Archive for July, 2012

With Personal Loans, Borrowers Hear ‘Gift’ And Lenders Get Resentful

Personal loans between friends are often seen as gifts by borrowers but loans by lenders, according to new research.

Friends will never pay you back. It’s not because they are forgetful or cheap, it’s because they told themselves the $200 you kindly lent them in June was actually a gift.

New research shows why personal loans to friends don’t work: Financial scroungers tend to revise history and see the money as a gift, especially the more delinquent they are to pay it back, according to a new study published in the Journal of Economic Psychology.

“We thought that when loans were not paid off that borrowers would feel terrible and avoid lenders,” said paper co-author George Loewenstein, an economics and psychology professor at Carnegie Mellon University, in a call with The Huffington Post. “We found that lenders believed that, too.”

Both are wrong.

“Delinquent borrowers were actually blithely unaware of how lenders felt,” Loewenstein said. And more than unaware, they actually did some mental gymnastics to re-interpret the terms of the loan.

This kind of recasting of past events has a purpose for those who shake down their friends for extra cash: They use it to let themselves off the hook or to save face when they can’t come up with money to pay back the loan, especially when it’s long past the supposed due date, Loewenstein said.

This is just one of the differences in perception between borrowers and lenders that the study found. Those on the receiving end of a loan were also less likely to report the payment date had passed and less likely to report the loan as unpaid. Meanwhile, those doling out the money reported losing trust and closeness with delinquent friends.

While much of these findings can be filed under common sense, this is the first academic research to study the differences between the two groups with personal loans. Loewenstein said that one reason personal loans are not well studied is they tend to happen spontaneously.

The study was based on a survey of 971 people who had borrowed or loaned money to or from friends. The median loan size was $250. Personal loans, unlike a loan from a bank, alternative lenders or even an online peer-to-peer network typically don’t have a formal written contract, interest is rarely paid and there is no collateral.

One of the hallmarks of the casual personal loan is it lacks any kind of contract, other than a verbal one. And that is where much of the misunderstanding starts. On the upside, a successful loan between friends strengthens a friendship by demonstrating trust and investment for both people. On the downside, an unpaid loan erodes that foundation of a healthy relationship; in worst case scenarios, it spells the end of the friendship.

“It seems like the real problems with personal loans is that neither party feels comfortable asking for a written contract,” Loewenstein said. “It is almost like a prenup, where asking for it undermines trust in longevity of relationship.”

According to the study — which found that the highest number of repayments reported were between one and six months since the loan was made — the solution is easy: Get it in writing. A simple IOU could be all the difference to preserving a friendship.

“It’s uncomfortable and feels like it could be bad,” Loewenstein advised. “But it’s much more likely to be good for a relationship because both parties will literally be on same page.”

– By Catherine New

Source:  Huffingtonpost 

Posted by Steven Maimes, The Trust Advisor



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Wealth Management Industry Not Sufficiently in Tune with the Needs of Young Investors, According to Aite Group Research

More than 1,000 US investors surveyed reveal convenience and online tools are key reasons for Gen-Xers and Gen-Yers to shift assets between financial institutions

Scivantage, an independent financial technology provider with proven expertise in online brokerage, tax and portfolio reporting and wealth management applications, and Aite Group, a leading independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry, announced the results of a report titled, “The Race for Next-Generation Assets: Can Banks Maintain Their Lead?”

The study examines the investing preferences of younger generations and the impact they may have on long-term growth opportunities for wealth management firms. In particular, the research focuses on the importance of banks to the younger investor population and discusses how firms can maintain their advantage in the race to capture next-generation assets.

With more than $40 trillion expected to transition to younger generations in the U.S. over the next several decades, wealth management firms will need to focus on this new wave of investors and reevaluate their current service, support and technology models. Financial institutions that can understand and address the unique investment needs of this emerging segment will be best positioned to capture their future wealth, according to the research.

“Gen-Xers and Gen-Yers have been far less loyal to their investment providers over the last few years compared to Boomer and Silent Generation investors, indicating that young consumers have yet to find their ideal investment providers,” said Sophie Schmitt, Aite Group Senior Analyst, Wealth Management. “Banks seeking to maximize their ability to retain and grow share of wallet with young investors should work on growing their online investing capabilities and providing more convenient services.”

