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Pricing in wealth management

2012

Times in wealth management have been difficult since the recent developments in the financial markets. Many clients are unsettled and are taking a long, hard look at what services their wealth managers provide – another reason to think about implementing a systematic pricing strategy based on the added value for clients.

Many wealth managers are following the current developments of the financial markets with concern. Not so much because they are running out of investment ideas in the wake of the resurging financial crisis. Rather, they are worried about whether the recent turbulences in the international financial markets will strangle the recovery in wealth management. From 2010 to 2011, managed assets dropped 2.6% to EU R 26.9 trillion. This had a major impact on the earnings of wealth managers, since most pricing models continue to be volume-driven.

One way to alleviate the competitive and market pressure is to employ a consistent pricing strategy. This not only gives you the edge over your competitors, it also improves your potential earnings by a considerable amount. Roland Berger's data indicates that implementing a systematic pricing system generates a 5-15% increase in earnings, depending on how competitive your existing price list is and to what extent you allow discounts.

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