A moneyball approach to wealth management

235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USATel: 404-855-4604 | www.banksolutionsgroup.com

A Moneyball Approach to Wealth Management

JP Nicols, CFP®Partner

Experts in the Business of Banking

Bank Solutions Group, LLC | A leader in financial services industry consulting

9 10Outof banks

Are considering a serious overhaul of their strategy, and

40% Say wealth management will be an important part of

that strategy.

Source: KMPG, American Banker 6/12

But the game has changed.

The era of “build it and they will come” is over.

Everyone plans to take market share from everyone else

Where will the growth come from?

79%Acquistion

Expansion

Focus on Affluent Clients

Lower costs

Unsure

No growth expectedSource: WealthManagement.com survey of 648 wealth managers from all channels (Oct 2012)

Five massive shifts define a new era in wealth managment

*Up to 90% of heirs plan to leave their family’s institution.

Huge wealth transfer opportunity over the next couple of decades

$41 Trillion*

Wealth of Gen X + Gen Y expected to exceed Boomers

by 2018

How Can Smaller to Midsized Financial

Institutions Compete in the Big Leagues?

A MoneyballApproach toWealth Management

The $1-$10MM investor space is twice as profitable and is growing twice as fast as the $10MM+ space, according to McKinsey & Co.

Bigger isn’t Always Better

Traditional metrics such as Assets Under Management and Loan Volume are poor predictors of actual financial success. Today’s key metrics must favor measures of productivity and profitability over raw volume growth.

Focus on the Right Metrics

It’s nice to have batting champs, but it’s even better to play in October. Likewise, wealth managers need to focus on the activities that are correlated to maximizing profitable growth over the long run.

Focus on Wins Not Hits

According to WISE Gateway, allocated costs can impact margins by as much as 30-40%. Get behind the numbers to understand the true costs and ROI opportunity.

Look Beyond Allocated Costs

Firms should expect $2.50 to $5.00 for every dollar of front-line compensation expense, firms supporting growth and/or in newer markets will take some time to reach this level as new hires ramp up production levels.

Invest, Support and Challenge the Client-Facing Staff

The ideal front-line support to maximize revenue growth is a little less than one support person for every client-facing professional.

Role Players Can be More Important then Sluggers

BSG Wealthcare Model

Standardized Process Specialized

Scalability

Execution Diagnosis

• Standard Credit• Product Advice• Estate Settlement• Discretionary Trusts• Complex Issues

• Goal Setting • Financial Planning• Complex Estates• Succession Issues• Nonfinancial Issues• Moral Support

• Custom Credit• Asset Allocation• Basic Trust Admin• Complex Assets• Basic Estate Plans

• Basic Service• Statements• Web and mobile• Standard products• Transactions• Item processing

They just have to make the right investments and establish the right metrics to manage them.

A Moneyball Approach to Wealth Management

There is no reason for smaller banks to relegate themselves to the minor

leagues.

Email: jp.nicols@banksg.com | Twitter: @JPNicols | Tel: +01 425-522-3579

He is a partner at Bank Solutions Group and the founder and CEO of the research and innovation firm Clientific. He has served in various leadership positions at top financial institutions, including as the first Chief Private Banking Officer for U.S. Bank. In addition to holding a BA and MBA, he is a graduate of the Cannon Personal Trust School and has held the CFP® designation since 1996. He writes about the leadership, advice and innovation for the future of wealth management on his Affluent Strategies blog at jpnicols.com.

A leading voice for leadership and innovation for the future of financial services in affluent markets, JP combines 20+ years of experience with a fresh perspective on combining high-tech with high-touch. His work has been featured in some of the industry’s top publications, including American Banker, BAI Banking Strategies and Bank Innovation.

About JP Nicols, CFP®

About BSGExperts in the Business of Banking

• That banking is a business – essential, unique, and embattled as never before

• Banking today requires the wisdom of the veterans, coupled with a vision for the future

• Expertise isn’t talent or intelligence or any one thing

• Expertise is the combination of skill-honed, time invested, success reinforced, and trust earned

• True experts earn long-term relationships

“Researchers have settled on what they believe is the magic number for true expertise: ten thousand hours.”

