In the dynamic world of wealth management, staying ahead of the curve requires an understanding of the latest organisational trends that are reshaping the industry. This article delves into some of these transformative trends, highlighting how they contribute to more efficient and effective wealth management practices.

This article explores emerging trends in wealth management organizations, particularly the shift towards centralized asset management and specialized portfolio management units. Centralization and specialization are two pivotal trends that are gaining momentum. Centralization focuses on consolidating various functions and services under a unified framework to enhance oversight, streamline operations, and improve resource management.

This trend helps firms reduce costs and maintain a coherent strategy across departments, leading to a more cohesive service experience for clients. On the other hand, specialization emphasizes the development of expertise in specific areas, allowing wealth managers to offer tailored advice and solutions that meet the unique needs of their clients. Together, these trends are shaping a smarter, more client-focused future for financial planning.

Centralized Asset Management

A dominant trend involves centralizing asset management, with the private bank acting as a separate distribution arm. This approach offers several advantages:

  • Leveraging Institutional Expertise: Private client portfolios benefit from the stricter investment discipline and access to institutional asset management capabilities and performance.
  • Enhanced Operational Efficiency: Centralization streamlines product development and delivery, leading to cost savings.
  • Consistent Performance: Investment performance becomes more consistent across client segments.
  • Sharper Focus for Private Banks: Private banks can concentrate on relationship management and sales.
  • Effective Geographic and Client Segment Expansion: Centralized asset management allows for more cost-effective penetration of new markets and client segments without duplicating resources.
  • Talent Acquisition and Development: It facilitates focused talent recruitment, skill development, and career paths for investment and sales professionals.

Several institutions, including Merrill Lynch, Northern Trust, and JP Morgan, have adopted this centralized structure, moving private client portfolio managers from the private bank into a centralized asset management group.

Dedicated Private Client Portfolio Management Units

Within centralized asset management, creating a dedicated private client portfolio management unit can further enhance the model:

  • Strong Client Focus: The private bank maintains a strong client focus, particularly in product development.
  • Tight Product Linkage: It strengthens the connection between product development and distribution within the private bank.
  • Consistent Performance: Private client portfolios achieve consistent investment performance relative to other client segments.

JP Morgan and Merrill Lynch (now BlackRock) are examples of institutions with dedicated private client portfolio management units within their centralized asset management structures.

The Independent Model: Exceptions to the Rule

A limited number of institutions maintain independent organisational structures for asset management and private banking. This approach might be suitable when:

  • Transaction-focused Business Model: The focus is on transaction-based services like IPOs and brokerage, rather than traditional wealth management services like portfolio management, trust, and credit.
  • Focus on Wealth Creation: The target clientele consists of high-net-worth entrepreneurs transitioning from wealth creation to wealth management. Integrated structures can help identify and establish relationships with these clients during the wealth creation phase (e.g., bulge-bracket investment banks).
  • Less Sophisticated Markets: The need for high-touch service and wealth preservation takes precedence over pure investment performance (e.g., Deutsche Bank’s independent model in Europe vs. centralized, product-driven model in the US).

However, it’s important to note that many institutions with independent models are considering a shift towards a centralized manufacturing-distribution model.

Interface Design: Tailoring the Connection

The structure and key features of the interface between asset management and private banking should be designed based on the specific strategies, business models, and target client segments of each unit. Here’s a breakdown of key decision drivers across various business system components:

  • Product Development, Marketing & Business Management:
    • Resource allocation must accommodate the private bank’s strategic demands.
    • Product development interface depends on product nature, economics, delivery, and responsiveness to client needs.
    • Marketing integration hinges on value propositions, product similarity, and existing marketing spend.
    • Profit and loss (P&L) arrangements depend on reporting lines, unit integration, group management information systems (MIS), and revenue/cost matching.
  • Research & Investment Policy:
    • The key challenge is balancing client needs with research excellence and consistent investment performance.
    • The decision to centralize or decentralize the research function depends on investment policy independence needs and cost considerations.
    • The degree of independence in investment policies for private and institutional clients is driven by commonalities in investment styles, client base characteristics, and private client portfolio manager motivation.
  • Portfolio Management:
    • Portfolio manager roles and responsibilities are determined by the relationship management model, investment process nature, and career path considerations.
    • The location, size, and structure of the private client portfolio management function depend on desired client and relationship manager contact levels, the need to leverage asset management synergies, and the relationship management model.
    • The level of investment policy independence granted to private client portfolio managers is based on product customization needs and the applicability of the institutional investment policy.
    • Career paths for private client and institutional portfolio managers may differ due to the nature of the roles and talent acquisition/retention needs.
  • Administration, Support & Execution Functions:
    • The organization of middle-office and support functions should balance cost-effectiveness with the specific needs of each business unit.
    • The decision to centralize or run customized functions depends on cost efficiency, commonality of business requirements, service standards, number of locations, and reporting.


The wealth management industry is shifting towards centralized asset management with specialized private client units. This fosters efficiency, consistency, and a sharper client focus. However, the optimal structure depends on each firm’s strategy and clientele. Understanding key interface design considerations is crucial for seamless collaboration. Wealth managers who adapt to these trends will be well-positioned for success.