Five issues are constraining growth in bank wealth management; the solution requires a fundamental reset.
Bank wealth managers face an uncomfortable reality: Despite market tailwinds, organic growth is stubbornly low. According to Datos Insights analysis, revenue growth from sales, net of attrition, averages just 3.8% across the industry, barely outpacing inflation.
At our executive roundtable in New York earlier this month, nearly 30 wealth management leaders confronted the root causes of this lackluster performance. A survey around the room revealed no single culprit or silver bullet. Rather, five interwoven issues that collectively constrain growth and, at the same time, mark a path forward.
The “Margin Trap”
Bank wealth margins peak optimally around 32% for the investment management and trust business, excluding private banking. Yet many firms push for higher margins, not through efficiency gains, but often by underinvesting in talent and technology. “We’re starving the business,” one executive admitted.
There is a clear tradeoff. Annual gross sales average about 10% of revenue, and attrition erodes two-thirds of those gains. Breaking this cycle requires a reset, which one leader summarized as “super strategic, super repetitive” messaging across the firm to realign margin expectations in favor of growth initiatives and investment.
Cultural Misalignment
A growth agenda requires banks to reprioritize. Executives emphasized that banks traditionally prioritize risk management. As one noted, budget allocation typically means compliance first, expense savings second, and revenue generation third. This hierarchy must be inverted.
One leader shared a transformation that powered their business performance. The bank redesigned its compensation plan to reward managed assets over nonmanaged accounts, resulting in dramatic growth in its most profitable relationships. By introducing a new pricing discipline (reducing discounts), this executive also strengthened revenue realization without losing clients. Their breakthrough stemmed from a clear philosophy: “We incentivize what we want, and we get what we incentivize.”
The Compensation Ceiling
Datos Insights research into incentives uncovered a core limitation in bank wealth and trust compensation models, one that undermines competitiveness across the industry. Industry reports point to bank advisor attrition exceeding hiring: 7% leave each year, while 4% join, creating a 3% net outflow. Registered investment advisors are the biggest beneficiaries of the migration. For these bank trusts, Datos Insights analysis finds base salaries rising rapidly, over 7% annually, whereas variable compensation trails at a slower pace.
Leading firms are responding by revisiting pay structures, not just pay levels, and investing more in variable compensation for sales and service. Some are using deferred pay (e.g., trailing commissions) and broader bonus pools to strengthen retention and shared ownership. These designs link advisor success directly to sustainable growth.
Technology Gaps and Silo Problems
Rounding out stubborn headwinds from margin pressure, culture, and compensation were fragmented systems and silos. In short, many firms have made client data across lines of business hard to access, limiting wealth management penetration. Separate platforms and systems splinter the client experience. By contrast, one pioneering firm embeds its trust data directly into advisor desktops, reducing friction and boosting referrals.
Defining the Way Forward
The engaging peer dialogue revealed a clear consensus. Sustainable, strong growth will require a fundamental reset in bank wealth management—revisiting margin expectations, reshaping culture, and renewing investment. Leaders agreed that positioning wealth for growth is neither aspirational nor secondary; it’s essential to the future of their firms. Access the data and strategies you need to win in this new landscape in our recent report: Wealth Management Financial Trends and Strategic Opportunities.
