Business process, corporate structure and systems

Many organisations that say they “personalise portfolios to financial needs over time and personal risk preferences”, do not actually posses the systems that relate structure to personal financial needs or indeed, the business processes and the service structures that can deliver such a service..

If an organisation is attempting to provide personalised portfolio management to its clients but does not have the systems to deliver asset management or manage the complex relationships, then it may be operating inefficiently in a number of areas.

If an organisation depends on product sales or transactions for its returns, then it may not have the business process or service focus to actually deliver personalised wealth and asset management to a level required to meet the needs of the individual investor.

An organisation may have great asset management expertise but if it cannot deliver this to its private clients, this expertise is not going to be of benefit to the client.

Worse still, is the situation where an organisation uses third party software and third party investment recommendations, but does not possess the necessary expertise and knowledge to manage and apply them.

There are many financial institutions whose revenue from their so called wealth management services actually comes from product sales and transactions. In this case, advice cannot be the most important component of the process. Since advice is the most important and valuable component of wealth and asset management services (most of the actual management is based on the relationship between asset risk and return and liabilities over time), the conclusion is not a difficult one to draw.

Many organisations have large numbers of advisors each responsible for the asset allocation, security selection and portfolio management. In these circumstances how can you be sure that you are getting quality and efficiency in the service you are receiving?

Organisations that deliver asset management to small numbers of very large clients have a different organisational and structural requirement to an organisation which is providing asset and wealth management services for a large number of clients.

Organisations focussed on selling products and transactions have different structures and business processes than ones focussed on managing needs and assets.

Many financial institutions separate asset management from advisory functions while most financial software does not integrate liability (income and capital needs) management with asset management. As a result, prime asset management expertise is often alienated from an organisation’s investment planning services.

Integrated systems and business processes relate advice and recommendations to one set of needs and resources, lowering costs and increasing total return for the client.

To assess whether you are getting effective asset management, you need to understand the business, the service process and the systems that drive the service.

SEE      SYSTEMS