Additional key insights include:

— 40% of young investors still consider a bank to be their primary investment provider. By contrast, only 20% of young investors consider an online brokerage firm to be their primary investment provider despite their strong adoption of online trading

— 44% of Gen-X and Gen-Y investors surveyed shifted assets to another investment firm or switched investment providers due to availability of online tools

— 42% of Gen-X and Gen-Y respondents said their bank would need to offer more convenient services and/or more robust online brokerage/trading capabilities in order for them to move more assets to their bank

— About 30% of young investors trade more than 25 times per year and slightly less than 70% trade online more than five times per year

— The No. 1 reason clients shift investments to another firm is fees, such as those tied to accounts, financial advisory and asset management

“Online investing capabilities are now second nature to Gen-X and Gen-Y investors and will be a requirement for banks that want to attract future high-net-worth or current affluent members of this segment,” said Chris Psaltos, Vice President, Product Management, Scivantage. “As younger, tech-savvy investors look for greater control of the investment decision-making process, wealth management firms, particularly banks, must ensure that their online investment platforms are keeping pace with the latest consumer technology innovations.”

This report is based on Aite Group’s December 2011 survey of more than 1,000 U.S. investors who hold a minimum of US$25,000 in investable assets and have access to online trading capabilities. The sample is representative of approximately half of the U.S. population.

About Scivantage

Scivantage is an independent financial technology provider with proven expertise in online brokerage, tax and portfolio reporting, and wealth management applications that automate and integrate key business practices for broker-dealers, mutual funds, custodians and prime brokers. For more information, please visit

About Aite Group

Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. For more information, please visit

Source:  Scivantage

Posted by Steven Maimes, The Trust Advisor



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Benefits of Social Media to the Wealth Management Industry

Cast your mind back 15 years to a time when many of us thought that e-mail was a passing fad and would quickly go the way of the fax machine as a means of communication.

Here we are in 2012 and e-mail is now an integral part of our lives and in many cases has replaced the telephone and face-to-face contact. It is now considered second-nature and I firmly believe that in another 3 years social media will also be viewed by the majority as another standard way of communicating. It is therefore imperative that the private banking and wealth management industry embrace social media as a matter of urgency – those firms that don’t risk being left behind. Imagine trying to run any sort of business nowadays without having access to e-mail – that is how social media will be viewed by 2015.

There is a huge amount of research available extolling the benefits of social media, but here are some interesting statistics that are relevant to our industry:

– There are 1.1m Google searches every month for ‘financial advisor’

– 47% of UHNW individuals have a Facebook profile

– 19% of millionaires are on Linkedin

– 71% of financial professionals have a Facebook profile, 65% are on Linkedin, 19% are on Twitter

– The average age of a Linkedin user is 41. Ninety-five percent are university educated, with an average household income of £65,000

– Of investors with at least £250k to invest, 75% of them have used Linkedin for investment research

These figures are only set to increase as the industry begins to understand how effective social media can be, not only in terms of client satisfaction but also upon the impact on your bottom line – an IFA in the New York area recently attributed a 20% increase in assets under management to his social media activity.

There are an almost unlimited number of benefits to incorporating social media into your overall marketing/business development strategy. Social media can help you to:

– Raise brand awareness, as well as preserve the key values associated with your individual firm, by engaging with clients, prospects and fellow professionals online. TIP – use, for example, Twitter, blogs, and YouTube to keep client informed of firm, market and product news

-Expand your professional networks by connecting with centres of influence and key decision-makers. TIP – utilize your Linkedin profile and its advanced tools to raise awareness of your client proposition

– Acquire new clients and deepen relationships with existing clients. TIP – use Facebook and Twitter to connect with luxury brands who cater to the demographic of your clients and prospects

– Monitor what the wider community is saying about your brand, products and services. TIP – it is imperative that you use dedicated software designed to monitor what your clients and employees are saying about your brand online; you must also use this software to retain all social media activity for 7 years, in accordance with FSA guidelines on record-keeping.

