Summary
For one of our clients, a leading asset and wealth management (AWM) firm, we conducted a deep-dive analysis providing insights augmenting their efforts to revamp its Online Brokerage Services fee schedule. The client was aiming to evaluate and enhance the current fee structure, analyze trends to encourage positive consumer behavior, and identify revenue opportunities aligned with industry norms.
Our research involved a multi-faceted approach: categorizing service fees and assessing related objectives, analyzing competitors' practices, and studying customer perceptions. This enabled the client to increase fees for selected services, eliminate sensitive fee points, and proactively shape client behavior through awareness initiatives.
The Challenge
A leading AWM firm aimed to revamp its Online Brokerage Services fee schedule with the following objectives:
- Evaluate and enhance the current fee structure to better serve clients
- Analyze fee trends for specific service categories to encourage positive consumer behavior
- Identify revenue opportunities by aligning select services with industry norms
Our Solution
Our domain experts devised a diverse framework to tackle the challenge holistically.
- Analyzed the spectrum of service fees charged to Brokerage clients and categorized them into three different buckets by the nature of these services – Account Services, Cash Management Services, Investment Specific Services
- Assessed each service fee and classified it as either ‘Revenue Generating’ or ‘Behavioral Change’. The idea was to clearly highlight the objective of charging a fee for that service.
- A Revenue Generating fee is levied for recurring events to maximize revenue, like bank wire transfer, broker assisted trading, etc. These are volume-based services and are need based rather than consumer behavior driven.
- Behavioral Change fees are charged to shape client behavior for non-recurring services, not for generating income. For instance, it includes charges for paper statements to promote e-delivery and fees for returned checks to encourage prudence in managing account balances.
- We identified a peer group consisting of the 10 closest competitors, and thoroughly analyzed the fees & charges associated with their services. The result was a comprehensive heatmap that clearly presented the fee figures across various services for each industry player.
- Added another dimension to highlight fee waivers for high investment accounts as it was crucial for understanding competitors' strategies towards high-net-worth clients.
- Studying customer perception of brokerage service fees was crucial for gaining an external perspective on clients' sentiments towards the charges. We examined third-party survey reports to gauge awareness levels, assess whether customers found the fees reasonable, and explored how perceptions varied across wealth tiers and age groups.
Business Impact
Benchmarking Analysis – The assessment provided a comprehensive fee comparison analysis for our client, enabling them to benchmark against their closest competitors. This valuable information allowed our client to pinpoint areas where their fees were either below or above industry standards for similar services.
Key Strategic Areas Identified – The strategic analysis yielded positive results, including the identification of five services with potential for fee increases. Additionally, two services categorized as 'Behavioral Change' were identified as candidates for fee reduction or waiver, which would enhance client retention, foster trust, and strengthen the customer-centric brand image. This information proved vital for the client's decision-making process.
Reduced Time to Market – By collaborating closely with the client and harnessing the advantages of round-the-clock work due to our team being based in India, we successfully expedited the project timeline. Our comprehensive analysis and well-structured deliverables ensured that the project findings were ready to use with the client only needing to add their internal strategic insights.
