Asset & Wealth Management
After many years of unprecedented growth in assets under management (AuM) and decent margins, both asset and wealth managers were hit heavily by the financial crisis after 2008, which significantly reduced overall industry profit pools.
Most companies are now aware of the challenges that lie ahead. However, their reactions to date have often been limited to short-term initiatives aimed at restoring profitability. Going forward, both asset and wealth managers should fundamentally review their business models. They should move toward client-centric solutions in order to stabilize their asset and revenue base and exploit future growth. At the same time, they should increase their resilience by introducing greater flexibility on the cost side.
Regulatory changes such as UCITS IV and the general trend toward an open or at least guided architecture for offering products and solutions to clients may serve as a catalyst for change in individual models and overall industry structures.
In brief
Roland Berger's Asset & Wealth Management Segment has a strong track record in providing sustainable solutions across the globe. We serve a wide range of leading institutions, from standalone asset managers and captive players held by banks and insurance companies to the wealth management divisions of universal banks.
We cover a wide range of functional areas. We advise our clients on strategic decisions at a top-management level, be it new geographies, client segments, or products and services. At the same time we have a strong footprint in operational topics that we can leverage to help clients optimize their business models, reduce the complexity of their organizations and refine their client coverage approach. In response to the challenges asset and wealth managers face in terms of decreased profit pools, we provide tried-and-tested solutions for profitable growth, such as pricing optimization and systematic acquisition initiatives.
Our international experts are also very experienced with M&A situations, helping multiple clients in both the due diligence phase of acquisitions as well as the post-merger management after closing the deal. In this area, we can build on a strong track record of smooth integrations with significant revenue and cost synergies.
Sample projects
The following sample projects illustrate some of our international experience in the Asset and Wealth Management Segment.
Supporting the post-merger integration of a leading asset and wealth manager
Background
A leading international universal bank with AuM of EUR 500 billion worldwide wished to acquire the largest European private bank, with core business in wealth and asset management in Europe and AuM of EUR 130 billion. The client asked us to support the due diligence phase and the entire post-merger integration process.
Approach
During the due diligence phase we derived a range of strategic options for the two main, independent bank entities on the target side and all their business segments (Wealth Management, Asset Management, Investment Banking and Corporate Banking). To assist the decision and valuation process, we additionally estimated the potential impact on customer attrition, the revenue and cross-selling potential and the cost synergies. In addition, we developed a long-term business plan.
Given the overall acquisition decision, we subsequently detailed the strategic options and set up and steered the overall post-merger integration project, including all front- and back-office functions. We supported all areas of the project for a total period of around 18 months.
For the core businesses in asset and wealth management, we developed a new value proposition and defined a holistic development program. This program was based on stabilizing the client base, optimizing the organizational setup and initiating powerful growth initiatives. In parallel, we optimized the brand positioning of the acquired bank to ensure that it complemented the existing wealth management division of the universal bank.
Results
The project ensured a smooth pre- and post-merger integration process. Strategic decisions were taken early on, attrition was lower than usual and the target bank was provided with a setup that delivered sustainable profits. One year after closing the deal our client achieved breakeven in profitability – even earlier than originally expected.
Defining a market-entry strategy for Germany for an international asset manager
Background
One of the leading global asset managers with a large geographical footprint was considering expansion into the German market. The asset manager asked us to provide a market overview and potential strategies for market entry, fully detailed and evaluated.
Approach
We began with a series of top-management interviews aimed at understanding the strategic and financial objectives of the client in detail. Based on these interviews, we then conducted a thorough analysis of the competitive landscape of the German asset management industry, outlining the competitor positioning and current trends in investor demand. We also identified potential distribution partners and institutional investors for whom our client's products might be interesting.
Next we defined different options for market entry: organic, partnerships and M&A. We assessed their overall feasibility and their individual pros and cons. In parallel, we outlined the exact requirements in terms of capacity and capabilities for a standalone market entry and drew up a list of potential partners and/or targets for an inorganic strategy.
Based on the strategy chosen by the client, we developed a detailed business case, including a projection of expected inflows and AuM, required investments and likely revenues/fees. By this means we determined the bottom-line potential. A granular implementation plan enabled the client to pursue the required activities on its own while retaining a complete overview of progress, project risks and required countermeasures.
Results
As a result of the project, the client was able to make a well-founded decision about market entry into Germany. The client could also define a specific strategy for entry, taking into account the specific characteristics of the local market. Furthermore, our experience in implementation helped the client to go ahead with a "hands-on" plan and to turn this plan into reality on the ground.
Devising a market-entry strategy for Romania for a large European player
Background
A large European universal bank with a significant private banking division wished to assess the potential of private banking in Romania. The bank already had some onshore private banking operations, but these were mainly concentrated on red-carpet retail banking.
The objective of the bank was to determine the potential for true onshore private banking and legitimate offshore operations. It also wished to find out what its positioning and value proposition should be. The bank had a sizeable and successful retail banking operation as well as a corporate banking operation.
Approach
We started with a thorough analysis and audit of the existing operations of the bank to assess the strengths and weaknesses in its organization. The assessment process also included interviews with relationship managers and competitors. Furthermore, we carried out several mystery shopping exercises.
To assess the potential of the Romanian target market, we derived a market model for the different asset buckets. We compared the bank's positioning and market approach with its existing competitors. In addition, we analyzed its setup in depth including regional presences.
In the second half of the project, we identified the target positioning of the bank as well as relevant products and services that the bank should offer. Finally, we derived a business plan as well as an implementation approach.
Results
The project resulted in a successful launch of the new private banking services with focus on the AFFLUENT+ segment. The client could also access a strong database regarding regional attractiveness of the private banking markets (clients, competitors). Furthermore, a detailed implementation plan including e.g. requirements for new staff was submitted.
