Private Credit

Case Prompt

Your client is a large, private financial services company. They offer various kind of products like managed accounts for college education savings, retirement savings account etc in the US with over $5T assets under management. However, they are seeing tightening margins on their financial products and have approached your firm for help.

The majority of their customers are aged 30-50 years old and are enthusiastic about the growing market and want to see their wealth grow. With this in mind, what are some potential avenues for revenue growth?

Case background:

• Geography: Headquartered in NYC, the client serves its customers through 10 regional offices and more than 190 Investor Centers in the United States. With 40,000-plus associates, their global presence spans eight other countries across North America, Europe, Asia, and Australia.
• Products: Client currently provides financial planning and retirement options such as IRAs, annuities, and managed accounts; brokerage and cash management products; college savings accounts; and other financial services for millions of individual investors. Client works with employers to build benefit programs for their employees. Offers clearing, custody, investment products, brokerage, and trading services to a wide range of financial firms. The client is not a bank and does not offer any loan products.
• Competition: Market share leader and competitor financial information is not available.
• Business model: Earn basis point fees on assets under management. Current margins down due to robo-advisors.
• Customers: Majority of customers are 30-50 years old and trend of growing number of retail investors by 10,000 Americans daily has prompted the client to review new products targeting this customer base.
  

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General response summary

• This is a revenue growth case and not profitability, so will focus on revenue. The key here is having a structured approach to identifying new opportunity spaces leveraging the client’s current customer base.
• This case is meant to be driven along by the interviewee, so wait for him/her to do so after each prompt.
• Interviewee should develop a MECE framework that covers most or all of the following examples: existing/new customers, existing/new products (can be illustrated in a 2x2 grid), competitive landscape, entry strategy (build/borrow/buy), market size, risks, regulations, among others.
• If the interviewee does not mention anything about new products, probe further in order to guide him/her towards this direction.