Booz & Company

This document is confidential and is intended solely for

the use and information of the client to whom it is addressed.
Miami, June 2013
How Digitization is Transforming
Wealth Management
Kunal Vaed
Principal, Booz & Company
kunal.vaed@booz.com
Perspective
Booz & Co presentation 2013
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Booz & Company
Booz & Company
Founded 1914 Private Company $1+ Billion in Annual Sales
OUR CLIENTS
Over 80% of our work is for clients with
whom we have previously worked
70 of the worlds 100 largest
corporations
More than 400 of the Fortune 500
Approximately 3,300 Employees across
57 Offices in 30 countries on 6 Continents
Functional Practices
Booz Digital
Strategic Leadership
and Organization
Operations
Strategic Sourcing
Digital Business &
Technology
Overhead Optimization
Human Capital
Management
Communications and
Change Management
Industries We Serve
Financial Services
Automotive
Aerospace and Defense
Consumer Products
Energy and Utilities
Global Transportation
Health Care
Media
Technology
Telecommunications
Booz & Company is a global leader in strategy and technology
management consulting
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Booz & Co presentation 2013
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Booz & Company
We are a cross-industry leader in digitization
100+ Professionals focused on the Digitization Domain
Thought Leadership
Experience Across Multiple Industries
Communications,
Media and Tech
Financial
Services
Public
Sector
Consumer
& Retail
Health Engineered
Products &
Services
Energy,
Chemicals &
Utilities
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Booz & Co presentation 2013
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Context -- the Wealth Management industry landscape
The wealth management business models are being seriously challenged
Revenues clients questioning high fees against poor investment performance and
moving to safer asset classes with lower management fees
Costs going up due to significant regulatory compliance requirements. Talent still
expensive
The value of advice is being challenged
Brand values have shifted (trust banks versus private banks or brokerages)
Lower cost brokerages and independent advisors are gaining share
Advisors are increasingly moving their books of business from traditional brokerages to
independent channels
Traditional brokerages are under significant pressure to innovate their model and improve
performance
30 May 2013
Booz & Co presentation 2013
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Booz & Company
Pain Points in Wealth
Clients with $250K to $5M+ in investable assets
Source: Survey of clients with assets from $250K to $5M+; Booz & Company analysis
In The Dark
On My Own
Its a Hassle
Undervalued,
Exploited
I find it hard to see a
across all my
accounts
I am suspicious of
the advise I get
They dont give me
real-time updates on
my portfolio
What do other
people like me invest
in?
Example Quotes from HNW Clients
My experience is not easy
and intuitive, right from
when I open the account
The firm does not
recognize and reward me
for my relationship
Information for making
decisions is not readily
available
There is little connectivity
to peers or a broader
network for investing
I dont get access to
the right experts
I cannot get all my
account information
in one place
I get charged high
fees compared to
actual performance
There are too many
documents to sign
Current wealth models only partially address client pain points
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30 May 2013
Booz & Co presentation 2013
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Booz & Company
In The Dark
On My Own
Its a Hassle
Undervalued,
Exploited
Seller feedback
system informs buyer
purchasing decisions
Fair pricing based on
broad network of
retailers
Innovative checkout
solutions
Frictionless sharing
Deposit image
capture
Free investment tools
and alternative fee
models
Select Portfolio allows
comparison across 10
diversified portfolios
Link, Like, Love -
Socially driven deals
Non-Bank Standard Setters
Emerging Financial
Institutions
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Increasingly, client expectations are set by non FIs
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Booz & Company
Wealth Management Industry Mega-Trends
Digitization
Changing Demographics Regulatory Pressures
Changing Sales Formats
New technologies enabling enhanced interaction
models between advisors and prospects
Ability to reach a broader base of prospects, at a
lower cost
Opportunity to differentiate firm as a leader in
providing rich, intuitive solutions online through
channels that are always on
Alternative advisor compensation formats is
changing acquisition competitiveness
Alternative business models (online, RIA) have
gained market share and present a threat to
traditional business models
Baby-boom wealth bubble has begun to enter
retirement and will eventually transfer wealth to the
next generation
Next generation of clients has embraced
technology and bring a variety of new needs
Aging FA population will result in high attrition and
potential mismatch with future client base
Recent regulation and guidance puts new scrutiny
and onus on financial advisors
Advisors must ensure the suitability of products
to their customers, and must know their customers
well enough to do so
Digitization will play a key role in fulfilling client expectations
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We see four benefits of digitization, across the wealth value chain
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Client/Advisor Service Client Acquisition Advice Quality
End-To-End Efficiency
Digital interfaces to improve FA
productivity
Richer client interactions
through more effective
communications and reporting
Access to leads and facilitated
referrals through social
network presence
Increased marketing ROI by
leveraging big data/ analytics
Portfolio performance and
share-of-wallet growth enabled
by deep analytics
Loss mitigation and
compliance enabled by
algorithmic consistency
Lower cost to serve by driving automation, workflow enhancements, straight through
processing (e.g., account opening, trade processing)
Lower cost to deliver advice enabled by online, mobile and video interactions
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Digital advice has the potential to disrupt traditional models
Advice Provider Positioning
C
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M
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F
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F
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Customer Mix
Self-Directed Delegated
O
n
l
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n
e
Advice Providers
Online providers are targeting
clients seeking full account
delegation, in addition to the
self-directed user. In doing so,
they are offering face-to-face
advisors for affluent clients
New entrants and traditional
online brokerages are
focusing on the high-tech,
high-touch white-space
Traditional brokerage and
wirehouse firms have begun
to offer both online and face-
to-face solutions to target
next-generation clients
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3
2
1
3
Self-Directed
Online
Brokerage
Peer-to-Peer
Investing
Automated
Investment Advisor
Full-Service
Brokerage
Registered
Independent
Advisor
Planning
Specialists
Portfolio
Analysis
Specialists
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