When it comes to attracting wealth management clients, the new focus is entirely on control-specifically giving control to customers via electronic channels that provide broad, up to date, actionable financial information as a means to compete with discount brokers and improve the flow of funds into institutions.
"In the past 12 to 18 months, the entire wealth management industry has changed in terms of how data is consumed," says Norman Jones of WealthTouch, a portfolio reporting firm which has upgraded its dashboard technology to tap more than 3,000 data sources ranging from banks to custodians to produce a daily view of portfolio performance-accessible online and via mobile devices. "You need to be able to react, and the [clients] have become more involved in the management of their wealth."
Bank of America, whose Merrill Lynch unit has suffered negative fund flows over the past couple of years, has tied Merrill Lynch's wealth management and BofA's financial services together in a Web-heavy service called Merrill Edge.
Merrill Edge's two primary planks include a self-directed automated account, and a more personal service-focused account through the Merrill Edge Advisory Center. "Merrill Edge allows clients to work with us in a way that works for them," says Selena Morris DiFusco, an svp at Bank of America, who says the breadth of the two units are the differentiator with discount online brokerages. "Whether they prefer to independently manage their finances, or prefer advice and guidance from professionals, they can choose the account that meets their needs."
Individual products within Merrill Edge include a single view of accounts on the Web, such as 401(k), brokerage and retail banking and credit products; access to ATMs, mobile, text and online; research; third party commentary and market news; relationship pricing; and general financial services from BofA paired with retirement solutions from Merrill Lynch. "They are catering to mass-affluent investors who want to look at their own financial information to see changes," says Sophie Schmitt, a senior analyst at Aite Group. "They don't want to have to email or call an advisor, and what for that person to get back to them."
BofA and Merrill have plenty of banking and brokerage heft to offer along with its new Web-enabled self-service, though that bulk has been diminished by the recession. BofA/ Merrill Lynch asset outflows in 2010 were about $25 billion-and that was a good year compared to 2009, when $93 billion flowed out of the institution. "If the funds are flowing to the online brokerages, which is where we think they're going, Merrill Edge can help [BofA] win them back," Schmitt says.
Aite says large wirehouse broker dealers such as Merrill, Morgan Stanley, Wells Fargo and UBS still hold the largest share of the wealth management industry, controlling about 38 percent. But the share for the discount brokers is increasing, currently standing at just below 20 percent-pressuring the rest of the market to respond.
"Plenty of advisors are doing a lot more with self service, they're putting all of the portfolio information, info on plans, presentations. Instead of offering a site with just data, they're providing a way for users to build information," says Schmitt, who says many CRM vendors and firms such as Salesforce.com are enabling advisors to build their own Websites. "From a customer service perspective, it's critical. Investors are going to get that information somewhere else."
There are also institutions that are pushing out more information via automated channels more frequently, but are keeping advisors close to the customer's decision-making out of deference to the complexity of wealth management.
INTRUST has licensed a pair of software products from SunGard-WealthStation and Relius-that enable wealth plan advisors to monitor fund performance data and help perform analysis that can be viewed by customers. "[Account performance data] has to get out quicker, with more efficient and better information for plan sponsors and the participants," says Troy Jordan, evp of wealth management at INTRUST, who says it's still important to retain a high level of personal professional advisory service to accompany user information. "You have to be careful. Just having information out there doesn't mean a user is prepared to make a decision."
