Clients With Less Than $1M Are Where the Growth Is: Report

“They will employ hybrid business models that combine digital and human engagement to personalize and deliver a more convenient and navigable one-stop-shopping experience, while improving their advisor efficiency and cost to serve.”

Challenges and Threats

Zakrzewski noted that few wealth managers are moving far or fast enough to address the array of challenges they face. Unless they pick up the pace, they will find the gap between themselves and the digitally enabled top players growing wider and wider.

According to the report, the most successful firms over the next few years will overhaul their client engagement models and commit to embedding data, analytics and new ways of working end to end.

It said advisors need to move away from intuition-directed sales activities and embrace data-driven, omnichannel engagement models. As well, wealth managers should encourage advisors to see themselves not as lone actors but as team leaders, running different investment plays, managing broader product portfolios and toggling easily between online and offline interactions.

Firms wanting to expand their foothold in the affluent segment and improve their front-office performance need data, the report said.

But that asset is increasingly at risk — from daily cyberattacks, insider attacks and fraud by disgruntled employees and bad actors, and external attacks trying to compromise payment systems, disrupt operations through ransomware and steal or damage digital assets.

Financial services firms are 300 times likelier than other companies to be targeted by a cyberattack, and dealing with those attacks and their aftermath carries a higher cost for banks and wealth managers than for any other sector, according to the report.

Yet, BCG found that many financial organizations were ill-equipped to respond effectively.

“Ultimately, wealth managers should better protect the confidentiality of client information, guard against the risk of data and credential theft, improve their regulatory posture, and better defend sensitive payments and other networks against outside attackers,” Tjun Tang, BCG’s Hong Kong–based senior strategic advisor on wealth management and co-author of the report, said in the statement.

In order to shore up cybersecurity, the report advised wealth managers to perform a rigorous cybermaturity assessment; develop a risk-based strategic plan; adapt the operating model to address strategy, governance, risk management and culture; and boost operational capabilities.