Mad or just disruptive? Part 2 – Say it three times

March 9th, 2007 by under Uncategorized. No Comments.

Hi. To continue on last week’s discussion of disruptive forces in markets and lead to the punchline that explains these at this point inexplicable titles I thought I’d start with a brief discussion of another market in the diverse and complex world of financial services. This is the world of personal asset management. Most commonly referred to as Private Wealth Management or PWM, this world is not only interesting, but interesting people are interested in it, which, well, interests me.

So, we’ll start in the past with the last and most powerful incarnation of old-world personal wealth management, the stockbroker of the 1980’s. Think Wall Street and Gordon Gecko, or Bud Fox even. You, the investor, have some money and you want to use it to make more. Or you’re just sitting at your desk at work and your phone rings, “Hello sir, my name is Bud Fox and I’d like to tell you about some stock.” This may ring somewhat familiar. However, Bud and his friends don’t exist in this capacity anymore because they were displaced by the greatest disruptive force of the 20th century, the internet.

Investors could trade online and therefore had no need for any particular individual to make their trades for them or convince them of the value of a particular stock. Sort of. After the internet the management of private wealth became more about “personal relationships” I put this in quotations because this marketing focus is the best banks and financial service providers can do in the face of a sharp spike in buyer power. Ok, so now they take you personally, but they’re still salesmen to their core. They sell you their management skills to work with your money, for a small fee.

Don’t be impatient, the punchline will be along soon. How would you imagine this market is segmented? Personal wealth of course. Who do you think the banks and financial advisors are most interested in? The people with the most money. Who do you think they are not interested in? Everybody else. If you’re in the middle market, you can talk to someone like Chuck (Charles Schwab), but they’re still missing everyone else. This is where the market asks the question that demonstrates divergence, “What does the average Joe do if he wants his money to work for him in a dynamic (read: risky) way?”

Well market, good question. He pays attention to the current disruptive force in asset management, Mad Money starring Jim Cramer. Here is asset management advice for the everyman presented in a dynamic way that meets a market need. Well done, Jim.