Wednesday, June 15, 2016
Although wealth managers have historically segmented their clients on the basis of wealth level, service models for the various segments have remained fairly uniform. (See Exhibit 1.) Yet demographic and socioeconomic shifts are setting the stage for the rise of nontraditional, underserved segments that do not fit the standard approach.
The vast majority of wealth managers still try to fit nontraditional segments into the traditional wealth-based framework, grouping them with clients whose investment and service needs may be significantly different. By not taking a more customized perspective, wealth managers risk client attrition and will potentially miss out on future growth opportunities. Existing cost-to-serve models often reveal a lack of understanding of what nontraditional segments are specifically willing to pay for, resulting in forgone revenues. Filling this gap presents a significant opportunity.