PwC29 February 2016

The wealth management industry is at an inflection point; the ability toaddress changing customer behaviours, regulation and the impact of digitalwill drive success

2Re-inventing Advice for the Digital Age • Singapore

Laggards

Growth

Time

Industry realities

Wealthmanagement

industryinflection

point

New equilibrium

Capitalisers

Traditional sources of revenue and marginsunder pressure, particularly with demise ofcommission income and tax secrecy

Clients’ digital expectations andbehaviours evolving at a retail pace of change

Regulations bearing down, impacting industryeconomics and increasing cost

Industry consolidation and value chainevolution continues at pace

PwC29 February 2016

The UK, an early indicator of global trends, show that traditional economicsof every aspect of the value chain are under significant threat

3Re-inventing Advice for the Digital Age • Singapore

Illustrative revenue trends across the wealth value chain

Administration/AssetServicing

Platforms and wrapper manufacture

Investment solutionsAsset allocation, portfolio construction,

fulfilment

CustomerAccess/DistributionDigital and Face to Face Advice

CommissionEra

(Pre-RDR)20121

Transparency(Post-

commission ban)

c.2018-2020

xxbps xx bps Xx bps

xx bps

Mainstream AM

xx bps

Asset Allocationfor end investors

to create packagedportfolios

Xx bps Xx bps

• Passives/ETFs• Focus on AM pricing and

value• Loss of distribution

power• Consolidation of

distribution

• Aligned to growthof ‘goal-based’investing andretirementsolutions

• Consolidation of advisors and need for‘utility’ platforms/admin. with digitalvalue-added service enablement

• Sunset clause further impactingeconomics – industry consolidationinevitable

• Scale necessary but in itself notsufficient for success – digital operatingmodels key

• New advice-basedbusiness models andshift of buying powertowards customeraccess

• Digital advice enableslow-cost distribution

ILLUSTRATIVE

Source: PwC analysis based on interviews with 60 Board Members in the industry (UK focus) and consumer research on c.4000 consumers

ACTUAL BPS NUMBERS REMOVED FORCONFIDENTIALITY REASONS

PwC29 February 2016

Client expectations are changing fundamentally – creating significantpressure on advisors

4Re-inventing Advice for the Digital Age • Singapore

Source: Strategy& analysis

Better advice

• Information overload, market volatility

• Sound, high-quality advice from experts(in-house and external) and peers

Better remote/online accessibility

• 24/7, “always on”

• My choice of device

• Seamless/cross-channel interfaces

• Online interaction to substitute orcomplement face-to-face

• My definition of usability

More transparencyand wider opinions

More tailored service,more fun

• Reputation and referrals

• Comparison websites

• Ability to switch or combine providers with ease

• Pre-selection of relevantinformation; what do I need to know?

• Services that matter to me and no hassle

• Accurate, easy-to-read reporting

• Fun, emotional connection to brand,gamification

• More frequent touch points

• Access to specialists when I needthem

• Online communities

• More transparency on products,risks and pricing

• Third party opinions/crowdintelligence

PwC29 February 2016

Improve Client Relations - Establish the connection with women

5Re-inventing Advice for the Digital Age • Singapore

Source: UBS, & PwC. (2015). Billionaires: Master architects of great wealth and lasting legacies. Retrieved January 21, 2016, fromhttp://www.pwc.com/gx/en/industries/financial-services/publications/billionaires.html

76%disagree

Needs of women areadequately addressed by the

wealth industry

Advisors have sufficientconnection with women

within the wealth family andeco systems

According to UBS/PwC 2015 BillionairesReport, "Billionaires: Master architects ofgreat wealth and lasting legacies”,

The needs of women are insufficiently addressed, despite the increasing number of femalewealth.

68%disagree

Number of billionaires

Male

Female

time

Growth of female billionaires6.6%

>Growth rate of male billionaires

5.2%

PwC29 February 2016

Improve Client Relations - Establish the connection with children

6Re-inventing Advice for the Digital Age • Singapore

FA/RMs have sufficientconnection with children

within the wealth family and ecosystems

93%disagree

Client’s wealth asset retainedupon their demise from their

children

53%Retention(Children)

The needs of the children withinthe wealth family and eco

systems are inadequatelyserved leading to significant

wealth outflow

PwC29 February 2016

Improve Client Relations - Act immediately when wealth is transferred

7Re-inventing Advice for the Digital Age • Singapore

SurvivingSpouse

50%

Trusts /Foundations

50%

Children

57%

Outflow from the accountwithin 6 to 12 months

Wealth Managers need toproactively address theassociates of their clients to

retain the significant portionof the clients wealth assets.

