Assetization and the Wealth Management Growth Problem
Organic growth accounts for less than a quarter of the growth for most wealth management firms in developed markets. To survive, they'll need to up that number. Assetization can help.
When I was a young comms guy starting out in wealth management — I spent time at a Swiss private bank, at Credit Suisse, and then almost a decade at UBS early in my career — I learned that the bread and butter of the business was attracting new assets.
So it’s no surprise that, while doing research for our new book, a stat in BCG’s latest Global Wealth Report caught my eye: these days, less than a quarter of wealth manager growth in mature markets comes from existing advisors bringing in new clients.
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Instead, the lion’s share of growth is coming from poaching advisors from other shops, buying other firms outright, or — the biggest driver by far — riding rising markets.
That’s not sustainable. Markets don’t always rise. Acquiring other companies is expensive and messy. And while it used to be that when an advisor switched firms, most of his or her clients would follow, that’s no longer the case.
Another disturbing trend is that today’s clients, especially the younger ones, are more likely to switch firms of their own accord (not because their advisor did) than in the past. And more of them are also “multihoming” — using more than one firm — than ever before.
These are headwinds indeed.
The Alchemy of Growth
The big question is how to respond. BCG recommends things like better prospecting tools, GenAI-powered lead generation, data-driven client insights, and strengthening the brand — all sensible strategies.
But here’s what struck me: they’re all about distribution. Better ways to find clients, better ways to engage them, better ways to keep them.
What about what you’re trying to sell them?
After all, you can’t prospect your way out of having the same products as everyone else. You can’t data-analyze your way into differentiation when clients look at your offering and see the same funds they can get anywhere else.
The Product Gap
The question to ask is: why would a client switch to you? How can you give your existing advisors or sales teams something that no one else has?
Because make no mistake — the ability to do that is going to get ever more important.
Another recent survey, this time EY, tells the story: when clients switch wealth managers, the main reason isn’t performance or fees or even their relationship with their advisor. It’s product. They want access to things they can’t get elsewhere.
And there’s another, potentially more important gap: many clients say they want to learn about alternatives — private equity, real estate, infrastructure — but most have never discussed them with their advisor.
Why not? Likely because the products either don’t exist on the approved list, they’re too complex to explain, the minimum investment is too high, or the lock-up period is too long.
Having those kinds of products on offer — in forms clients can actually access — would seem like a great way to start some potentially lucrative discussions.
The Assetization Advantage
Assetization is all about addressing these kinds of issues: it’s about turning wealth managers used to being product alocators into product creators. It’s about giving them tools to expand their product shelves and give their clients access to more opportunities of the kind they are asking for. That makes it a powerful tool for differentiation – and for winning new business.
We believe the firms that will break through aren’t necessarily the ones with the best CRM systems or the slickest AI.
They’ll be the ones that have figured out they can’t wait for the sell-side — the traditional asset managers and product manufacturers — to create what their clients actually want.
We wrote about this in our Shelf Syndrome report, and it’s the central theme of our upcoming book.
My point here is that the more you look at the data, the clearer the picture becomes: product will be key to the future of wealth management — and assetization is the key to product.
Stay tuned.
Tom Lyons, GenTwo
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