The era of the Independent Relationship Manager is here 

Keith Willey, WELREX® board member and adviser, shares his insights on entrepreneurialism in Wealth Management

Over recent years, the business world has seen a sea change in how professionals view big companies: the implicit employment contract has changed, technology has impacted how people add value, and the expectation of a life in service to a company has almost disappeared.  Entrepreneurship has emerged not just as a lifestyle choice but as a viable alternative route to achievement, reward, and recognition. Industry by industry the forces that bind an employee to a company have loosened.  Some professions, though, have been late to adapt and in the world of wealth management, the consolidation of smaller players into bigger ones can give the false impression that the safest place is in that big glass head office.  In this industry, we are at last seeing the emergence of the entrepreneurial alternative, especially for those in Relationship Management.  

Breaking out of the corporate career has become natural and even expected for, say, the computer science professional for whom it’s accepted that they may dip in and out of a salaried job in large companies, entrepreneurial companies, or working freelance.  For a Relationship Manager, though, it might seem a bit scarier – unlike the coder you cannot ‘create’ a product on your laptop.  However, a closer inspection of what being an RM involves shows that there is indeed a viable alternative to the traditional, established players. 

The drivers for this are:  

• Industry consolidation  
• Technology enablement  
• Changing demands of the newer generation of client  

Consolidation amongst traditional players has turned them into ‘factories’ where scale in wealth management is key.  They scale and reduce costs by standardising everything and adding volume to fixed systems.  In this scenario how do we interpret the role of the Relationship Manager?   

The job is to just represent the ‘factory’, present the product range and smooth the customer’s interface with the system.  From the corporate viewpoint, this is exactly what you want and entrepreneurial behaviour from an RM is threatening to scalability.  It is compounded by the fact that clients with less than $5-10 million as an entry ticket – especially from Emerging Markets – often find that firms are uninterested in their business, despite them being important potential clients that deserve corresponding treatment.

So long as this scaling strategy is pursued, the RM’s job will be to compromise their own interpretation of client needs and frequently their own sense of autonomy. 

Some RMs see the bank or multi-family office brand on their business card as a sign of safety and are content to serve the corporate strategy.  Other RMs, however, see their priority as being the best advisor to their client and regularly consider what life would be like just to focus on that relationship and not simply distribute the corporate product.  Industrialisation always leads to disaffection for independently-minded individuals.  

The technological advances that we are now seeing are a direct result of the commoditisation of the wealth management industry.  The industry needs volume, has built scalability into the investment management processes and so naturally they are opening access to outside distribution routes.  Most large firms have been running projects to build their own technology platform or app to address the customer-facing aspects and administration tasks. Technology enables this so that now an investment portfolio can be assembled quite easily – investment management has become a “plug and play”.  Those wonderful investment options that your company claims are exclusive to its customers?  Not usually exclusive anymore but if they are, there are equally effective alternatives that can easily be accessed.  Technology is key to the disintermediation of wealth management.  An RM wondering whether they can continue to provide excellent investing solutions to clients from the position of being an independent can be confident that this is possible.  The advance in technology makes assembling and managing such a portfolio relatively easy.     

Meanwhile, the market is in flux: wealthy individuals are increasingly receptive to technology and alternative approaches, their children and successors more so.  Many HNW clients even made their money in their own tech businesses – so they are believers in innovation of all sorts.  The cosy restaurant chat with the well-dressed advisor is still nice but really rather old-school.  It’s like no other relationship they have and feels so out of date.   

Relationship Managers are best positioned to understand what their clients really want.  They probably share investment thoughts with clients over WhatsApp and similar already, but the drag of corporate systems weighs heavily on their ability to follow up and delight their client.  Furthermore, with big wealth management institutions making periodic sweeping changes to the profile of clients they can or wish to serve, an RM is always in danger of having to divorce their client on the firm’s behalf.  

So, technology-led change is already happening both within established wealth management institutions and led by the new market entrants.  A key point of pivot is in the still-essential position of Relationship Manager – the role that interprets and anticipates client needs.  It’s the most important aspect of wealth management and can at last be freed from the compromised offering of a single firm.   

Whilst existing well-known institutions can still serve the purpose of providing highly regulated legacy services (such as custody, brokerage, and lending), RMs can still end up feeling constrained and unable to fulfil their full potential. In the API economy, it has become relatively easy to manage your clients through other brands and serve as a smart layer connecting client demand with market supply, providing unbiased value-adding services in addition to a more traditional offering. Furthermore, the legal and regulatory context has never been more conducive to an RM becoming independent. 

This is the vision that the WELREX® team aims to deliver – a platform where clients and Independent Relationship Managers (IRMs) can together agree on solutions and pick from best-of-breed offerings, all enabled with technology that delivers the desired client outcomes more conveniently and efficiently.  For the RM, it represents a realistic way to step out of the stifling corporate bureaucracy and into the fresh air of their own entrepreneurial business.  

It’s the way to realise the ambition of the ‘Relationship Manager of the Future’, as a successful IRM with WELREX®. 

Register now to see how WELREX^®can help you develop your business.

Or connect with our founder and CEO Yevgeni Agerd yevgeni@welrex.com to learn more.