Malcolm Gladwell, Outliers: The Story of Success

Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com

As “Experts in the Business of Banking” we understand…

BSG is a financial services industry consulting firm with…

• The scale and skills to fill the gap between small boutique firms and “Big Firms”

• Deep industry expertise covering 11 practice areas

• Consultants in 11 countries on 5 continents combining global insight with local

expertise

• Professionals averaging 15 years of industry experience, 10 years as consultants

• Projects leveraging small, cost effective teams of 3-5 industry experts• Shorter timeframe engagements• Additional local resources accessible to support larger projects

Our 11 practice areas encompass the “business of banking”

• Consumer and Small Business Banking

• Wealth Management and Trust

• Payments and eCommerce

• Commercial Lending

• Insurance

• Risk and Compliance

• Operations

• Information Technology

• Treasury and Finance

• Marketing and Segmentation

• Organizational Effectiveness

How can we help? (Partial list representative of past engagements)

• Corporate and Business Line Strategy

• Competitive Assessment

• Performance Management

• Revenue Growth

• Marketing and Market Planning

• Product Management and Pricing

• Segmentation

• Value Proposition Development

• M&A Support

• Risk Management

• Business Transformation

• Bank Turnaround / Recovery Planning

• Project Management / Implementation

• Distribution and Planning Tactics

• Vendor Sourcing / RFI / RFP

• Contract Negotiation

• Operational Reengineering

• Operational Assessment

• Peer and Industry Benchmarking

• IT Assessment and Planning

• Sales and Service

• Strategic Finance and Treasury

• Portfolio Valuation

• Expense Improvement

• Regulatory Actions

• Compliance

BSG has developed several proprietary, cost effective accelerated performance improvement projects that require just six to eight weeks to complete and provide immediate results

Quick ImpactTM

Revenue Enhancement

Quick ImpactTM

Cost Improvement

Quick ImpactTM

Vendor Contract and Pricing Review

Quick ImpactTM

Line of Business Peer Benchmarking and Competitive Assessment

Quick ImpactTM Services

Hundreds of successful engagements over 30+ years in 30+ countries•About half in the U.S

• Argentina

• Australia

• Bahamas

• Barbados

• Belgium

• Bermuda

• Brazil

• Canada

• Chile

• Colombia

• Dominican Republic

• Dubai

• El Salvador

• France

• Germany

• Hong Kong

• Indonesia

• Italy

• Jamaica

• Malaysia

• Mexico

• Panama

• Peru

• Puerto Rico

• Saudi Arabia

• Singapore

• Spain

• Thailand

• United Kingdom

• United States

Just a few of the hundreds of clients we have served

Our Partners are at the top of their game – seasoned practitioners with successful consulting backgrounds

Ann S. TaylorPartnerann.taylor@banksg.com

Mark GrossmanPartnermark.grossman@banksg.com

Kim AndresPartnerkim.andres@banksg.com

Rob StansfieldPartnerrob.stansfield@banksg.com

Russ DrummondPartnerruss.drummond@banksg.com

Charles AlbanoPartnercharles.albano@banksg.com

Craig PagePartnercraig.page@banksg.com

Wilton DolloffPartnerwilton.dolloff@banksg.com

Robert HughesManaging Partnerbob.hughes@banksg.com

Steven WarnerPartnersteven.warner@banksg.com

Gregory NoonanPartnergreg.noonan@banksg.com

Michael BradleyPartnermike.bradley@banksg.com

Peter HetzlerManaging Partnerpeter.hetzler@banksg.com

Alan ThompsonPartneralan.thompson@banksg.com

John MuellPartnerjohn.muell@banksg.com

Steven AppenzellerPartnersteven.appenzeller@banksg.com

John TaylorPartnerjohn.taylor@banksg.com

Les RiedlSenior Managing Partnerles.riedl@banksg.com

Darryl McGeePartnerdarryl.mcgee@banksg.com

JP NicolsPartnerjp.nicols@banksg.com

With teams in 11 countries, we gain advantage from a global perspective, leveraging fresh ideas and new approaches from colleagues in different markets

Atlanta (Headquarters)

Canada

Mexico

United Kingdom Belgium

Colombia

Australia

Hong Kong Thailand

Puerto Rico

Los Angeles

New York

Dallas

Seattle

What our clients say

“I bring BSG’s expert consultants back every time we need fast recommendations that I know will stand up during the implementation. They have never let me down.”

EVP of Top 50 bank

“These days we don’t have time for consulting project oversight like we used to. BSG’s consultants can work independently.”

CEO of Community Bank

“We don’t worry about scope-creep with BSG. They stay focused on results and timelines.”

CTO of Regional Bank

“So far I haven’t come across a problem that stumps BSG ‘s veteran consultants. They’ve been around, they’ve seen it all, and nothing fazes them.”

CBO of International Bank

Six core principles define our culture and our conduct

1. Act with Integrity

2. Work with Passion

3. Deliver Value

4. Commit to Service

5. Value Relationships

6. Be Accountable

235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USATel: 404-855-4604 | www.banksolutionsgroup.com

A moneyball approach to wealth management

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