Bruce Holley, vice president in the New York office of The Boston Consulting Group, leads the firm’s wealth management practice in North America. At BCG he has focused on improving profitability through better pricing and a small accounts model for a high-end trust bank. In his role at BCG he has also worked with a major investment bank to improve the effectiveness of its high net worth sales force. Prior to BCG, Holley was a vice president at JPMorgan in New York.

What’s the most common problem you see in firms’ approaches to wealth management?

Typically people in wealth management are part of a larger organization that services different segments, so they need to decide whom they are servicing and then look at their cost and capability. You don’t want to have someone who is very expensive focusing on a lower wealth segment; it is important to align the right model with the right client segment based on the revenue potential. The other problem I see is that clients have problems and want solutions, while firms too often are just selling product. They say here is a mutual fund, or a loan, or a deposit.

Short of private banking tailored to the very wealthy, what else can firms do?

They could offer a combination of products in a wrapper. A young family needs liquidity – a mortgage, checking and savings accounts, a credit card, and perhaps some very basic investing through mutual funds. You could sell this as a package for a starting family. When you take a product-focused approach, you don’t meet the needs of your clients who are not thinking in terms of products.

So people want one-stop shopping?

More important, financial firms can offer them the convenience of all, or at least most, of their accounts on one site so they can move money around easily. People are time-pressed, and this can be offered as a way the financial institution can help.

Hi, I’m from your bank and I’m here to help you? Pardon my skepticism.

I think it is tough for financial institutions. Their Web sites talk about providing solutions, but how many people from financial firms actually talk to their customers about their needs, then link that discussion to solutions and deliver it with flawless execution? Banks think if they do a survey of 500 people they understand the market, but this is about focusing on the needs of each individual.

Who is doing best?

We favor insurance companies, because they lead with more financial planning, they know how customer needs are changing, and that gives them a roadmap to craft solutions. Having that conversation about needs is very challenging, and insurance companies are set up to do it best, although many other companies now realize they need to learn. If you start with planning, and sell a solution, that gives you the opportunity to sell multiple products. They might be very standard products, but the delivery tailors them to the individual customer.

What’s stopping firms from doing this?

It presents challenges for the way the relationship manager works with the customer, and the way the relationship manager interacts with the rest of the institution. He might be fine with mortgage and asset management products, but when things get more complex he has to bring in a product specialist. All of a sudden the mode of behavior is changing dramatically, and institutions aren’t getting that right.

That’s not so difficult. Technology makes it easy to access third–party products and offer them to clients; the difficulty is delivering in an integrated fashion. Some of the key challenges are in changing the behavior of the sales force where a more consultative approach is needed. What’s the ideal customer experience? How does the sales force interact with the rest of the institution? How do you include an understanding of the client’s emotional needs through the process? Personal financial issues are very emotional issues, whatever level of wealth you are dealing with. Families are trying to provide for their children; wage earners are concerned about what happens if they die suddenly and how they can set up the survivors for success; and most institutions are not focused on the this emotional aspect of the sale.

What do you want from a bank?

I would like a total view of my credit card, debit card, checking and savings, and my loans in a single place where I can transfer money easily.

What are you getting?

I just took out a mortgage for an apartment in Manhattan. My bank knows my pay, they know we get bonuses twice a year, they know all about my debt, so they could project my needs. The one thing they have sent me regularly since I received the mortgage is an offer for automobile insurance. I have never owned a car in my life. You’d think they would try to send me some investment offer timed to my bonus. Or, since they know I have four checking accounts, they might offer to consolidate my accounts. Banks capture so much information about an individual and they use maybe three percent. Even at that, if they used the right three percent it could be very powerful.

It sounds as if your bank needs a better customer relationship management (CRM) system.

I have seen various forms of CRM, but I have yet to see one that really works. Sales people regard them as just adding more administrative work that doesn’t help them acquire customers or cross-sell. They think the main purpose is so managers can see what they are doing.
www.bcg.com