– Ultimately, to grow your business, gain client trust, and add significant value for key stakeholders

Almost every other industry is ahead of wealth management in incorporating social media into their business. The two most common perceived barriers to entry, compliance and brand damage, should not be a hindrance as both can be controlled and managed with a comprehensive and well-thought out business strategy.

– By Amy Loddington


Posted by Steven Maimes, The Trust Advisor



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Gucci Survives Brand Challenges from Heirs and Guess Jeans in Tense Courtroom Dramas

High-powered lawyers from all corners put the 91-year-old luxury label in the meat grinder with Judge Judy herself getting mixed up in one dispute.

The fashion industry is notorious for blurring the line between vast fortunes and dirty family laundry, but the House of Gucci continues to break new legal ground when it comes to enforcing the intangibles in perpetuity.

Far from working to protect the Gucci family’s rights and legacy, the company seems hell bent on ensuring that none of the heirs — much less outsiders — can piggyback on the world-famous brand.

From the corporate point of view, defending the trademarks that drive $5 billion a year in handbag and shoe sales comes first.

But when that policy extends to preventing the Gucci family themselves from trading on their legacy, it’s an open question whether this is what the family patriarch wanted when he died six decades ago.

Family first, except for business

Gucci is legendary for jealously fighting anyone who dares to copy its name, logos and even the red and green stripes that make its accessories stand out.

Most recently it went after mass market retailer Guess for selling its own striped leather bags bearing double “G” marks, winning a $4.6 million cease and desist order from Judge Shira Scheindlin — often confused with soundalike colleague “Judge Judy” Scheindlin.

The Gucci family before they sold their company…and it turned on them.

The coincidence of famous names was probably not lost on the House of Gucci, which has come down on rogue members of the Gucci family itself for daring to set up rival fashion studios.

The latest, Guccio and Alessandro Gucci, were caught marketing high-end Italian leather handbags under the “To Be G” brand.

The “G” obviously stands for Gucci and since the start-up launched in 2008 plenty of fashion reporters have highlighted the famous family connection to their great-grandfather who started the company back in 1933.

But the lawyers weren’t amused. An Italian judge ruled against the brothers on grounds that they traded deliberately on the Gucci label, which “caused confusion with Gucci’s products and business activities and took unfair advantage of the qualities and name of Gucci’s products.”

When conventional multi-generational planning goes bad

The problem is that the Gucci family and the Gucci company legally separated in 1993, when the last family shares sold for $170 million.

Since then, a succession of corporate overlords — initially from Bahrain and more recently from France — have run the Gucci brand exclusively as a business.

As a result, Guccio can no longer use his own name — which he shares with the company’s founder — to market his products.

For all practical purposes, he would have been better off if he hadn’t been named to honor the patriarch.

His own father, Giorgio Gucci, has been churning out “Giorgio G” handbags since 2000 without running into trouble with the increasingly litigious company, so the “G” in itself is not the pain point.

Meanwhile, relatives around the world have been sued into the ground for trying to start coffee chains, bedding and even hotels under their full family name.

Interlopers like Turkish soundalike “Guecca” and archenemy Guess have no excuse, but Guccio and Alessandro have insisted that they can’t help it.

“To Be G, that is, to be Gucci, is in our DNA,” they maintain.

Lock down the rights

The Gucci-versus-Gucci disputes could have been prevented if the previous generation had thought to preserve some of the intellectual property for the family when they were selling off the company.

Of course, the estate planning conversation around media and marketing rights is still sophisticated stuff today and was practically science fiction when the first Guccio Gucci died back in 1953.

That shouldn’t stop you from raising the topic with your clients.

Silicon Valley estate planner Bernie Vogel works hard to lock down the publicity and image rights as well as the patents and other tangible intellectual property.

“Your personality and your media image are part of your legacy that simply passes to the next generation unless you’re careful,” he told me awhile back.

“Unless these intangible rights are addressed in the estate planning, sooner or later someone will want to use the deceased person’s personal brand to make money.”

Arguably the House of Gucci went too far with those rights when its founder’s grandson sold their intangible birthright along with the designs, factories and retail network.

And by that point, the family was no stranger to squabbling over the empire.

