Walls are coming down – Zero fees & zero commissions are accelerating change

Walls are coming down – Zero fees & zero commissions are accelerating change

In Asset and Wealth Management, as more and more products are becoming “free”, a tectonic shift from a product-led model to a service-led model...

IA Fintech Member Insights: ALPIMA  


“Ich bin ein Berliner”

John F. Kennedy’s famous speech in Berlin in 1963 gave people hope in a divided Berlin scarred by a wall. The Berlin Wall, was built in the middle of the night on 13th August 1961, stemming the migrant flows from East to West. On that morning, citizens of Berlin woke up to the harsh reality of segregation, with tragic stories of families, friends and loved ones no longer able to be united.

As suddenly as the wall was built, it came down twenty-eight years later on the evening of the 9th November 1989, when East German officials declared that people were free to cross the border again. People quickly gathered from both sides in jubilation, with memorable images of people demolishing parts of the Wall.


Reversing globalisation?

As we approach the 30th anniversary of this historic event, one wonders what the world has learned from history, as geopolitics seems to have gone into reverse on globalisation.

However, while political “Walls” are being built, barriers of a different kind continue to come down in the real world. In large parts of the globe, voicing one’s opinion, transferring funds and spreading specialised knowledge, to name but a few examples, can be done today without boundaries. Ever faster internet access, ubiquitous mobile devices and the growth of cloud computing have catapulted digital globalisation to stellar heights.


Going to zero

In Asset and Wealth Management, as more and more products are becoming “free”, a tectonic shift from a product-led model to a service-led model has started.

Zero-fee trading, zero-fee ETFs and zero-fee mutual funds are forcing established providers to carefully re-think their business model from end to end and implement profound changes to the operating model. What is at stake is more than profitability, it is relevance.

The announcement of zero equity trading commission by Charles Schwab was supported by a personal statement of its famed founder, that “Schwab has knocked down a lot of the barriers that stood in the way of making investing accessible to all”. His pledge to continue to deliver an “unmatched service”, strongly resonates with discussions we are having with many thought leaders in the Asset and Wealth Management industry. In a recent conversation, a board member of a prestigious wealth manager put it clearly: “How does one remain relevant in a zero-fee world?”

The answer lies in providing differentiated service, true personalisation, better insights through enhanced visualisation, and ongoing engagement to incorporate client feedback and deliver solutions in a timely manner, as events unfold and markets evolve. Asset and wealth managers need to retool their front-office to remain competitive, to stay relevant and to win in a rapidly changing environment. Walls are coming down, time is the enemy and partnering with proven innovators delivers tangible time and cost benefits on the journey to executing a new strategy for a new world.

And if you think that this trend stops at liquid assets, think again – some already use dynamic portfolios of liquid ETF proxies to replicate and hedge illiquid assets such as real estate, corporate credit, private equity and hedge fund exposure, with a lot more to come in the years ahead.

When walls come down, the tide goes out – and this is a big tide. One that calls for thoughtful planning and decisive action, with the right partners.


Please contact us at [email protected] to find out how we can help your firm capitalise on this momentous trend.

View this article on ALPIMA: https://www.alpima.net/insights/2019/oct/16/walls-are-coming-down-zero-fees-zero-commissions-a/

View this article on Medium: https://medium.com/@ilan.heimann/walls-are-coming-down-zero-fees-zero-commissions-are-accelerating-change-d140223052ea

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