Introduction 

Over the past two decades, the financial services industry as a whole has seen a growing homogenisation of products and services and particularly in the wake of the financial crisis of 2008. Yet, while homogenisation is a phenomenon not limited to wealth management, it is within this subset of the financial services industry that its effects have been most keenly felt. The reasons are threefold: regulation, globalisation and technological advances.

As John Allen Paulos once, somewhat trustically, remarked, “Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.” Yet, in the wake of 2008/9, regulators have sought to mitigate risk by imposing stricter checks and balances for products, the fees generated by those products, the companies and staff who create and market them and the clients to whom such services are offered. Wealth management therefore has become a much more expensive enterprise, raising the barrier to entry for smaller boutiques, cutting the sources of fees across products and wealth management platforms and limiting firms from serving clients from jurisdictions which the regulators deem “problematic”.

Wealth management revenue erosion within institutional providers has

led to a substantial sector-wide cutting of overheads and consequent retrenchments. As one of the more client-facing areas of financial services, this has had obvious consequences for clients: fewer relationship managers, higher barriers to entry to receive relationship management services, less active portfolio management, more pooled accounts and fewer portfolio choices.

​

As a parallel development, globalisation coupled with technological advances have facilitated a homogenisation of the global market, removing the inherent inefficiencies within the equity and debt markets and causing a greater correlation between emerging and developed markets – effectively eliminating the value of geographical diversification. Coupled with a low interest rate environment in many developed markets, the net effect has been a reduction in average returns, lower manager out-performance in conventional products and an inevitable reduction in fees to remain competitive. For many larger institutional providers, retaining a competitive edge has necessitated emulation of the products and services of their rivals and, thus, the internal consolidation of these external homogenizing forces.

​​

​For some investors, lack of choice and lower returns have caused a flight to alternative investments, tangible assets or deal-based investing; for others, the search for the best fee deal has perpetuated the “revolving door” of wealth management as clients move between service providers; and for others, stricter “know your client” checks have reduced or eliminated their access to conventional financial services institutions and instruments and pushed them into domestic or regional transactional business. The cumulative consequence of these trends is that clients – the lifeblood of the financial services industry – are being universally under served.