Mercer’s 10 tips for wealth management firms

Survey1Consultancy firm Mercer has highlighted ten points it suggests wealth management advisers put into practice for better client service.

Cara Williams, global head of Mercer Investments' wealth management business and global technology solutions, says: "There are three sets of challenges that we find are common to wealth management firms competing in today's environment. These are strategies to improve investment results in a low-return environment, strategies to reduce risk, and strategies to contain costs. Our recommended top 10 priorities for wealth management firms to address in 2015 are organised along these lines."

The list
1. Position portfolios for growth in a low-growth environment. Rates are at, or near, historic lows and the US is more than five years into a bull market in equities.

2. Determine if alternative investment strategies are appropriate for a broader group of clients.

3. Consider impact and socially aware investing as part of portfolio design.

4. Adopting a client communication technology strategy. Disruptive technology is transforming the wealth management industry and Mercer expects the pace of change to accelerate with increased use of cloud computing, applications, social media and mobile, collectively known as CASM.

5. Review the resources required to deliver value to clients and resolve the "build versus buy" question.

6. Conduct investment and operational product risk assessments. Product and portfolio risk, from both an investment and operational perspective, is increasingly important and should be fully integrated into the investment process.

7. Beware rear-view product risk assessments. Many industry models that assess product risk are backward looking in nature and overly reliant on measures of historic volatility.

8. Evaluate the firm's governance process.
Traditional governance models are designed to protect the interests of the firm and its clients. Yet many have failed to do this.

9. Discuss fee budgets with your clients, and ensure they get what they pay for.

10. Remember that fees always matter. Evaluate business models, services, and enhancements that allow you to deliver exceptional service and products while continuing to reduce the cost to your clients.

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