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Banks Struggling To Win Wealth Management Business

Wednesday, March 12, 2014

Many banks are looking toward new revenue opportunities, particularly from fee-based business like wealth management, according to the inaugural Fidelity Bank Wealth Management Study, released by a division of Fidelity Investments.

Fidelity Institutional interviewed more than 140 senior bank executives. Over half (55 percent) of the bank executives who participated in the Fidelity Bank Wealth Management Study expected the revenue contribution from their wealth management practices to grow 25 percent or more in the next five years.

Although the future of wealth management appears positive for banks overall, some challenges remain. One such challenge is changing investor perceptions, the study says. Eighteen percent of Pacesetters (banks whose wealth management practices contribute more than 20 percent of overall revenue) felt clients think banks lack the investment expertise or breadth of services that other channels offer. As one banker put it, banks need to "overcome the perception by some that a bank is only there for loans and deposits and that wealth management is not a strength of an individual bank."