Investment Industry Needs to Harness Technology to Facilitate Client-Financial Advisor Collaboration, Finds Cap Gemini Ernst & Young and Merrill Lynch Report.

Business Editors/High-Tech Writers

NEW YORK--(BUSINESS WIRE)--June 16, 2003

To attract and retain clients, financial services providers need to facilitate a collaborative relationship between clients and their financial advisers, an experience that requires enhanced technical support, according to the 2003 World Wealth Report published by Cap Gemini Ernst & Young and Merrill Lynch.

Providers failing to do so will struggle to survive the new market realities, the study forecasts.

"The relationship between high net worth individuals and their financial advisers has evolved," explained Alvi Abuaf, vice president and leader of Cap Gemini Ernst & Young's North American securities industry consulting practice, "from the passive role clients exhibited in the 1960s to the self-directed approach they took in the mid-to-late '90s to today's 'collaborative counsel'."

High net worth individuals, or HNWIs, are people with financial assets of at least US$1million, excluding primary residential real estate.

Mr. Abuaf said: "Harnessing technology is the key to facilitating the experience clients desire while simultaneously enabling financial advisers to offer a highly tailored and proactive service."

"Providers must be able to build a comprehensive portfolio of services beyond stock selection and market timing to customize financial plans which incorporate elements such as financial goal setting, risk management, asset allocation and ongoing portfolio rebalancing."

"Furthermore, their HNWI clients are demanding access to their portfolios when and where they want." He said: "Providers must integrate their channels, financial advisors, customer service representative, internet and voice response units to provide their HNW clients with seamless access."

"Beyond serving these needs, providers must address HNWIs' desire for a range of additional advisory services, from basic banking services to sophisticated tax planning, and trust and estate planning," Mr. Abuaf said. "However, to tailor these services to meet each client's individual requirements, providers must have an intimate knowledge of client characteristics. In that respect, HNWIs are looking for a close advisor contact characterized by two-way communication and rapid task-management and supporting technology."

"Building a superior client experience depends on effectively leveraging several key technology enablers, implementing adaptive processes, facilitating efficient workflows and utilizing the next generation advisor technology."

James Gorman, president of Merrill Lynch's Global Private Client group, suggested, "As the search for capabilities becomes more demanding providers may want to look outside of their organization for additional resources."

New Generation Work Stations

"The next generation of advisor workstations, for example, will be critical enablers for improving capabilities and efficiencies of the wealth management processes. They will support the complete relationship with clients, from acquisition to development to retention," said Mr. Gorman. "They will provide the advisor with a substantial platform of functionality - from comprehensive client relationship information to market news, research, proactive alerts and a vast array of products and services - to support all aspects of comprehensive wealth management. The next generation wealth advisor workstations will build a holistic client view that integrates previously stand-alone applications, thus improving client service and advisor productivity."

Mr. Abuaf added: "The new generation of workstations enables a more collaborative relationship between clients and advisors. Technology enables this collaboration."

He also suggested: "To reduce costs and to improve profitability, transforming processes and work flows should become a priority. Best practices include organizing the talent into multi-disciplinary teams, establishing consistent service levels across the organization, implementing a standard wealth management process and measuring client profitability."

Donie Lochan, vice president in the securities industry consulting practice at Cap Gemini Ernst & Young, also suggested: "Providers will have to improve their current internet offerings to build a more complete full-service experience. A full-service internet solution provides clients with the self-service access to basic account information, while at the same time providing advisors with more opportunities to interact with clients on substantive matters through enhanced functionality, planning, transaction and information sharing, and other collaborative advice activities. The right online solution can improve profitability by reducing costs, improving advisor productivity and increasing client satisfaction."

World Wealth Rises Despite Volatile Markets

More broadly, the World Wealth Report noted the number of high net worth individuals worldwide grew 2.1%, just under 200,000 individuals, to 7.3 million people last year. Their combined wealth world rose approximately 3.6% to US$27.2 trillion (25.9 trillion euros) over 2002.

The Cap Gemini Ernst & Young Group is one of the world's largest providers of Consulting, Technology and Outsourcing services. The company helps businesses implement growth strategies and leverage technology. In early 2003, the organization employed approximately 53,000 people worldwide and reported 2002 global revenues of 7.047 billion euros. More information about individual service lines, offices and research is available at www.cgey.com

Merrill Lynch is one of the world's leading financial management and advisory companies with offices in 36 countries and private client assets of approximately $1.1 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions, and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets. For more information on Merrill Lynch, please visit www.ml.com.