With many expert voices advising how to invest, wealth managers face increasing challenges in remaining competitive. The FinTech and WealthTech founders speaking at the Collision Conference in Toronto give clues about the strategic direction for Wealth Management. To stand out to potential clients, the best wealth managers need to step up their technology and adopt unique strategies to attract and retain clients. While you are at the Collision conference, here are three key strategies by McKinsey to keep in mind that could set leading wealth managers apart from the rest: 1. Creating an institutionalized lead generation system, 2. Building new businesses close to the core or in adjacencies, and 3. Pursuing strategic mergers and acquisitions (M&A).

Create an Institutionalized Lead Generation System: While lead generation is a critical aspect of any business, few wealth managers have fully institutionalized and optimized this process. Often, the reason is political and how to allocate which Financial Advisors to pursue the wealthy, well-known prospective clients and families. Technology will sort out these issues.

By investing in data infrastructure, and advanced analytics technology, wealth managers can develop a centralized and effective lead generation system. This system can help accelerate organic growth by attracting new clients and deepening relationships with existing ones, even in lower-value offerings or adjacent business units. During times of volatility, when money is in motion, having a robust lead generation system becomes even more pertinent. It gives depth such as knowing Next Generation family members and increases the ability of the Financial Advisor to get ahead of succession plans.

The benefits of a well-executed lead generation system are numerous. It enhances the firm's attractiveness to highly sought-after advisors, fosters stronger client relationships, lowers compensation as a percentage of revenue, and creates new opportunities for strategic M&A. While implementing such a system requires investment, the costs should be weighed against the significant benefits they unlock. For instance, acquiring a $1 million relationship can generate $50,000 to $70,000 in advisory fees over a decade, justifying a higher client acquisition cost.

Build New Businesses Close to the Core or in Adjacencies: To ensure sustainable growth, wealth managers must go beyond relying solely on the past ten years’ method of growth which has been depending on market appreciation and advisor recruiting. Developing new, digitally enabled business models tailored to serve existing or new client segments is key. Additionally, tapping into adjacent revenue streams, such as banking, lending, asset management, retirement, or payments, can open new avenues for growth. Clients appreciate their Wealth Management firm acting as a Family Office and doing detailed direct payments to the private school or retirement home, not only their monthly lifestyle payment.

Success in building new businesses hinges on several universal factors. Wealth managers should adopt a client-centric approach, constantly iterate with clients to understand their needs, allocate appropriate funding to ventures, and maintain a link to the core business to leverage existing strengths while remaining agile. The Collision companies can bring fresh approaches and many banks, such as Desjardin, are bringing onboard FinTechs.

Pursue Mergers and Acquisitions (M&A): Strategic M&A plays a pivotal role in the growth strategy of leading wealth managers. Three major M&A themes are expected to shape dealmaking in the wealth management industry in the coming months. Firstly, there will be a focus on platform synergies. Secondly, firms will seek transactions that enable entry into adjacent revenue pools, such as asset management, banking, retirement, or payments. Lastly, wealth managers will pursue acquisitions to gain capabilities crucial for future growth, including digital advice, planning, and wealth technology such as tracking all your financial records with passwords to be able to deal with the unexpected, leaving you incapacitated.

Despite the challenging environment, the best wealth managers understand the importance of making bold moves early. By proactively building resilience through rigourous financial planning and decisive action, they position themselves to weather storms and deliver the sustainable growth UHNW clients expect. As the saying goes, fortune favors the brave, even in times of uncertainty.

In a competitive wealth management landscape, the best wealth managers differentiate themselves through their strategic approach. By creating an institutionalized lead generation system, building new businesses close to the core or in adjacencies, and pursuing strategic M&A, these firms position themselves for long-term success. It is essential for wealth managers to embrace innovation, take calculated risks, and adapt to evolving client needs to thrive in an ever-changing industry.