The sale only happened in the first place because the heirs couldn’t find a way to work together and had started suing each other — and even descending into assault and murder — to freeze rival relatives out of the name and the fortune it represented.

In fashion we trust?

Modern style tycoons can delay or avoid the worst infighting by assigning their brand, company and personal image to a trust that can be administered by experts for the benefit of the entire family.

Ralph Lauren has evidently learned from the Gucci debacle.

About 68% of his controlling stake in his eponymous company is already vested in a system of interlocking trusts. When he’s gone, the trustees will be legally bound to his stated wishes for who can and can’t be “Polo.”

Martha Stewart, on the other hand, could stand to follow his lead.

While her daughter Alexis is a partner in the holding company Martha set up to own her 91% in the company, the family has only dabbled in charitable trusts.

And Martha might look great, but she’s not getting any younger. If she wants her name to live on into the next generation and beyond, she’d better have a talk with her estate planners.

Scott Martin, senior editor, The Trust Advisor


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How Much Do Advisors Cost?

So you want a financial advisor, but haven’t a clue what they cost. What to do? And what do you get for what you shell out?

First, know that there are two basic types of advisors. Broker-dealers are sales people. They get paid commissions for what they sell you – funds, stocks, bonds, etc. The second kind, registered investment advisors, or RIAs, don’t get compensated for selling stuff. Investors pay RIAs a flat fee, or by the hour or as a share of assets.

RIAs tend to think they are on the side of the angels because they can more easily avoid conflicts of interest. In fact, RIAs operate under a stricter rules on dealing with clients, called the fiduciary standard, which means they must manage your money with your best interests at heart, not their own. In fairness, lots of broker-dealers are well-trained and well-intentioned (and outnumber RIAs, four to one). Yet for now, let’s focus on RIAs, and what you pay then.

Just as there are two categories of advisor, clients fall into two groups. It all depends on what kind of service you, the client, need. And that determines how advisors charge. The groups are:

Self-Directed. These are do-it-yourself investors who want an advisor to look over their shoulders and make suggestions. The investors run their own money, buying and selling holdings. They may use an asset allocation model, provided by the advisor. They want to make sure they aren’t risking blowing up their assets.

Deputizers. This variety of investors wants an advisor to administer their portfolios. They usually are not as well-versed in financial matters as the Self-Directed are, and feel more comfortable with an expert at the helm. They tend to pay the most for advisory services.

The Self-Directed often prefer to pay a flat fee, commonly around $1,000, to have an advisor examine their holdings and suggest possible changes. The advisor may run simulations, like Monte Carlo, to see what the odds are clients will have sufficient money to meet life needs, such as sending the kids to college and funding retirement. The advisor may propose a rejiggering of asset allocation, and will factor in such things as clients’ ages, incomes, family sizes and so forth.

Another route for the Self-Directed is a deeper work-up, forming a financial plan and paying an hourly rate. Since more labor is involved and the results are more comprehensive – an estate plan may be part of it, for instance – the payout to the advisor tends to be higher. Usual rates are $250 to $500 per hour, with the total outlay ranging from $3,000 to $5,000.

Deputizers pay a percentage of their assets to an advisor, trusting him or her to make the right choices. This is usually the most expensive alternative. It can run from 0.75% to 1.5% yearly.  For a typical 1% rate on a $1 million portfolio, that means $10,000. Generally, the more assets you have, the lower the percentage you pay.

Obviously, the first question you should ask is how the advisor gets paid. But be aware that cheapest is not always best. Some advisors do not like to take on clients who comparison-shop among a batch of advisors, choosing the least expensive one. They believe the bargain-hunter clients are the first to leave if the advisor has a bad quarter. Every once in a while, even the brightest investing genius hits a pothole.

But on top of payment considerations, you the client want to ensure you are getting your money’s worth. Does the prospective advisor have professional education credentials, such as the Certified Financial Planner designation? Does he or she ask you the right questions, particularly what your goals are – protecting your principal or aggressively seeking to build your net worth?  Does the advisor follow up periodically, seeing how things may have changed for you?

