5 reasons to add wealth management to your offerings
Financial institutions have been the bedrock of financial stability for individuals and businesses for generations. But as financial landscapes continue to evolve in complexity and dynamism, the conventional spectrum of banking services may fall short of meeting the needs of today's customers.
It's increasingly evident that financial institutions must expand their offerings to encompass wealth management services.
While some financial institutions may initially be hesitant to embrace wealth management, these services can play a vital role in ensuring long-term viability and competitiveness. Moreover, the failure to expand service offerings can expose financial institutions to risk, including customer attrition and reputational damage.
For financial institutions that want to thrive in the current market, wealth management can help ensure their continued relevance and growth.
Here are five ways wealth management services can benefit your financial institution:
1. Fulfilling diverse financial goals
Wealth management services encompass an array of financial planning and investment solutions, each tailored to facilitate unique financial goals.
From securing a comfortable retirement to funding education or preserving one's estate, these services are indispensable for financial institutions to provide. Without access to these services, customers may seek external financial advisors, inadvertently diverting business away from your institution.
2. Strengthening customer relationships
Wealth management services act as the linchpin in fortifying the relationship between financial institutions and their customers.
By offering comprehensive financial planning and investment guidance, your financial institution becomes a trusted ally in your customers' financial journeys. Not only does this help build loyalty, it elevates their lifetime value since they’ll be more likely to centralize their financial activities within your institution.
3. Diversifying revenue streams
Sustained financial stability hinges on a diversified revenue stream.
Wealth management services give financial institutions an additional source of income beyond their conventional banking products and services. Be it through fees, commissions or management charges, the revenue generated by wealth management can significantly bolster profitability, enhancing your institution’s ability to stay resilient in economic downturns.
4. Keeping pace with specialized competitors
In an era dominated by specialized financial firms and automated robo-advisors, financial institutions run the risk of losing customers to competitors if they overlook wealth management services.
Many customers are in pursuit of specialized knowledge when managing their investments and pursuing their financial goals. By providing in-house wealth management services, your financial institution can go head to head with these competitors, effectively retaining your customer base.
5. Mitigating risks
Failing to offer wealth management services carries its own set of risks:
- Customer attrition: Customers in pursuit of comprehensive financial solutions may switch to institutions that offer wealth management services, potentially decreasing your deposits and revenue.
- Reputation risk: Financial institutions that don’t provide wealth management services may be seen as less comprehensive or less committed to their customers' financial well-being, damaging their reputation.
- Regulatory pitfalls: In certain jurisdictions, financial institutions are mandated to offer investment and financial planning services within specific regulatory frameworks. Noncompliance could lead to legal repercussions and regulatory sanctions.
- Missed revenue opportunities: Financial institutions may miss substantial revenue streams by neglecting the demand for wealth management services.
In the contemporary financial landscape, offering wealth management services is not just a strategic option but an imperative for financial institutions. These services empower financial institutions to cater to diverse customer needs, cement customer relationships, diversify revenue sources and compete with specialized financial entities.
Begin by looking for opportunities to leverage your existing customer base to build a foundation for your new services. By cross-selling and upselling to existing clients, you gain the opportunity to increase wallet share and deepen their relationships with your institution.
How Wipfli can help
Wipfli is ready to help position your financial institution to face tomorrow’s challenges. Our team is committed to helping you grow with holistic solutions in areas including technology, talent management and regulatory compliance. Contact us today to learn more about how we can help take your financial institution further.
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