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
Page 2
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
Bank Solutions Group, LLC | A leader in financial services industry consulting
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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?
Bank Solutions Group, LLC | A leader in financial services industry consulting
3%
5%
6%
19%
40%
49%
79%Acquistion
Expansion
Focus on Affluent Clients
Lower costs
Unsure
Other
No growth expectedSource: WealthManagement.com survey of 648 wealth managers from all channels (Oct 2012)
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Five massive shifts define a new era in wealth managment
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*Up to 90% of heirs plan to leave their family’s institution.
Huge wealth transfer opportunity over the next couple of decades
Bank Solutions Group, LLC | A leader in financial services industry consulting
$41 Trillion*
Wealth of Gen X + Gen Y expected to exceed Boomers
by 2018
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Bank Solutions Group, LLC | A leader in financial services industry consulting
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How Can Smaller to Midsized Financial
Institutions Compete in the Big Leagues?
Bank Solutions Group, LLC | A leader in financial services industry consulting
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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.
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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.
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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.
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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.
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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.
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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.
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Role Players Can be More Important then Sluggers
BSG Wealthcare Model
Bank Solutions Group, LLC | A leader in financial services industry consulting
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Standardized Process Specialized
Low
Tou
ch
In
timac
y/EQ
H
igh
Touc
h
Fees
Scalability
Execution Diagnosis
Adapted from True Professionalism by David H. Maister © 1997 David H. Maister , used by permission
• 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.
Bank Solutions Group, LLC | A leader in financial services industry consulting
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A Moneyball Approach to Wealth Management
There is no reason for smaller banks to relegate themselves to the minor
leagues.
Email: [email protected] | Twitter: @JPNicols | Tel: +01 425-522-3579
Bank Solutions Group, LLC | A leader in financial services industry consulting
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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
Experts 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
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
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
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
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
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
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
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
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
Experts in the Business of Banking
• 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
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
Just a few of the hundreds of clients we have served
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
Our Partners are at the top of their game – seasoned practitioners with successful consulting backgrounds
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
Ann S. [email protected]
Mark [email protected]
Russ [email protected]
Charles [email protected]
Craig [email protected]
Wilton [email protected]
Robert HughesManaging [email protected]
Steven [email protected]
Gregory [email protected]
Michael [email protected]
Peter HetzlerManaging [email protected]
Alan [email protected]
John [email protected]
Steven [email protected]
John [email protected]
Les RiedlSenior Managing [email protected]
Darryl [email protected]
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
Peru
Australia
Hong Kong Thailand
Experts in the Business of Banking
Puerto Rico
Los Angeles
Miami
New York
Dallas
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
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
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
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
Experts in the Business of Banking
Bank Solutions Group, LLC | 235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USA | Tel: 404.855.4604 | www.banksolutionsgroup.com
Experts in the Business of Banking
235 Peachtree Street NE, Suite 400 | Atlanta, GA 30303, USATel: 404-855-4604 | www.banksolutionsgroup.com
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