How white label products can increase assets under management

1. Helping today’s affluents become tomorrow’s HNW

As well as appealing to the pool of existing clients, white label solutions help wealth managers to “grow their own” HNW base. 2024 Capgemini research found that individuals holding between $250,000 and $1 million increased at a compounded 
annual rate of 3.8% between 2015 and 2022. Affluent customers want to build their wealth using “digital platforms, particularly mobile apps“, making them ideal candidates for white label solutions. As the research states, the right “self-service” support could help elevate this group to “millionaire next door” status.
Fostering a good relationship early on with branded digital experiences, can also 
increase loyalty after the affluent client has become a HNW. This is where white 
label services more than pay for themselves.
What’s more, the process of “growing” affluent clients into HNWs can add to wealth managers’ AUM too. If 100 affluent clients were to invest £250,000 for example, this would add £25 million, without significantly increasing admin costs as onboarding, compliance and monitoring become largely automated. Rather than manually uploading all the details, issues are flagged to managers if they arrive and the process is largely self-service.
As Capgemini reveals there is a huge market opportunity here. Nealy half (46%) of affluent clients feel underserved and underwhelmed with their wealth manager’s digital offering today.

2. Widening the range of investment products and services available

Taking advantage of tax benefits is at the heart of wealth planning. Naturally, many HNWs will have already maxed out their annual Individual Savings Account (ISA) allowance at the start of the financial year. But what about their children? The latest data shows that 1.2 million Junior ISAs are opened each year.
If HNWs can effortlessly open, view and monitor digital accounts for their children using white label services, it could increase the overall AUM of wealth manager significantly. For example, if 50 clients maxed out two Junior ISAs each year (£9,000 as of 2024), this would lead to an annual increase in AUM of £900,000. If 250 clients did this, that would add £4.5 million yearly, at little-to-zero extra cost to the manager.
With white label solutions, clients could also effortlessly open Self-Invested Personal Pensions (SIPP) and Junior SIPPs for their children. If 50 clients maxed-out a SIPP (£60,000) for themselves each year (with the added +20% tax benefit, in this case £12,000), this would create an extra £3.6 million in AUM. If these fifty clients also filled two Junior SIPPs for their children, the amount would increase to £3.96 million. If that increased to 250, the overall annual increase could come to £19.8 million, with the white label solution carrying the bulk of administrative work.
White label solutions offer an easy way for wealth managers to increase and scale their investment services, without overburdening compliance departments.

3. Freeing up time and expertise for value-adding services

Today’s HNW clients are looking beyond their financial advisor to manage their wealth. 2022 PWC research found that 47% seek extra support with tax planning, 46% with estate and trust matters, while interestingly, 35% want financial guidance for health and eldercare.

Bundling this service in-house could prove hugely lucrative for wealth managers. A boutique firm serving 100 HNW individuals, for example, could expect to generate an extra £564,000 – £5.64 million (if 47% took up the service) a year by offering tax planning at between £1,000 – £10,000 per month.

However, new revenue streams are taking a backseat to manual processes and slow in-house systems. One study found that wealth managers spend just 43% of their working time adding value. “Inadequate technology, unreliable data and compliance burdens” were cited as the core barriers.

Efficient technology, reliable data and automated compliance are key to giving wealth managers back 57% of their time, so they can focus on adding value. The obvious solution for this is a white label service, which can be custom-built to match wealth manager’s exact needs.

What’s more, the cost efficiency gains of white label services could be used to better serve clients, for example, by employing seasoned accountants, estate or eldercare planners.

4. Avoiding clients taking their money elsewhere

More than a fifth (22%) of HNWs abandoned their financial advisor in 2022 in favour of “improved digital capabilities”. And the number is likely to continue as young millennials and Gen-Zs come into wealth. Gartner’s 2023 research found that 38% of Gen-Zs (currently those aged between 12 and 27) will leave a brand if they cannot resolve their own issues online. Dubbed as generation “self-service or no service”, this clientele disrupts the traditional wealth management model. Increasingly, financial advisors will need to turn to “phygital” (blended physical and digital) approaches.

White label services can certainly help to lift the load. Rather than re-inventing the wheel and creating a costly service in-house, financial services are increasingly outsourcing. This has the double advantage of saving vast time and resources, as well as ensuring that the user experience is continuously updated in-line with client expectations.

One study found that bringing in new customers is up to 25 times more expensive than retain existing ones. For HNW and UHNW clients, this cost can be significant. A simple way to maintain and increase AUM is to ensure that the funds already there do not leave.

5. Making it easier for clients to save, invest and engage

Frictionless experiences at the right moment increase the likelihood that people will engage and spend. Mobile applications (apps) are ideal for this. Whenever clients have a spare moment, they can simply take out their phone and browse.

One 2019 report found that customers who use apps spend 37% more money. They also visit 33% more frequently and buy 34% more items. However, since the COVID tech boom, this figure is likely to be a lot higher. Another 2024 study reveals that global App Store spending has increased 3% year-on-year. And today, the average user will spend five hours a day on apps.

For wealth managers, ensuring that their apps are designed for HNW user experiences will go a long way. The statistics suggest that clients will be more likely to engage with the firm more, show interest in the product shelf and deposit larger sums. A straightforward way to do this is with a white label service. A provider like Quai can built the product, and then the wealth manager inserts their logo and branding on top.