Analytical Diaries

The wisdom of the crowd is a popular trend and many start-ups leveraging crowd-sourcing have scored exceptionally well during their seed financing. So how and when can we apply crowd concepts to Private Banking and Wealth Management? I say the time is now and people are waiting for the appropriate services.

Would you agree to the following statements?

– Ebay has made prices more transparent
– Book and Hotel consumer reviews are gaining traction in consumer purchasing decisions
– I trust my personal network when researching personal finance options

There’s two parallel trends at work when combining Wealth Management and crowd concepts. The social net transformation going on is creating, for the first time ever, a close equivalent to the traditional advisor – client relationship on a virtual platform. All Facebook savvy clients would start to trust their direct network more that their quarterly changing, process and product optimized advisor. The second tend is relying of the truth in large numbers. Many investment decisions are only occurring a few times for the individual client but in large numbers across a specific community. And the public exchange about pro’s & con’s of certain products, or the service quality of certain banks or advisors can leverage that fact. While a few banks and investor communities have started to build such an exchange, a true crowd-sourced private bank is yet to be founded.

Some possible constructs might include:

– timesharing of multiple portfolio managers running a joint, crowd-funded investment fund
– risk & reward sharing by syndication expertise and capital between multiple asset managers
– independent financial advisor can offer expertise for specific client requests out of the crowd

What would be your expectations as a client or as an employee of such a crowd powered wealth manager…