Make sure you feel personally comfortable with your advisor. One of the most common complaints from clients who ditched an advisor is that the person treated them as if the advisor were smarter than the client – and the client should blindly heed the advice. A good client-advisor relationship depends on a spirit of give and take, and a vital candor. If your advisor is an arrogant individual, that won’t happen.
Your money is important. Both what you accumulate for the long-term, and what pay right now to reach that goal.

– By Larry Light

Source: Forbes 

Posted by Steven Maimes, The Trust Advisor


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ByAllAccounts: Most Advisors Base Client Selection on Investable Assets


More than 8 in 10 financial advisors identify prospective clients based on their investable assets, according to a new report.

ByAllAccounts, Boston, Mass., published this finding in a national online survey of more than 390 financial advisors. The survey examines key traits and characteristics of successful advisors, including their views on defining success, personal strengths and values, top priorities, plus areas of focus and insights into how they spend their time.

The report reveals that 85% of advisors use investable assets to select prospective clients. Far fewer advisors base their selection according to the prospect’s life stage or geographic location (40%), occupation (20%) or age (18%).

According to the survey, the top 30% of firms (those with over $100 million in assets under management) grew their holdings by more than 16% during the past two years.

Nearly all (96.9%) advisors surveyed judge client satisfaction to be the most important measure of business success. Far fewer advisors view assets under management (41.5%), revenue (35.4%) or investment performance (33.8%) as the most important gauge.

When asked to identify the three top priorities for their firm, close to 7 in 10 advisors (65.6%) flag “client retention.” The next two highest priorities are “client service” (60.9%) and “grow assets under management” (59.4%).

In response to the question, “Which of the following characteristics would you want your client and/or peers to use to describe your firm?” more than 6 in 10 advisors (64.1%) select “trustworthy.” The next two most popular characteristics are “honest” and “best-in-class.”

Four in 10 (40.6%) of the survey respondents say most of their clients are high net worth individuals with investable assets ranging from $1 million to $4.9 million. Mass affluent clients with $500,000-$999,999 in assets and middle income class with $0-$500,000 in assets make up a majority of, respectively, 28.1% and 23.4% of advisors.

Source: LifeHealthPro

Posted by Steven Maimes, The Trust Advisor



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South Dakota Eyes Boost In Trust Company Fees

Next month the state Banking Commission will consider raising annual registration fees on trust companies.

The commission and state banking director Bret Afdahl are looking to hire additional examiners, in response to the rapid growth of trust companies headquartered in South Dakota.

The commission also will consider changing the requirements for a trust company to receive charter status in South Dakota.

Currently trust companies need to wholly or partly perform in South Dakota only one of six activities established in state law to qualify.

The proposed rules would require at least of the listed three activities be performed wholly or partly in South Dakota, and the list of possible qualifying activities would be changed.

The Legislature and state banking officials have worked for several decades to make South Dakota into a preferred site for new trust companies to start and for existing trusts to relocate their charters from other states.

There were 13 trusts chartered in South Dakota in 2001 and 39 by 2009. There were 50 in 2010 and 56 last year.

Currently there are 62 with $110 billion under management.

“All of these companies must be examined no less frequently than every three years,” Banking Division director Bret Afdahl said.

A total of 70 are forecast for 2012, according to an estimate distributed by the Banking Division to the commission in May.

The number is projected to grow by 10 annually and reach 110 in 2016. The division described the forecast as conservative.

The plan calls for increasing the division’s examiners assigned to trusts from 2.5 in 2011 to 7.5 for 2016.

The division paid about $219,000 in wages to its examiners in 2011 and proposed topping $616,000 for 2016. Education expenses for examiners also would be boosted.

The plan calls for charging seven cents, rather than the present six cents, per $10,000 of assets, and setting a minimum annual fee of $3,750 for private trust companies, which would be an increase of $750, while keeping the cap at $20,000.

The proposed changes also would create a new set of fees for public trust companies ranging from a minimum of $4,500 to a maximum of $30,000.

Trust companies would remain responsible for the division’s costs for conducting examinations.

Afdahl said the proposed increases would generate an estimated $122,321 based on the current number of companies and amounts of assets.

