Private banks and trust companies’ assets are projected to reach $5.3 trillion by year-end 2019, according to the latest research from Cerulli Associates “Asset Management Opportunities in Banks 2015: Capitalizing on a Resurgent Focus on Wealth Management”.
“With growing competition, most banks can no longer consider asset allocation their core differentiator,” states Donnie Ethier, associate director at Cerulli. “Delivering comprehensive goals-based planning that includes the softer nonfinancial elements of wealth is more important than ever.”
The research focuses on investors, asset managers, and banks. Particular attention is given to best-practice banks that have centralized the investment decision-making process across all of their wealth management platforms, including broker/dealer, trust department, RIA, and family office.
“Banks have unique characteristics that most other channels cannot fully replicate,” Ethier continues. “Such as the ability to be an all-in-one provider for any household. Banks that are not promoting their full offering are doing their firm and their clients a disservice.”
“The channel’s most promising trends include: client-centric advisory models, integrating wealth management platforms, consolidating research teams and portfolio construction processes, and centralizing fee discounting decisions,” Ethier explains.
The work finds that asset allocation is no longer a main distinguisher, which is only being validated more by the increase in direct-to-consumer providers and the electronic registered advisors (eRIAs)/robo-advisors. Delivering holistic goals-based planning that can incorporate the softer nonfinancial aspects of wealth is more important than ever for banks to differentiate themselves from the low-cost investments provided by the eRIAs.