A Brief Discussion on the Functions of the Wealth Management Department

Wealth management business occupies an increasingly important proportion in the banking system of today’s era. In the past, the early banking business was mainly based on corporate loans and personal loans, earning income from the interest rate difference between deposits and loans.

With the evolution of the times, the increase of national income, the diversification and progress of financial transactions, the personal wealth management business is also occupying an increasingly important position in the business of the financial industry today.

In the early days, the wealth management business of banks was mostly under the jurisdiction of the personal finance department, which was only a small part of the personal financial business.

However, most banks now pay more and more attention to the wealth management business, and many banks even put the wealth management solution the importance has been raised, and an independent department has been established to form a tripartite confrontation with the corporate finance business and personal finance business, becoming one of the important pillars supporting the bank’s revenue.

Generally speaking, the functions of the wealth management department mainly include the following three items:

The introduction of wealth management products:

With the progress of the cash financial business, very diverse wealth management products have been developed. In addition to common stocks and funds, insurance that was mainly sold through the salesman channel in the past can now be purchased mostly through the bank channel.

In addition, ETF, overseas corporate bonds, dual currency, TRF, etc. are also common financial products in modern banks. Through the operation of the wealth management department, banks will be able to provide customers with more diversified product choices in terms of financial management, and wealth management planning services.

Cultivation of wealth management talents:

The design and content of wealth management products have a certain degree of professionalism and complexity. Therefore, it is necessary to cultivate professional talents to provide customers with correct and detailed explanations, configuration and planning of personal financial plans, and market Risk and profit considerations, and even personal or family property distribution and tax planning all require professional training in order to train good professional financial service personnel.

The provision of market information:

The global market is divided into regions, and there are many commodities in different categories such as single country, region, industry, raw materials, agricultural products, etc. The information of the investment market is also changing rapidly.

How does each financial service personnel provide customers with fast Accurate market information also depends on the bank’s wealth management department, which sets up dedicated researchers in each market to organize and compile the most real-time information for financial institutions and customers as a reference for investment entry and exit.

Good wealth management business development enables banks to expand and develop the territory of financial business, and also allows clients to properly plan and accumulate their own wealth through the services of banks, which enables banks and clients to create a win-win situation and predicts the future There will also be unlimited room for improvement and development potential in the wealth management business.

Wealth management will undergo some major changes over the next decade. There are new technologies on the horizon that will serve investors and businesses to invest their money.

Technologies like robo-advisors and artificial intelligence will be accessible to every client or business looking to improve their financial situation through wealth management. These innovations could eventually completely replace human financial advisors. 

How will automation affect the wealth management industry?

Robo-advisors are basically automated investing tools that can be set up to automatically invest in different funds and stocks without any human interaction from the wealth manager. With enhanced analytical and data-rich capabilities, they can monitor the global economy and financial markets to generate insightful recommendations and investments for clients.

You simply tell the robo-advisor how much you want it to invest, what your risk tolerance and strategy are, what industries you focus on, and let it run! This is robo-advisors . The only time a human is needed is when it comes to financial planning and private banking, where human interaction is critical.

How will wealth managers’ fees be affected?

Robo-advisors highly impact the fees generated for wealth managers. Since the emergence of artificial intelligence in the financial field, the cost of investing and trading has dropped significantly. Wealth management software and service providers have been hit hard in terms of their management fees.

Wealth managers can no longer compete with the truly low management fees offered by their competitors. As the chart below shows, higher management fees can severely impact your cumulative returns over time.

An average active management advisory fee is closer to 2-3%, while an ETF’s fee will be around 0.60%. That difference might not seem like much for a year’s worth of performance, but when you factor in a 10-year lifespan and compounding effects, the difference is huge.

Should wealth managers treat younger investors differently?

Investment managers should always strive to be close to the needs of younger generations in order to compete with AI and leveraged technologies. This can be achieved through investment and financial advice on next-generation topics, such as sustainable finance, which ranks as the number one investment preference for Gen X and Z.

This means that we should see a shift in the wealth management industry towards themes of sustainability, ESG, and DeFi, which most wealth advisors should focus on in order to catch up with these new trends.

The question always remains, are managing directors, or senior management, willing to invest in the digital transformation of their company?

It is crucial to take the future of wealth management into account.

InvestGlass has created a suite of digital tools that can help you assess where your customers are in their financial journey and what they need today to succeed tomorrow. InvestGlass provides a single platform for Portfolio Management Systems, Orders, Trading, Payments and Risk Management, FINSA, and MIFID.

You can develop stronger client relationships by using real-time insights and data-based recommendations that align your recommendations to your customers’ needs.

Additionally, labeling options allow you to divide customers into different categories, such as risk averse and risk enthusiasts, or sports fans and technology optimists.


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