Share with your friends

A view on operational transformation: It's decision time in Wealth Management

Is your business prepared for change?

Evolving operating models in wealth management.

Bill Packman

Partner, Head of Wealth & Asset Management Consulting

KPMG in the UK


Also on

A view on operational transformation: It's decision time in Wealth Management - rowing team

Change is in the wind for wealth managers as businesses adapt to new regulations, margin compression, and the challenge of attracting new clients. It goes without saying that a solid operational base is needed to meet these challenges – one that’s robust enough to withstand any shocks, but fluid enough to adapt to change.

This will hardly come as a surprise to the executive teams of UK wealth managers. A recent benchmarking survey by Compeer found that senior teams have been ramping up expenditure on operations every year since 2014. And crucially, that investment has paid off – when you consider these operational costs as a percentage of revenues, there is a steady decline, which implies that efficiency gains have been achieved.


Squeezed margins – a sign of the times

For at least a decade now, wealth managers’ margins have been squeezed due to the regulator’s drive to lower fees and increase transparency. At the same time, competition has become fiercer – low-cost providers are bringing new products to market, increasing the choice available to clients. Not only are the high margins of yesterday gone forever – arguably, so is client loyalty. Clients have access to more information than ever before, and it’s easy for them to take their business elsewhere. For wealth managers, that means client retention should be an imperative. Investing in ways to retain existing clients is more productive, in our opinion, than the efforts made to win new ones. That means looking at your base of operations and asking if the technology is providing the best experience for your clients – especially as compared with your peers. 


Harnessing technology

The development of the ‘software as a service’ model has been revolutionary, making it easier and cheaper to access best-in-class technologies. Moreover, many technology solutions are now available at realistic price points. Increasingly, we are seeing wealth managers explicitly building a ‘customer service’ agenda. This might include alternatives to face-to-face meetings, such as a digital portal, or a more direct way to report on tax liabilities, ESG factors, or investment performance. The trend of clients demanding more isn’t going away, and updating your technology is a key way to retain your clients’ business – and loyalty. 


Regulation on the rise

It’s also worth considering client loyalty in the context of the macroeconomic and regulatory backdrop. We’ve moved on from the strong market of 2012–2018, and global growth is trending lower. In a tough market where returns are perhaps limited, clients are more inclined to scrutinise their arrangements and ask tough questions. Is their wealth manager justifying their fees? And of course, the regulator is asking similar questions; these, of course, were at the heart of MiFID II.

As well as MiFID, wealth managers have had to adapt to other high-profile regulatory changes, namely GDPR and PSD2 (payment services). As things stand, we’re enjoying a brief reprieve before more regulations come into force. Looking to the future, the SMCR (senior manager regime) will have a big bearing on senior executive teams. 


It’s decision time – why now?

It’s important for executive teams to focus on operational transformation now, because we’re seeing several inter-linked changes unfolding concurrently. New regulations are on the way, and technological change is a must if wealth managers are to keep up with their clients’ demands. In our experience, it’s far easier to tackle issues one at a time, and to implement solutions sequentially. The risk of not preparing now is your technology falling out of date, or worst of all, your customers walking away. As a wealth manager, the most important action to undertake now is a full operational review. That includes examining the efficiency of existing business operations and developing relevant and appropriate policies and programmes. 

© 2021 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Save, Curate and Share

Save what resonates, curate a library of information, and share content with your network of contacts.

Sign up today