Practical analysis for investment professionals
30 July 2015

A More Personalized Approach to Private Wealth

Like the finance industry as a whole, the private wealth sector is in the midst of a period of profound transition.

The challenges confronting it are legion. There are the philosophical dilemmas — the active versus passive debate, for example. And then there are the structural issues, particularly the two facets of the sector’s generational divide: Private wealth managers are aging as are their clients. How each of these ranks will be replenished remains an ongoing question.

A major component of these challenges can be distilled to technology, whether in the form of increased competition from robo-advisers or how managers can more effectively harness social media to engage with clients. The larger question is, Will digitally connected, tech-savvy millennials — and “plugged in” prospective clients of all ages — come to doubt the ultimate utility of hiring a living, breathing private wealth manager?

Mindful of these dilemmas, my colleague Will Ortel has repeatedly encouraged advisers to consider their value add — and their fees — to figure out ways to better connect with their clients, whether through technology or by offering them more personalized service than they would receive either from a robo-adviser or even a “traditional” wealth manager.

Recognizing these issues, we queried CFA Institute Financial NewsBrief readers about what they thought was the most glaring change the sector needed to make to acclimate to the philosophical, generational, and technological shifts roiling the industry.

The consensus that developed was illuminating.

Of the 433 poll participants, a significant plurality (41%) cited a greater emphasis on goals-based investing as the most important change that needed to be made, while 32% said that a stronger emphasis on risk management was the most necessary shift. An additional 10% declared that improved performance reporting was the industry’s most glaring need. Meanwhile, 16% cited the need to foster better client-interaction skills, and a mere 1% identified improved social media presence to be the most pressing issue.


Poll: What changes are most necessary for the private wealth industry?

What changes are most necessary for the private-wealth industry?


Fully 83% of respondents see the challenge as largely about how to best fulfill the specific needs of the client. The challenge is not principally technological, social, or even structural in nature. Rather, the message that emerged was that the sector needs a restored emphasis on investing basics as well as a more personalized approach to client service.

So, what can private wealth managers take from these results? Instead of developing a one-size-fits-all rubric or concentrating on honing their social savvy, whether interpersonally or via social media, private wealth managers might be better served by focusing on their metrics, their risk mitigation, and, especially, their development of individualized strategies designed for clients’ particular situations, which take into account what clients ultimately want to achieve with their wealth.

In the end, it’s a fairly simple and basic message: Focus on the client and investing fundamentals.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

About the Author(s)
Paul McCaffrey

Paul McCaffrey is the editor of Enterprising Investor at CFA Institute. Previously, he served as an editor at the H.W. Wilson Company. His writing has appeared in Financial Planning and DailyFinance, among other publications. He holds a BA in English from Vassar College and an MA in journalism from the City University of New York (CUNY) Graduate School of Journalism.

4 thoughts on “A More Personalized Approach to Private Wealth”

  1. Ayodeji says:

    Great Insights! You sure hit the nail on the head, Paul. The focus remains the client and client’s objective(s).

  2. Our world is dominated by scalable customization of coffee and sneakers, smarter phones and medicine, and exponentially better BI tools and big data; yet, Advice models still rely on retrofit institutional solutions, overly standardized portfolios, and product-centric mass distribution. CFAs have a fantastic value discovery opportunity to provide clients the integrated goals-based wealth management they deserve, require, and desire. Where portfolio size, complexity, and unique circumstances are deemed suitable, PWM CFAs should remove the handcuffs of managing sales products. Rather, clients’ best interests are served with freedom to implement strategies.

  3. Elsie Cole says:

    I definitely agree that individual developments should be focused on a lot more. Everyone is different, so you can’t have a “one size fit’s all rubric.” You definitely have to acknowledge diversity when it comes to things like this.

    1. Paul McCaffrey says:

      Great points, Elsie. And thanks for reading.

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