Capability Mapping for Wealth Management Firms

1. Mastering Wealth Management Capability Mapping www.capstera.com 1

2. Transform Your Firm's Strategic Vision into Actionable Architecture In the rapidly evolving wealth management landscape, firms ▪ face mounting pressure to deliver exceptional client experiences while optimizing operational efficiency and navigating complex regulatory requirements. Success demands a clear understanding of organizational capabilities and their alignment with strategic objectives. A Business Capability Map is the foundational blueprint that ▪ connects your wealth management firm's strategic vision to its operational reality. This powerful tool enables targeted transformation, technology rationalization, and strategic decision-making that drives competitive advantage by providing a structured, comprehensive view of what your organization does—independent of how it's done. www.capstera.com 2 2

3. Understanding Business Capability Mapping Fundamentals 1 Business Capability Mapping provides a structured representation of what a wealth management firm does to fulfill its mission, independent of organizational structure or technology implementation. This approach offers a stable framework for strategic analysis and transformation planning. ▪ Capability Definition: A business capability represents a discrete "what" a wealth management firm does, encapsulating the people, processes, information, and technology needed to deliver specific business outcomes. ▪ Strategic Context: Capability maps create a common language that bridges the gap between executive vision and operational execution in wealth management organizations. ▪ Organizational Neutrality: Effective capability models transcend organizational boundaries, focusing on stable business functions rather than volatile reporting structures or personalities. ▪ Transformation Foundation: Capability assessment provides the analytical basis for prioritizing investments, identifying redundancies, and targeting improvement initiatives across the wealth management value chain. ▪ Architectural Alignment: The capability map serves as the linchpin connecting business strategy to operational models, process design, and technology architecture. www.capstera.com 3

4. The Anatomy of a Wealth Management Capability Map 2 A comprehensive wealth management capability map follows a hierarchical structure that organizes capabilities from broad categories to specific functions. This structured approach ensures complete coverage of the business while enabling appropriate focus. ▪ Capability Levels: Effective maps typically employ 3-4 levels of hierarchy, from Level 1 capability domains to Level 3-4 specific functions that support wealth management operations. ▪ Classification Framework: Capabilities are typically organized into strategic, core, and supporting categories that reflect their relationship to the wealth management value chain. ▪ Descriptive Elements: Each capability includes clear definitions, performance indicators, value drivers, and other metadata that contextualize its role in the organization. ▪ Relationship Mapping: Connections between capabilities illustrate dependencies, information flows, and collaboration requirements across the wealth management ecosystem. ▪ Governance Model: Capability ownership and stewardship designations establish clear accountability for performance and evolution of each business function. www.capstera.com 4

5. Core Capability Domains for Wealth Management 3 Wealth management firms require specific capability domains that reflect the unique nature of their business. These domains form the foundation of a comprehensive capability map tailored to the industry. ▪ Client Relationship Management: Capabilities encompassing client acquisition, onboarding, service delivery, and relationship nurturing throughout the client lifecycle. ▪ Advisory Services: Core capabilities that enable financial planning, investment management, estate planning, and other specialized advisory offerings. ▪ Investment Operations: Operational capabilities supporting portfolio management, trading, performance measurement, and investment administration. ▪ Product Management: Capabilities for developing, managing, and delivering investment products and services that meet wealth management client needs. ▪ Risk & Compliance: Functions ensuring regulatory adherence, risk assessment, and fiduciary responsibility fulfillment across all wealth management activities. www.capstera.com 5

6. Building Your Capability Mapping Team 4 Successful capability mapping requires the right team with appropriate expertise and representation across the wealth management organization. This diverse team ensures comprehensive and accurate capability identification. ▪ Executive Sponsorship: Senior leadership support provides the authority and resources needed for successful capability mapping and subsequent transformation initiatives. ▪ Business Architecture Lead: A dedicated architect with capability modeling expertise guides the methodology, facilitates workshops, and ensures consistent application of principles. ▪ Business Domain Experts: Representatives from key functional areas contribute deep domain knowledge about wealth management operations and client service requirements. ▪ Technology Stakeholders: IT participation ensures capability definitions consider current and future technology enablement across the wealth management platform. ▪ Transformation Leaders: Change management and strategic initiative leaders provide context for how capability assessments will drive improvement priorities. www.capstera.com 6

7. Did You Know According to a 2024 Gartner survey, wealth management ▪ firms with mature capability mapping practices achieve 29% higher client satisfaction scores and 23% better operational efficiency compared to industry peers. www.capstera.com 7

8. The Capability Mapping Methodology 5 A structured, collaborative approach to capability mapping ensures comprehensive coverage and organizational alignment. This methodology balances efficiency with thorough stakeholder engagement. ▪ Discovery Workshops: Facilitated sessions with business stakeholders identify and define capabilities across different domains of the wealth management business. ▪ Documentation Standards: Consistent templates and metadata models ensure capabilities are documented with appropriate detail and contextual information. ▪ Stakeholder Validation: Iterative review cycles with domain experts verify the accuracy and completeness of capability definitions and relationships. ▪ Visualization Techniques: Graphical representation of the capability map enhances understanding and communication across the wealth management organization. ▪ Publication Approach: Distribution of the capability map through appropriate channels ensures accessibility for various stakeholders and use cases. www.capstera.com 8

