Building a customer value framework in wealth management

TABLE OF CONTENTS

BUILDING A CUSTOMER VALUE FRAMEWORK

• Introduction
• Definition and concept
• Why assess customer value?
• Framework overview
• Identifying valuable customers
• Value measures
• Developing a dynamic perspective
• Value-based segmentation
• Dream accounts
• Cash-cow accounts
• Strategic Growth accounts
• Problem accounts

BUSINESS MODELS AND CUSTOMER VALUE

• Overview
• Business model assumptions
• Investment-focused mass affluent model
• HNW Investment Specialist
• Full-service HNW Private Bank
• Universal wealth management proposition
• Contrasting business models
• Dissecting the customer value scores for each business model
• The value ceiling for an investment-focused mass affluent model is too low
• HNW Investment Specialists must be as their name implies
• Full-service HNW Private Banks: strong revenue potential must not be undermined by higher costs
• Universal wealth proposition must achieve clear differentiation

STRATEGIC CONSIDERATIONS AND ACTIONS

• Wealth managers should examine the customer value characteristics of their business
• Maximise value and align resources for the existing customer base
• Adjust the target market and secure greater customer value from new clients
• Introduce new products designed to achieve specific improvements in customer value
• Conclusions

APPENDIX

• Research methodology
• Further reading
• Datamonitor Global Wealth Service SPP: Market Reports
• Datamonitor Global Wealth Service SPP: Insight Reports
• Related Datamonitor Savings & Investments SPP Reports
• Datamonitor's Global Wealth Model
• SPP writing team

List of Tables

• Table 1: Results of the customer value assessment for the different wealth management business models
• Table 2: Countries that have been modeled using Datamonitor's Global Wealth Model

List of Figures

• Figure 1: The nature of the customer base is one key restriction on revenue growth for the business
• Figure 2: Presenting a customer value framework for wealth managers
• Figure 3: Datamonitor's Portfolio of Clients Framework
• Figure 4: Applying a customer value framework to a business model
• Figure 5: Customer base assumptions for the Investment-focused Mass Affluent model
• Figure 6: Customer base assumptions for the HNW Investment Specialist model
• Figure 7: Customer base assumptions for the Full-service HNW Private Bank model
• Figure 8: Customer base assumptions for the Universal Wealth Management model
• Figure 9: The full-service HNW private bank business model scores most highly in terms of customer value
• Figure 10: Contrasting how different business models score across the different customer value-dimensions of the framework