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Deloitte Reveals Keys to Bank Advisor Success in 2019

By Garrett Keyes December 6, 2018

Improving customer experiences and adding goal-based advice, tax, and estate planning services may match investment performance in importance for the growth of wealth management businesses at banks, a recently released Deloitte industry outlook claims.

“Blending high-touch personalized services with low-touch automated interactions” to improve customer experiences will also be key for success in 2019, the study adds.

Investors have increased their expectations as new technology has become available, according to Gauthier Vincent, lead wealth management consulting partner at Deloitte. With online portfolios where investors can define their goals, review their portfolios, and do transactions online, it's increasingly important for wealth managers to offer both investment guidance and other services.

“Wealth managers must connect to a client, think through all components of a client experience, and differentiate themselves from other managers,” he says.

And expanded offerings may be particularly important for success in 2019 amid the prospects of a market slowdown, the growth of digital advice platforms, regulatory uncertainty, movement towards low-cost options, and the push for added price transparency, the study warns.

Regulatory changes and fee compression may continue to impact wealth managers as the SEC’s proposed Regulation Best Interest looms, the study notes.

“Even though the DOL’s fiduciary rule has been overturned, the SEC is floating a best interest standard,” the study notes. The proposed legislation attempts to place broker-dealers under a stricter regulatory framework. The proposal, under discussion for much of 2018, has variously been attacked and defended by RIAs and broker-dealers alike, as well as consumer and industry groups.

If the SEC's proposal becomes law, advisors will go through a situation similar to that of trying to comply with the then-new DOL Rule two years ago, says Vincent. He adds that any new regulation requires new technology and internal investment to achieve compliance. The introduction and enforcement of the best interest regulation could make it more costly for firms to operate as they will have to demonstrate compliance through documentation, he says.

Additionally, an apparent industry trend towards fee-based advice relationships may also pose a risk to wealth management teams at banks if they serve as fiduciaries while other parts of the banks' operating transaction businesses do not.

Gauthier Vincent

Despite the risks bank wealth management teams face in 2019, the high net worth client segment for this sector is expected to expand by over 9% in total assets in the next 10 years, the study shows.

Over the long term, HNW client assets tend to grow two percentage points faster than the economy, Vincent says. If advisors accept the trend that affluent assets are growing faster than other investors' assets, clients with more assets should continue to accumulate more assets at a more rapid pace than other investors, he suggests -- making the pursuit of HNW clients well worth the effort.