January 21, 2008

The wealth management industry is changing. More specifically, the expectations of wealth managers' clients are changing, according to new white paper coauthored by IBM and business intelligence vendor Actuate. Wealthy clients are considering more-sophisticated strategies for managing their assets and as a result, are demanding more from their providers.

According to IBM's research, assets under management in traditional equity and balanced strategies is declining while alternative investments -- including hedge funds and private equity -- are gaining in popularity. This trend is exaggerated by what Actuate and IBM refer to as "the Google effect." The Internet has empowered individuals to track business and market performance in near real time, which has raised the expectations of wealthy clients.

The IBM/Actuate white paper points to six key technology issues that the modern wealth manager must address in order to meet these expectations:

  1. Firms must be able to build reports that rapidly pull together reliable, accurate information from multiple sources to present a holistic, customized view of the performance of a range of products.
  2. Clients need to be able to see, at a glance, the performance of their portfolios in context -- that is, compared with historical performance and with the performance of alternative products.
  3. Information must be tailored to the individual's needs and preferences, and provide goal-based (rather than fund-based) views of progress.
  4. Firms must enable what-if projections and analyses to enable cost and performance comparisons.
  5. Ideally, information must be available in real time, at any time -- typically over the Internet (using the latest Web 2.0 technology offering an interactive experience).
  6. And the online reporting interface must provide a rich, dynamic user experience.