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We are pleased to present the findings and insights from the 20th Anniversary edition of our 2013 Global Private Banking and Wealth Management Survey.

Pervasive regulatory pressures are driving cultural change.

Since we began this Survey 20 years ago, reputation has been a recurring and important theme. Popular consensus suggests that trust in financial services is absolutely essential for society, yet we seem to have reached a low tide mark. The private banking and wealth management industry’s trusted adviser status must be restored if it is to prosper sustainably. But rebuilding a reputation is easier said than done. Behavioural change is a challenge, requiring time, constant messaging and clear role modelling and tone from organisational leadership. Aligning the powerful lever of reward and incentives to appropriate behaviours is fast becoming the norm. Client outcomes, doing the right thing, putting the needs and interests of clients ahead of simply maximising profit are all areas of focus. Put simply, “we do it because it is the right thing to do (and we still make money)” is the new call to action for the industry.

The quest for operational efficiency and differentiation through technology continues.

Participants have been investing for significant future improvement and some are now through the first phases of their transformation agendas. Cost income-ratios remain high, particularly in established markets, and there is now a greater emphasis on sharing and outsourcing solutions to further improve efficiency and improve front to back operational risk profiles. Digital technology has been a focus for many organisations that must now develop plans to build digital trust through improved security to meet rising cyber threats.

Traditional approaches to product and service provision are changing.

The emphasis is now on solutions and a shift away from perceived commoditised products to advice. The shift to open architecture will continue and organizations are now focused on rationalization and more specialist products. Greater transparency in pricing and the abolition of retrocessions in some countries is leading to margin pressure. The industry value chain is evolving with greater specialisation and focus on the key determinants of success. As a result, new and innovative competitors today compete alongside traditional industry players.

Understanding the client’s perspective of value is only getting tougher.

Respondents need to understand their clients better. While respondents are clear that many aspects of their client relationships are effective, key demographic trends, (including the rise in importance of Generation Y and of women as specific client segments), now need to be embedded within segmentation techniques, next generation transition management needs to improve and profitability measurement needs to become more sophisticated. Respondents rank themselves as needing to improve in some key areas of client value added, especially in client reporting, digital offerings and provision of broad based advice. The industry needs to become smarter at understanding what clients really value, and in turn how much they will pay for the value added. Private clients tell us that they are currently underwhelmed by how they are communicated with by their wealth managers.