Mass Affluent Customers Seek Wealth Management Services

The financial services industry is being flooded by the mass affluent -- about 33 million consumers, mostly baby boomers, with between $100,000 and $1 million in liquid assets. Consumers with enough money for diversified investment products but not quite enough to warrant the attention of private bankers represent a new market and new opportunity for retail banks.

The mass affluent have an active interest in diversified financial products, according to Balaji Yellavalli, head of Infosys' (Bangalore, India) U.S. banking and capital markets solutions practice. Annual fee revenue for the group, he contends, could top $250 billion, and banks are working to establish integrated wealth management platforms to meet the needs of these customers.

Yellavalli recommends rapidly scalable technology that spans channels to create a seamless view of customers' relationships across the bank, not just in the wealth management space. Banks also should look for seamless account-opening functionality, he adds.

Currently, retail banks are the top deployers of wealth management platforms, accounting for 43 percent of deployments, according to an Aite Group (Boston) report. Brokerages are No. 2 (32 percent). Organizations without an integrated adviser platform often experience a drain on adviser productivity, with advisers spending excessive amounts of time trying to make technology work for them, the report says.

"Wealth management firms have thrown far too many tools at their advisers ... without defining a consistent technology strategy for the front office," according to Alois Pirker, a senior analyst at Aite. "An integrated front-office environment will increase advisers' productivity within a firm, and it will help attract and retain top adviser talent."

Focused Services

But banks shouldn't try to serve the entire wealth management market, cautions Infosys' Yellavalli.

To support clients' focused wealth management services, "Vendors have had to focus on key modules -- such as financial planning, portfolio construction, reporting, trading and compliance," says Celent (Boston) analyst Isabella Fonseca, author of the firm's report that ranks wealth management technologies.

In the report, Celent examines 10 leading wealth management platforms. Celent found that Reuters' (London) two main wealth management products have the greatest breadth of functionality in the space. More than 500 financial services firms -- including UBS (Zurich), Citigroup (New York), Credit Suisse (Zurich) and ABN AMRO (Amsterdam) -- use the Reuters Investor/Online and Reuters Plus products.

Other vendors evaluated include San Francisco-based NorthStar, Finaplex (San Francisco), InvestEdge (Pittsburgh), Fidelity (Jacksonville, Fla.), Thomson Financial DST (Stamford), SunGard (Wayne, Pa.), Xeye (New York) and AdviceAmerica (Fremont, Calif.). **

--Nancy Feig