A public hearing is set for Aug. 8 in Sioux Falls. The session begins at 11 a.m. in the Ramada Inn and Suites on West Russell Street.

Source:  Capitol Journal

Posted by Steven Maimes, The Trust Advisor


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SEI Poll: 58 Percent of Wealth Management Firms Polled Cite Regulatory Changes as Biggest Challenge

Majority Are Confident Their Firms Will Meet the New Regulations

In today’s environment of complex and frequently-modified regulatory updates, including Dodd Frank, the Volcker Rule, and the Uniform Fiduciary Standard initiatives, among others, the majority of wealth management organizations view meeting these new regulations as a significant challenge, according to a Quick Poll released today by SEI. The poll, completed by 100 participants at SEI’s annual Connections Conference, revealed that regulatory changes pose the single largest challenge for 58 percent of survey respondents. However, only 44 percent ranked managing these regulatory changes as their firms’ top priority, demonstrating that other issues are splintering their focus.

The poll also revealed that clarity is still needed surrounding the details of new regulatory changes. Only 22 percent feel comfortable they have received enough information to fully understand the new regulations, with the remaining three-fourths either “learning about them now” (61 percent) or reporting they’re still “in the dark” (19 percent). However, nearly all respondents (94 percent) feel at least “somewhat confident” their firm will meet the new regulations by the time they take effect.

“We’ve entered a new era in the wealth management industry, where meeting regulatory requirements is a constant challenge for wealth management firms,” said Sandy Ewing, Senior Vice President of SEI’s Global Wealth Services. “The challenge for firms is anticipating the regulations’ parameters before they’re finalized and bracing for unexpected changes, without losing momentum in other areas of their businesses.”

Regarding technology, nearly a quarter (24 percent) reported that integrating new technology is their firms’ top priority. Technology does not, however, come without worries, as nearly all of those polled (97 percent) have concerns with security threats resulting from enhancements to a firm’s technology.

“The desire to improve technology is a trend we’ve been witnessing for some time now,” continued Ms. Ewing. “Wealth management providers are searching for ways to automate processes and more easily aggregate data from a variety of sources to enhance their client reports. In the end, technology enhancements will allow firms to achieve greater consistency and eliminate inefficiencies, giving them more time to focus on their clients.”

For more than 30 years, SEI’s annual conference, currently known as Connections, provides an interactive forum for wealth service professionals to discuss industry challenges, innovative research, emerging trends, and technology developments. This year’s conference, hosted at SEI’s Oaks campus from June 11-13, brought together banking, wealth management, operations, and technology personnel who support wealth management organizations across the United States.

About SEI’s Global Wealth Services SEI’s Global Wealth Services is an outsourcing solution for wealth managers encompassing wealth processing services and wealth management programs, coupled with business process expertise. The integrated offering aims to provide wealth management organizations the infrastructure, operations and administrative support necessary to capitalize on their strategic objectives in a constantly shifting market. For more information visit: .

About SEI

SEI  is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of June 30, 2012, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $424 billion in mutual fund and pooled or separately managed assets, including $182 billion in assets under management and $242 billion in client assets under administration. For more information, visit

Source:  SEI

Posted by Steven Maimes, The Trust Advisor


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Wealth Management Outsourcing

Many wealth management firms are realizing the potential benefits outsourcing can offer.

In the aftermath of the financial crisis, wealth management firms are facing a number of challenges, including having to lower costs, improve efficiency, reduce turnaround time, scale up or down operations, mitigate risk, and adhere to stringent regulations. All of these have brought technology centre stage in managing financial institutions. Firms are finding it difficult to manage complex and diversified technology needs entirely in-house; many of them are increasingly looking at outsourcing as a viable alternative.

In a new report, Wealth Management Outsourcing: A Global Market Perspective, Celent discusses the adoption of outsourcing in the wealth management industry. Outsourcing has been in use in the financial services industry for quite some time. However, the wealth management services industry has been a laggard. Because of the privacy and confidentiality issues involved in this business, wealth managers have been reluctant to engage with third party providers.

