Strategy & Practice Management
Managing a wealth management firm - part 1
Kees Stoute of Hubbis
Nov 29, 2016
Those wealth managers who still spend their time and effort trying to make work what once worked in the past, face - sooner rather than later - the same horrible fate as the dinosaurs, says Kees Stoute.
A successful business is one that offers a product or a service for which clients are prepared to pay, ultimately resulting in a profit.
The focus is usually on creating value, which explains why many successful businesspeople are considered visionaries; they not only see something that other people don’t, but they also master the ability to deploy scarce resources in such a way that the costs of creating the value is lower than the benefit of ‘selling’ this value.
Isn’t that simple?
Conceptually, it is. In practice, however, visionaries tend to be surrounded by skeptics. They meet resistance, face disappointments, lack finances; in short, they have to overcome many obstacles on their way to success.
It is the clarity of their vision that keeps them running and gives them the strength to persevere. The road to success is like running a steeplechase.
And then...
Once they succeed initially, the next challenge emerges: success has a tendency to ‘kill’ the very ingredient of its origin, ie. the hunger to create value.
This phenomenon is better known as ‘complacency’. You have created value, it made you successful, and now you want to continue to enjoy the benefits of selling this same value.
However, the world is changing rapidly. What two years ago represented ‘value’ may today be close to ‘worthless’.
My children don’t know what a fax machine is, whilst I still remember the day that the first fax machine was presented to the world; it was revolutionary.
If you ignore changing realities and continue to spend all resources on keeping past dreams alive, you are destined to fail. We get stressed, work harder, blame the marketing and sales force, and without realising it, we find ourselves trapped in a vicious circle expecting different results even though we repeat the same thing over and over again. Einstein referred to this notion with the word ‘insanity’.
Staying relevant
Why is this relevant for the wealth management industry?
Not too long ago, providing information about the markets, executing transactions and parking assets offshore far away from the prying eyes of the taxman, all represented a value.
With the ongoing technological revolution – offering cheap alternatives – the global coordinated crackdown of crime, including tax evasion, and the commitment of most regulators to protect the interests of consumers, as a direct consequence of the financial crisis,, the business proposition of the past is no longer relevant for today’s business environment.
Creating value in the context of wealth management has a totally different meaning today than yesterday. And tomorrow it will be entirely different altogether.
Only those who conscientiously spend time to continuously reinvent the concept of value – led by the notion that profits don’t come from selling products but instead from creating value for clients – will be able to survive in this highly-competitive industry.
Contact Kees: [email protected]