Enterprise transformation in wealth management

Winning in today’s US wealth management landscape

In today’s rapidly evolving US wealth management landscape, a select group of wealth managers are rising above the competition. In a representative sample of 38 wealth firms of different sizes and from varying channels, the top firms are tripling their peers’ revenue compound annual growth rates (CAGR), growing assets under management (AUM) at four times the rate of other firms, and achieving nearly 30% operating margins compared to peers’ 22%.¹

The selected group of wealth management
leaders compared to their peers

Utilizing a channel-agnostic methodology for classification, the leaders cohort includes firms of all sizes from all channels—indicating that strong financial performance is achievable across a diverse range of business models and operational scales. These leaders also outperformed others within their respective channels as well.

How do they do it? We identified five key success factors lying at the heart of these winning firms’ evolution.

Five factors positioning wealth management firms for sustained financial success

How are leading firms achieving these impressive results? What strategic choices are they making to beat their competitors and in which domains? Through an analysis of firm-provided qualitative and quantitative data and a range of survey data,² we found that leaders’ strengths aligned to five key success factors:

1. Providing an anticipatory investor experience that is intuitive, flexible, trustworthy, and consistent, promoting ease of business.

2. Deploying a seamless adviser³ experience that reduces administrative overhead; simplifies the adviser’s day-to-day activities; enables advisers to spend their time aligned to their highest/best value-added activities; and provides advisers with integrated tools, data, and support needed to advise their clients both efficiently
and effectively.

3. Leveraging an end-to-end core wealth platform that is purpose-built and serves as the operating fabric underneath the investor experience and adviser experience to enable efficient delivery of personalized financial advice at scale. Today’s leading core platforms also provide the delivery of investments views at the relationship, investor, portfolio, and product levels.

4. Bringing to market a holistic product and service offering designed to provide clients with a more comprehensive and personalized experience across a wide range of traditional and alternative investment needs, new account structures, banking and lending products, insurance offerings, and trust/estate services, among other things.

5. Exhibiting a tightly knit transformational DNA motivated by tech-savvy leadership; orchestrated by organization-wide change management and an end-to-end mindset; and measured by modern, dynamic key performance indicators (KPIs).

For each factor, we compared leaders’ numerical scores with all other firms’ scores within the population. In aggregate, leaders beat all others in every success factor, demonstrating the factors’ correlation with positive financial performance. We found that leaders outperformed their peers by the greatest margin within transformational DNA, followed by investor experience, adviser experience, core wealth platform, and product breadth and differentiation.

Leaders outperformed the rest of the population
across all success factors, with transformational DNA
showing the strongest link to financial performance

Transformational DNA

The most differentiating factor identified and the one with the highest degree of correlation with strong financial performance is transformational DNA. Firms with strong transformational DNA are deeply committed to innovation, digital modernization, and investment in both organic and inorganic growth opportunities, and they consistently outperformed their peers in top- and bottom‑line results. Rearchitecting the business, or major parts of the business, is recognized as a necessary exercise to compete and serve clients. Our research indicated that firms possessing transformational DNA demonstrate four critical attributes:⁴

The path forward

The wealth management industry is entering a period of rapid change—and with it, tremendous opportunity. Our research highlights that firms with a strong transformational DNA are best positioned to outperform, but the landscape ahead requires even greater adaptability.

Most wealth managers are actively undergoing digital transformation programs and large-scale AI programs designed to improve and differentiate their client and adviser value propositions. For many firms, this is a multi-year journey. But the industry is not standing still while firms transform, thus necessitating a flexible approach. Learn more in our
full report.

Endnotes

¹ Cerulli Associates; firm websites; public financials; Casey Quirk analysis.

² Deloitte independently scored each firm in the population across metrics tied to transformational DNA, investor experience, adviser experience, core wealth platform, and product differentiation and breadth. Our numerical scores were derived from studying each firm’s 10-K's and annual reports as well as dozens of third-party and proprietary surveys evaluating the firms’ demonstrated qualities and capabilities.

³ The term adviser is being used to describe the primary client-facing individual, which might include relationship managers, private bankers, and a variety of other titles.

⁴ To assess transformational DNA and arrive at these attributes, Deloitte reviewed firm disclosures and annual reporting to determine transformational positioning (for example, qualitative evidence, such as mentions of digital platform modernization, AI/data investments, executive commentary on innovation) and transformational execution (for example, quantitative metrics, such as R&D spend, strategic acquisitions, and growth attributable to strategic acquisitions, and qualitative evidence including new market entry/business lines/product launches, named chief innovation officers/chief digital officers, and evidence of internal innovation programs, such as venture arms or digital innovation labs).