The lab also highlighted the potential for firms to transform themselves through collaboration. I often refer to this as collaborating to compete.
In a converging world, partnering with companies from other sectors — and even with rivals — can help wealth and asset managers succeed.
Of course, collaboration is not that easy to pull off. Firms need to strike a careful balance between making the most of their strengths and recognizing when they need external expertise.
Keep it simple
The need for collaboration is only one of the challenges posed by convergence. If I take a step back, I see that the greatest challenge my clients face is the same one I face as a partner at an EY member firm: the need to make complexity simple.
Businesses used to embrace complexity. Complex analyses or processes are difficult to replicate, so they enabled companies to brand themselves as unique. This helped them to defend themselves against rivals and new entrants.
But today, complexity and a resulting lack of clarity can be significant impediments for investors, regulators and other stakeholders. The explosion of data and ideas enabled by digital technology is creating more complexity than many organizations can handle … or than their stakeholders can easily grasp.
For our clients — and for us at EY — it is more important than ever that we make our goals, strategies and methods transparent and easy to understand.
The search for simplicity could take us in some unconventional directions. Here’s one example: to take full advantage of convergence, firms may need to drop the “wealth manager” tag for a more holistic label.
Why do I say that? To younger investors, “wealth management” is more likely to represent a complex process than a clear benefit.
Millennials are excited by purpose, unique experiences and connectivity — probably more so than creating wealth.
Changing the label would help investors and consumers see the industry in a different light. And it could help firms to focus on clients’ life goals and motivations, thereby creating greater financial well-being.
As convergence accelerates and complexity grows, the need for collaboration — and simplicity — is crucial to lasting success. The goal of my upcoming blog series is to bring new thoughts and plain speaking to this subject in hopes of achieving better outcomes for the industry and its end clients.
This blog is part of a series from Mike Lee on convergence in wealth and asset management.