“
20
NEWS ANALYSIS HIGH NET WORTH GROWTH
It is important
to get off on the
right footing. You
are dealing with
regulators and
compliance people
and you have to run to
their timetable rather
than your own
”
Neil Darke, managing director,
Collins Stewart Wealth
Management
SUMMARY
Growing numbers of HNWIs
are coming from emerging
markets.
Wealth managers must
consider how their business
model will fit a new market
before entering it.
Lynch’s global wealth management
business.
Accessing this wealth is
the challenge for the businesses,
something Tucker
acknowledges. “While
trends indicate that opportunities
exist for wealth
management firms to tap
into new growth markets,
success will go to those
that recognise their existing
service, delivery and
technology strategies must
be adapted and tailored to
meet the particular needs
of these markets,” he says.
l Preparation is vital
This point is a major focus
of the report: that firms
cannot simply get off a
plane, announce ‘I am
here’ and expect to win
new business. It highlights
a number of issues such as
reputation, brand and history,
service model and
regulatory and product differences
that all require
deep consideration before
a new market is tackled.
Neil Darke, managing
director of London and
Jersey-based Collins Stewart
Wealth Management, which
has recently expanded into
Geneva, says: “Whenever
we are thinking about a
new jurisdiction, all the
appropriate regulatory and
corporate issues have to be
dealt with, such as ensuring
you have the right
corporate entity, you are
regulated in the right way
and you present yourself
as the sort of professional
financial services organisation
you have always done.
The last thing you want is
for something to go wrong
and for you not to be seen
as a top-end company.
“These issues take
months rather than weeks
to address, but it is very
important to get off on
the right footing. You are
dealing with regulators and
compliance people and you
have to run to their timetable
rather than your own.”
l Build on strengths
Collins Stewart has longerterm
expansion plans for
Singapore, Dubai and
Hong Kong. Darke says
the strategy for entering
these markets is to lever-
Factors in wealth management strategy
Service delivery model
Practice model approach; transaction vs
fee-based pricing; distribution channels
(branch vs call centre vs online,
individual vs team delivery, talent,
personalised vs mass,
compensation)
Offerings across asset
classes; commoditised vs
customised; closed vs
open product; architecture
Firm
heritage
Firm
Products and
perception
services
Source: Merrill Lynch, Capgemini
ENTERING NEW MARKETS
When seeking to enter new markets, firms should ask the following
questions:
� Do we have a comprehensive understanding of client needs in our
new target markets?
� Have we made an honest assessment of who we are and who we
aspire to be?
� What are our long- and short-term growth strategies?
� How do we best use our existing capabilities and strengths to
determine the most pragmatic and effective service delivery model
and operational and IT capabilities for success in new markets?
� How can we improve speed to market entry, and what strategic
sourcing options make the most sense?
Source: Merrill Lynch Capgemini World Wealth Report
age off different aspects of
the Collins Stewart group,
which includes capital markets,
brokerage and fund
management arms.
“We will look to capitalise
on the expertise or
presence of the group. In
Geneva we had our securities
business and the link
with Anglo Saxon trust
companies that have been
moving there.
“It is about using what
exists in the group’s infra-
INTERNATIONAL ADVISER [www.international-adviser.com] AUGUST 2008
Firm
identity
Client profile
• Wealth brand
• Source of wealth
• Cultural
differences
structure to expand and
use to our advantage the
contacts or presence that
has been built up. That is
probably why our expansion
has focused on financial
centres, because those
are the place where we are
likely to already have contacts
and there is scale to
develop the other aspects
of our business.
Operational and IT structure
Advisory vs product platform orientation;
centralised vs decentralised operational
model; proprietary vs packaged
solutions; in-sourced vs outsourced;
service-oriented architecture
Core
competency
Culture
Competitive landscape;
regulatory, legal and
political constraints;
economic conditions and
performance
External factors
“For example, we have
not moved into Eastern
Europe because it does
not provide the scale or
benefits across the divisions;
it is about lowering
risk and maximising the
opportunities.”
l Beneficial linkups
The report highlights joint
ventures as one of the best
ways for firms with limited
resources, brand recogni-
tion or local infrastructure
and resources to become
active in new markets.
Capgemini’s Gant says:
“A business could be brave
and go and set up on
its own and try to grow
organically.
“There are definite
merits in that if it works,
but it would be a risky
strategy and would require
a lot of planning.
“Another option would
be to find another firm
already based there and set
up a joint venture or strategic
alliance, a strategy that
has advantages because the
local firm will know the
market and already have
distribution capability.”
Service and practice
model is also vital, says
the report. It identifies
three models – transactional,
investment manager
and wealth planner and
– highlights that each tends
to have a pricing structure
moving along a line
between commission and
fee orientated.
Linked to this, the study
says firms tend to excel
in certain areas and be
less competent in others.
It recommends that they
focus on their competencies
and if these do not fit
a particular target market,
either bolster their offering
or rethink their plans.
What the report and
commentators make clear
is that going into new markets
is not something to be
taken lightly and requires
a great deal of preparation
before doing so.
Gant warns: “It is a risk
– a firm can easily find
itself worse off for doing
it. One of the things we
have been saying to firms
is that they should get back
to the basics of what they
do well, because growth
can elude firms or only be
short term if they try and
be what they are not.”
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