Improving Wealth Mgmt.

Improving a Wealth Management Company

Background

Our client is one of the major Guernsey-based Wealth Management service providers. Their services cover Investment management, trust provision and currency management for private clients. The business enjoys long standing relationships with both clients and introducers.
The market for Guernsey based wealth management services is likely to show continued moderate growth of 5% to 10%. However, there is a significant change in mix of business underlying this forecasted growth:-

• lower value structures, in particular low value UK resident non-dom business, are in decline and the current economic crisis may slow demand from higher value UK resident non-doms in the short term;
• however, multi-national clients, particularly from Eastern Europe, the Middle East and the Far East are a rapidly growing segment of the market; and
• the funds administration market in Guernsey, in particular of expert funds, is expected to show strong growth.

The forecasted change in business mix and the changes in the marketplace are an opportune time for a review of the business operations to ensure its effectively and efficiently managed.

Consulting Assignment

Our client asked us to undertake a business review to ensure the operations were effectively organized to meet the challenges ahead.

Key Project Activities

Analysis and Design

We undertook a detailed analysis of the activities to understand the scope of potential change. The analysis covered:-

1. Business environment, supplier and customer views
2. Business objectives, strategy, products (investment management, trust management, currency management), structure and culture
3. Key operational processes (efficiency, effectiveness and risk assessment)
4. Cost to serve for the key product areas.

The areas for improvement consisted of:-

1. Business development . New client acquisition rates over the past few years have been low. This is due to:
   • Not targeting those introducers with a greater focus in the growing HNWIs segments
   • Client directors spending too much time on internal responsibilities and historically conducted only limited sales and marketing activities
2. Business Growth. There are income stream opportunities:
   • Fund management opportunities include managing cash assets, FX trades, insurance products and investment monitoring
   • The recent funds initiative has been quite successful so far, and further growth is possible
3. Operational risk. The operating processes for investment management and currency trading had developed over the years. Key areas for change:-
   • Irregular and insufficient management information
   • Little evidence of a systematic “plan-do-review” of trades and exposure
   • Inadequately documented policies and procedures. Plus evidence of policies being circumvented.
4. Operational Efficiency & Effectiveness. There are significant opportunities for improving staff utilisation and recovery rates:-
   • Currently, Administrators, Book-keepers, and Accounts Preparers have a utilisation rate of c.60% and Managers currently have a utilisation of only c.50%
   • This has not been addressed due to a lack in management focus, a weak IT system and poor management information
5. Organisation. There is a need to enhance the ‘bench-strength’ of the manager layer to provide greater support to the directors in client delivery work

We then documented the key areas and nature of the changes required to address the above weaknesses.

Implementation

We put together three change teams and one expert team to develop and implement the changes. The change teams comprised of key members of the client staff pus our consultants and the expert team comprised of our consultants and the CEO. These teams under took the following key activities:-

1. Business Development & Growth (change team)
   1. Business development:-
      1. Identified key customer segments and key business introducers
      2. Developed marketing and contact plan
      3. Allocated responsibility for implementation and changed accountabilities for partners (moving admin to managers)
      4. Rolled out plan
   2. Business growth:-
      1. Developed growth strategies for Fund Management (including cash management), Foreign Exchange and Insurance products
      2. Developed and introduced enhanced reporting and review processes
2. Operational Risk (change team)
   1. Reviewed existing key processes (Fund Management, FX Management) using process map techniques.
   2. Critiqued processes/procedures with stakeholders (including senior management, compliance, operating staff)
   3. Developed robust, effective processes
   4. Developed robust policies and procedures to support the process
   5. Developed robust reporting processes
   6. Prepared implementation plan
   7. Implemented
3. Operational Efficiency & Effectiveness (change team)
   1. Reviewed management data and developed enhanced management information system (short term:- use of existing data and spreadsheets; long term:- new time recording system).
   2. Prepared process maps for the key activities looking at efficiency and effectiveness aspects. Critiqued existing processes with stakeholders and developed more efficient processes eliminating poor utilisation of resources.
   3. Implemented changes.
4. Re-organisation (expert team)
   1. Developed an organisation structure to match the operational process needs
   2. Developed associated skill needs, employee assessment and development plan
   3. Recruited several key managers to support partners.

Client Benefits

The outcome consisted of a plan for growth supported by a re-organised back office with best-in-class operational processes and lower risk:-

The benefits included:-

1. Jointly designed so reduced resistance to change
2. Growth plan, incremental EBITDA:-
   
3. Reduced risk profile (and clean audit)
4. Effective back office