NorthStar Report Reveals Why Wealth Management Firms Struggle to Meet Client Needs

San Francisco, CA – 30 July 2008

Serious Gap Identified between Firms’ Current Processes and Holistic, Personalized Services Required by Wealthy Clients

A report released today by NorthStar Systems International, Inc., a leading provider of wealth management software to financial services institutions, reveals the vast majority of wealth management firms are unable to service affluent clients effectively. The NorthStar Wealth Manager Challenge Quiz™ Report documents that firms are only able to provide the holistic and personalized service required by clients less than “on occasion” and at these service levels, firms are acting more like traditional financial advisors than true wealth managers. The report also indicates that lack of automated processes is likely the main reason why firms are unable to provide best-in-class service to every client every time.

Using an online quiz, NorthStar polled 5,500 wealth management contacts worldwide about how frequently they were able to offer best-in-class processes and client service. NorthStar received responses from business, technology and operations executives as well as financial advisors. Respondents spanned all major segments of the wealth management industry including banks, broker-dealers, insurance companies, family offices, registered independent advisors and asset managers.

“This survey is an industry check up report. In January, the industry told us that improving overall wealth management processes was the best way to scale,” said Collin Cohen, president, NorthStar. “The results of the recent quiz clearly echo that overall wealth management processes can be significantly improved and are likely one of the main obstacles that prevent firms from providing clients and advisors the capabilities and services they want.”

Report Objectives and Key Findings:
The primary objective of the report was to understand the state of overall wealth management processes, a key determinant of firm profitability.

State of Overall Wealth Management Processes:
• Firms scored an average of only 32 out of 80, indicating a serious gap between what most firms provide and what wealthy clients demand in terms of holistic and personalized service for every process throughout the wealth management lifecycle.
• Critical process weaknesses for all firms include client reporting, investment policy statements, client profiles, 360-degree client views, and overall integrated workflows.

The second objective of the report was to determine who is systematically operating as wealth managers providing holistic and personalized service.

State of Client Service:
• 87% of respondents are currently operating as traditional financial advisors or investment generalists versus “wealth champions or wealth managers.”
• Less than “on occasion” are firms able to provide holistic and personalized service to clients

“It’s unfortunate that firms are only able to provide best-in-class service to clients on occasion,” noted Bob Skea, chief operating officer, worldwide field operations, NorthStar. “Yet this industry-wide lack of automated processes may help explain why so many firms are struggling to scale their business and achieve profitability.”

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