PwC29 February 2016

Improve Client Relations - For UHNW cater to the specific needs andunderstand dynamics (link to Youtube video)

8Re-inventing Advice for the Digital Age • Singapore

https://www.youtube.com/watch?v=VEZ_UAdpp4M&feature=youtu.be.

PwC29 February 2016

Digital Disruption - market in WM is broad and blurred but is focused ondelivering against 3 primary customer needs

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PwC29 February 2016

Digital Disruption - Established players have spotted the threat and aremoving rapidly to incorporate robo-advice into their propositions

DIY Partner Buy

Aberdeen acquires Parmenion, includingits automated simplified advice tool,

partners with Hymans Robertson to targetpensions opportunity through ‘Guided

Outcomes’

Hargreaves Lansdown

launched Portfolio+, onlinediscretionary services and

exploring robo-advice

Santander in direct tocustomer push after

advice re-entry

Aegon launchesRetiready direct tocustomer platform

Investec Click & Invest is a new simplifiedadvice-based online investment management

service for customers with £10,000 or more toinvest, and is due to launch in late 2015.

Barclays agrees direct tocustomer deal with FNZ

LV to launch an online adviceservice Cora aimed at people

with small pots

Aviva to launch direct tocustomer proposition for

General Investment accountand ISA

Source: PwC analysis, public announcements

DBS applies IBM Watson to itswealth management business to

improve the advice and customerexperience

Following up on its partnership with robo-advisorBetterment Institutional, Fidelity Institutional

Wealth Services announced a collaboration withLearnVest

Schroders acquires an 11.9%stake in Nutmeg Saving andInvestment Ltd, a UK online

investment managerBlackrock acquiresFutureAdvisor

Vanguard pilotingPersonal Advisor Service

– digital & face to faceCharles Schwab launchesIntelligent Portfolios

10Re-inventing Advice for the Digital Age • Singapore

PwC29 February 2016

Digital Disruption - Banks look at new entrants for digital inspiration

Source: 8 securities11

Re-inventing Advice for the Digital Age • Singapore

Services planned to be provided online in 2 years

New entrants are clearly influencing the agenda, many banks are planning Robo-Advisor like capabilities

Financial goal adviceplanning35%

45%

45%

45%

Financial planning simulationtools

Proactive alerts in relation tomarket events

Portfolio simulation tools

PwC29 February 2016

Delivering good client outcomes will require a fully connected andcollaborative client interaction model

13Re-inventing Advice for the Digital Age • Singapore

Now: Simple traditional client-advisor interaction

Increasing client insight, technology, people, process and knowledge enabled change

Next step: More connected clientrelationship with advisor andinvestment strategist (some digital)

Future state: Fully connected andcollaborative model (fully digital)

Advisor

Investmentcounsellor

Risk andcompliance

Client

Face to facephone

Advisor

Investmentstrategist

Risk andcompliance

Face to facephone

Client Investmentcounsellor Client

All channels

• Investment counsellor

• Portfolio manager

• Investment specialist

• Product manager

• Back office

• Risk and compliance

• Investment strategist

• Other

Advisor

PwC29 February 2016

Given external drivers and legacy issues, this evolution will occur inwaves - technology alone will not realise the opportunity

14Re-inventing Advice for the Digital Age • Singapore

2nd wave• Sales pipeline/opportunity

management

• Marketing

• Up-sell and cross-sell

Gr

ea

ter

Imp

ac

t

Customer Technology Maturity

Revenue growth

Client experience

Risk/proof of concept(e.g., complaints management)

1st wave• Consolidation – accounts and

contact management data

• Regulation and compliance

• Reporting and dashboards

3rd wave• Multi-channel/social/mobile

• Self-service via client portal

• Back office integration

For more information contact:

Michiel van SelmOffice: +65 6 236 3388 | Mobile: +65 9272 9209Email: michiel.van.selm@sg.pwc.com

This is a discussion document and does not constitute a contract of engagement with PricewaterhouseCoopers Consulting (Singapore) Pte Ltd.

© PricewaterhouseCoopers Consulting (Singapore) Pte Ltd. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers Consulting (Singapore)Pte Ltd (a limited liability partnership in Singapore), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is aseparate legal entity.