(Based on a talk recorded live at our Nov 2023 conference)
The UHNW wealth management industry is at a crossroads – there is a profound, secular shift in demand for counseling, objective advice, and information management, but extremely challenging business economics leave most firms undercapitalized and under-resourced to exploit the opportunity. Tech-enabled work processes can enhance the UHNW client experience and drive firms’ operating leverage.
Below are key takeaways from a talk delivered at our inaugural conference by Jamie McLaughlin, who stands as an unparalleled authority in the UHNW wealth management industry. With a career spanning over 30 years, his insights and guidance aer highly sought after by wealth management firms that want to stay ahead of the curve.
How has the industry evolved?
- Shift in wealth management demand: Over the past 35 years, there's been a profound shift in the wealth management industry from providing product (be it manufacturing or distributing) towards counseling, objective advice, and efficient information management. This is driven by client demand.
- Cloud computing and the role of technology: Cloud computing has revolutionized the industry since the early 2010s, offering integrated, cost-effective solutions that support wealth management processes. Today, technology is seen as a key enabler for enhancing client experience and driving operational leverage.
What are firms struggling with today?
- Capital and talent shortages: Many firms are struggling due to insufficient capital and lack of talent, hindering their ability to capitalize on opportunities with ultra-high-net-worth clients and family offices. Many 'so-called' multi-family offices are often not able to deliver on the promise of delivering family office services to their sophisticated clients.
- What's a multi-family office anyway? The term is used as a marketing tagline rather than a formal classification, often failing to meet the bespoke needs of families. There is currently no standardized market or consistent standards in the family office sector, although some regulatory progress has been made through Dodd-Frank, the Lender case, etc.
The firm of the future
- Future success factors: The firms that will win the future will need figure out how to combine scale and speed without losing client intimacy. They will need to adapt to improve service delivery, serve clients better and quicker, and be more profitable.
- Separation of roles: This prediction opens up a whole universe of possibilities for outsourcing providers. In Jamie's own words:
Counseling and advice is a business unto itself. I think powering that workflow that supports counseling is in fact a different business. (...) It may be heretical to hear that that would in fact be a separate business and could be outsourced, but I see that day coming where there will be opportunities to no longer be in what I call the utility business and really work as a professional service firm delivering counseling.