Click chart to enlarge

The global financial crisis has changed that perspective and contributed to a major paradigm shift. Many wealth management firms are realizing the potential benefits outsourcing can offer. Most of the tier I and some tier II retail banks and insurance companies in the US, including their wealth management divisions, are outsourcing parts of their technology and operations infrastructure.

Similarly tier I brokerages have also been outsourcing their technology needs and are fairly advanced. Europe lags the US in terms of the maturity of outsourcing practices. Due to stringent privacy requirements, especially in Switzerland, European firms still cannot outsource all of the same functionalities as US firms. Outsourcing has also not been as popular yet in Asia.

“The further a wealth management function is from client interfacing, the more likely it is to be outsourced,” says Arin Ray, Analyst at Celent and coauthor of the report, “Outsourcing in the areas of global custody, securities lending, client servicing, accounting, and settlement of trades in complex financial instruments, are relatively widespread, with managers taking a more aggressive approach to mainstream outsourcing.”

“IT budgets are expected to remain flat or decline in most markets, which will restrict firms’ ability to spend on technology,” says Alexander Camargo, Analyst at Celent and coauthor of the report. “However, this also means firms will have to do more with less. Outsourcing provides an option for increasing efficiency without needing significant investments in infrastructure.”

This report examines the trends, drivers, and state of outsourcing in the industry as well as the available opportunities across various market segments.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies.

Source:  Celent

Posted by Steven Maimes, The Trust Advisor


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Top Advisors Take a “Mercedes” Approach to Client Satisfaction

What are the key traits of today’s successful financial advisors? What are their personal strengths? Top priorities? And what are a few of their personal preferences that round out the picture?

These are a few of the the questions ByAllAccounts asked when it recently took a national online survey of nearly 400 advisors.  We looked at responses from firms with more than $100 million in AUM who have grown 16%+ during the past two years.

The results covered everything from management priorities to music preferences to motoring along in a Mercedes— and provided us with a revealing profile:

Chart A: Click to Enlarge

Clients are No. 1, AUM growth is No. 2

It wasn’t even close. Just check out Chart A (left) to see how 96.9% of advisors measure success by client satisfaction, more than twice as many as the next highest metric, assets under management, which was used by 41.5%.

Then look at Chart B. See how client retention (65.6%) and client service (60.9%) are both higher priorities than AUM (59.4%).

Additionally, 96.8% of the fastest-growing advisors cited their understanding of client needs as their top personal strength.

Chart B: Click to Enlarge

Clearly, client service is the driving force that moves today’s RIA firm forward. This is not only a philosophical commitment, but it also determines how time and responsibilities on the job are allocated:

Time is spent with clients, not on the back office

As you’ll see, Chart C shows that 80.6% of advisors spent the majority of their time on client management, communication and service.  This surpasses even investment management and research.

Chart C: Click to Enlarge

The focus on client service is why so many firms have started to use data aggregation solutions that enable them to analyze and report on all of a client’s assets, including financial accounts such as 401(k)s and 529s.

With data aggregation, they’re able to get a comprehensive view of clients’ portfolios and provide holistic wealth management advice that differentiates the advisor from the competition.

The result: Increased client satisfaction, retention and revenue for the firm. In other words—better client service and a better bottom line.

Exceptional client service requires high standards

When we asked advisors to compare their firm to an automobile, a full 40.8% compared their firms metaphorically to a Mercedes SUV. Think of the exclusivity and quality that are conveyed by the Mercedes brand!

(Also, for an interesting take on the auto analogy as it relates to high levels of client service, see the recent blog by James Carney, CEO of ByAllAccounts: Change is Coming, RIAs. Don’t Get Caught in the Middle)

Advisors ranked the Beatles as their favorite musicians by greater than-2-to-1 over the Red Hot Chili Peppers, Frank Sinatra and Bob Marley (many others ranked far lower, like Elvis at 1.6%).

They are also 40% more likely to have an iPad by their bedside than a Bible.

How do these personal preferences relate to an advisor’s success? They may be more than tangential, because they indicate that advisors place great value on best-of-breed quality, talent, innovation and convenience — four characteristics that are essential to the stated goal of superior client service.

CLICK HERE For the full executive summary of the results, and for more information on data aggregation, please contact ByAllAccounts today.

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