Two major banks merged, each with similar sized wealth management divisions. There were a broad range of differences, such as in the rate schedules, external manager fees, how the banks charged for proprietary fund investments, and how the products were grouped for pricing consideration.

The goal was to come up with fee schedules and pricing policies to fit management objectives, which included minimizing client impact, aligning products between the two organizations, and taking advantage of the best-practices for pricing found in each of the legacy institutions.

With data loaded to our Q4 Wealth Management System from both legacy bank systems, Quantifacts began by showing comparisons of the impact from using the opposite schedules on each book of business. Working interactively with management, we tested a variety of approaches to pricing and product adjustments in order to support the bank in determining optimal schedules for the combined organization.

The bank's internal reports showed them consistently one of the top new business performers in the U.S. Yet their bottom line revenues and profits were flat or declining. Our reports told a different story. The problem turned out to be that their financial reporting used a number of anecdotal reports and reports claiming new business credit for accounts and additions with inadequate accounting for accounts lost and distributions. Without proper controls, there is a tendency in the industry to count the wins and avoid stating the losses. This project resulted in the client switching to Quantifacts reporting for all wealth management revenues. These reports deliver properly balanced reporting of new, closed, transferred accounts and a full explanation of the cause of fee change from new accounts, closed accounts, market impact, deal change, changes caused by additions and distributions, etc. These reports let the user drill down to the account level to see the detail for new and lost business and exactly which accounts were responsible for the change in revenue.

Based on results from the Fiserv/Quantifacts Wealth Management Industry Survey, the bank learned of an opportunity to raise prices and remain competitive. The head of Wealth Management used our projections of revenue opportunity as a goal for his staff to meet in the upcoming fiscal year.

We immediately began two simultaneous projects to:

• Design and test optimal fee schedules to meet plan, and
• Design and install a technology solution to implement the fee initiative with maximum speed and effectiveness

For the fee schedule research, we analyzed the products and markets vs. top competitors and worked with the bank's Fee Committee to define pricing objectives and desired competitive positioning. A specific objective was to eliminate the base fee, a fee that client advisors and new business officers complained bitterly about as they felt it was difficult to explain.

We ran live fee modeling sessions with the Fee Committee, which allowed management to understand pricing constraints and feel confident that we achieved the optimal fee schedules to fit their objectives and meet the revenue goal.

The goal of the technology project was to maximize the fee implementation. We worked with Quantifacts' technology and bank programmers to rapidly deploy a browser-based fee tool for the relationship officers and managers to use in reviewing and implementing the new fee schedules across accounts. If officers added an adjustment to the fee, the account would be routed to one of three levels of management for approval, depending on the size of the discount. In addition to minimizing discounts, the application automated communications and fee schedule implementation within Trust Operations resulting in a months-quicker roll-out and revenue recognition increase.

The bank was considering moving a significant portion of its accounts from traditional proprietary investment management where the bank makes all investment decisions, to an open architecture platform where outside managers may be hired to manage all or part of the assets. The study included trial 'pass through' fee schedules, where the cost of outside managers would be passed through to the customer, as well as bundled prices where the bank would charge the same price regardless of which managers worked on the account. In modeling the new fees, we projected changes to fees as well as changes to the bank's costs for hiring outside managers for parts of the portfolios. We compared proposed prices to open architecture prices in the Fiserv/Quantifacts Wealth Management Industry Survey. We projected total fee and profit/loss change using various schedule assumptions.

We compared actual fees to published rates throughout the bank's footprint and worked with management to set goals for reducing discounts. We provided actionable account detail reports by relationship officer, followed by monthly tracking reports showing specific accounts 'touched' and the resulting improvement in substandard fee collection. We measured increased revenues from the individual accounts to the officer, region, and top-of-bank impact. As a result, the bank improved percent-of-standard fee collection from 69% to 74%, resulting in millions in additional annual fees.