Since the decline in stock markets during 2001 and 2002, many PCAMs have been hit by a decline in AUM and new business and hence revenues. Some notable players have retrenched or cancelled purely online propositions and have refocused on relationship-based business models. The emphasis is now on cost reduction, and maintenance of the existing franchise of clients
The cost of relationship management has become a major issue both because good relationship managers are expensive and because PCAMs perceive they have many lower scale portfolios which do warrant the “full service”. The instinctive response is therefore to “segment” the clients based on portfolio size and to increase the client/RM ratio, thereby reducing servicing costs.
Although this may be part of the answer, in this article John Lawrence argues that it could have damaging effects if it is the sole thrust of the sales strategy, and that new information technologies and behaviours are also required to ensure an effective approach to new business development.
