve, tailor and teach. Clients want firms that are easy to do business with, firms that look out for their best interests and firms that can help them make better decisions.

If firms fail to deliver on those key drivers, funds will continue to flow from them to competitors that can deliver.

Wealth management isn’t the Holy Grail. It’s a specific set of services designed to solve the unique issues and meet the unique goals of a specific set of clients.

As I have said before, Don’t repaint the walls when you need to fix a cracked foundation.

“You must choose, but choose wisely. For as the true Grail will bring you life, the false Grail will take it from you.”

-The Templar Knight guarding the Holy Grail in Indiana Jones and the Last Crusade

6 comments

  1. […] the intersection of leadership, advice and technology to improve financial services « Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail? The Valley of Despair and the Exodus of Talent June 19, […]


  2. […] Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail? (jpnicols.com) […]


  3. […] Firms and advisors also need to devise new ways to generate revenue, as some provisions severely curtail some of the most profitable business practices of the past. No wonder so many firms are looking to new wealth management initiatives to offset these challenges. (See Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail?) […]


  4. […] Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail? (jpnicols.com) […]


  5. […] Firms and advisors also need to devise new ways to generate revenue, as some provisions severely curtail some of the most profitable business practices of the past. No wonder so many firms are looking to new wealth management initiatives to offset these challenges. (See Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail?) […]


  6. […] Banker Jones and the Last Crusade: Is Wealth Management the New Holy Grail? (jpnicols.com) […]



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