Case Study

Personal capital: Differentiating within digital wealth management

12 pages
November 2016
Reference: IMD-7-1832

The case introduces a classic digital disruption process applied to a secular sector, wealth management. It explains the current challenges of this industry, which has undergone severe changes following the recent financial crisis. It shows that even an industry for which the main key success factor has been the personal relationship and trust between the client and its advisors, is not resilient to digitalization. The change is driven by technology and rapidly changing consumer habits. Based on the story of Personal Capital – one of the companies on the very forefront of these changes, the case shows how Fin techs can play a part in wealth management and in the long run changes the landscape of the industry thereby disrupting large and well established incumbent players. The case goes in detail to understand if the strategies pursued by Personal Capital: -to position itself as a tech augmented human platform. -To aim at mass affluent market and sizeable accounts; -To consider adjacent sectors such as provision of mortgages and insurance as the next expansion opportunities; are the right strategies to pursue in this market. Furthermore, it researches the financial implications of the strategies also in comparison with the competition in that field. At the same time the case tries to position the financial performances of the companies into a broader development of the industry and competitive forces. The case concludes with multiple dilemmas translated into imminent decisions that need to be taken: What is the right strategy for further market expansion and growth? Should Personal Capital be sold to a large incumbent based on current valuation or go for another round of financing to stay independent? The underlying fundamental question being: do we believe that the new players can take the space of the traditional player and or will they lose the battle against those powerful institutions?

Learning Objective

1) How did the industry structure change with the entry of the disruptors? How might it look in the future? 2) Disruptive innovation and strategies of disruptors to enter the market; why the incumbents are slow to react? 3) How does a business model and specific strategies translate into financials and company valuation? Only size matters? 4) What are the different options a company can take to secure further growth? 5) What is the Job to be done for wealth management including digital ones?

Wealth Management, Digital Disruption, Valuation, Business Model, Financial Services
Northern America, United States of America
Personal Capital, Finance and Insurance, Financial Services
Field Research
© 2016
Available Languages
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