9. Accelerating Value with Pre-Built Capability Maps 6 While custom capability mapping delivers value, leveraging pre- built and customizable maps significantly accelerates time-to- value while reducing resource requirements and implementation risks. ▪ Time Compression: Pre-built maps reduce development time from months to weeks by providing industry-standard capabilities that require only customization rather than creation from scratch. ▪ Best Practice Integration: Industry-specific maps incorporate wealth management best practices and regulatory requirements that might be overlooked in custom development efforts. ▪ Resource Optimization: Purchasing established maps dramatically reduces the internal effort required from scarce business architecture and domain expert resources. ▪ Risk Mitigation: Proven models minimize the risk of capability gaps, structural issues, or methodological flaws that can undermine the value of capability-based planning. ▪ Accelerated Assessment: Starting with a comprehensive model allows organizations to move quickly from capability definition to the more valuable phases of assessment and transformation planning. www.capstera.com 9

10. Capability Assessment Dimensions 7 Once capabilities are mapped, wealth management firms must evaluate them across key dimensions to identify improvement opportunities and transformation priorities. ▪ Strategic Alignment: Assessment of how each capability supports overarching business strategy and competitive differentiation in the wealth management marketplace. ▪ Performance Evaluation: Analysis of capability effectiveness and efficiency against industry benchmarks and internal performance targets. ▪ Maturity Measurement: Evaluation of capability sophistication using defined maturity models that span from basic to optimized implementation. ▪ Technology Support: Assessment of how well current applications and infrastructure enable each capability across the wealth management value chain. ▪ Risk Exposure: Identification of compliance, operational, and strategic risks associated with current capability implementation and controls. www.capstera.com 10

11. Capability-Based Investment Planning 8 Capability assessment findings drive targeted investment in areas that deliver maximum strategic value. This approach ensures transformation resources focus on the most impactful opportunities. ▪ Gap Prioritization: Structured evaluation of capability gaps against strategic importance identifies the highest-value improvement opportunities for wealth management operations. ▪ Initiative Alignment: Mapping proposed projects to capability gaps ensures investments directly address specific business needs and strategic objectives. ▪ Portfolio Optimization: Capability-based portfolio management balances investments across strategic, core, and supporting capabilities for holistic improvement. ▪ Technology Roadmapping: Application and infrastructure planning leverages capability needs to define target architecture and implementation sequencing. ▪ Resource Allocation: Capability prioritization provides the analytical foundation for allocating limited transformation resources to areas of greatest business impact. www.capstera.com 11

12. Did You Know McKinsey research indicates that wealth management ▪ firms using capability-based investment planning achieve 34% higher ROI on transformation initiatives and reduce project failures by 28% compared to traditional planning approaches. www.capstera.com 12

13. Process and Capability Integration 9 While capabilities define what a wealth management firm does, processes describe how those capabilities are executed. Integrating these perspectives creates a comprehensive operational view. ▪ Process Architecture: Capability maps provide the organizing framework for process hierarchies, ensuring comprehensive coverage of all wealth management activities. ▪ Capability Realization: Process models illustrate how specific capabilities are implemented through sequential activities, decision points, and handoffs. ▪ Performance Alignment: Integrated capability and process metrics create a holistic view of operational performance across the wealth management value chain. ▪ Improvement Targeting: Combined capability and process analysis pinpoints specific workflow enhancements that will strengthen overall capability delivery. ▪ Governance Integration: Aligned capability and process ownership clarifies accountability for both what gets done and how it gets done in wealth management operations. 13 www.capstera.com 13

14. Technology Rationalization Through Capability Mapping 10 Capability maps provide the foundation for optimizing the technology portfolio that supports wealth management operations. This alignment reduces redundancy while ensuring adequate capability enablement. ▪ Application Mapping: Associating applications with the capabilities they support reveals redundancy, gaps, and strategic importance across the technology portfolio. ▪ Investment Prioritization: Capability-based assessment highlights where technology investments will deliver the greatest business impact for wealth management operations. ▪ Architectural Alignment: Capability needs inform technical architecture decisions, ensuring technology solutions effectively support business requirements. ▪ Build vs. Buy Decisions: Capability strategic importance guides make/buy/partner decisions for technology solutions across the wealth management platform. ▪ Legacy Modernization: Capability assessment helps prioritize which legacy systems should be modernized first based on business criticality and performance gaps. www.capstera.com 14

15. Capability-Based Operating Model Design 11 Capability maps inform optimal organizational structures by clarifying what functions must be performed regardless of how they are organized. This approach ensures the operating model supports strategic priorities. ▪ Organizational Alignment: Capability analysis identifies optimal groupings of related functions to inform reporting structures and team configurations. ▪ Shared Service Opportunities: Capability assessment reveals functions that can be centralized to improve efficiency and quality across the wealth management organization. ▪ Sourcing Strategy: Strategic importance and differentiation potential of capabilities guide decisions about which functions to perform in-house versus outsource. ▪ Talent Requirements: Capability definitions clarify the skills and expertise needed to effectively deliver each function within the wealth management firm. ▪ Governance Framework: Capability accountability models inform decision rights, policy ownership, and oversight mechanisms for the operating model. www.capstera.com 15

16. Using Capability Maps for M&A Integration 12 During mergers and acquisitions, capability maps provide invaluable frameworks for analyzing synergies, integration planning, and target operating model design in wealth management firms. ▪ Due Diligence Support: Capability-based assessment of acquisition targets provides structured analysis of operational strengths, weaknesses, and compatibility. ▪ Integration Planning: Common capability frameworks create a shared language for mapping processes, systems, and organizational structures between merging entities. ▪ Redundancy Identification: Capability mapping across both organizations reveals duplicate functions, technologies, and resources that can be consolidated. ▪ Best Practice Selection: Capability maturity comparison guides decisions about which operational approaches should be retained from each organization. ▪ Cultural Integration: Shared capability models help bridge organizational differences by focusing on objective business functions rather than subjective practices. www.capstera.com 16

17. Client Experience and Capability Alignment 13 Client experience design must connect directly to the capabilities that enable each client interaction. This alignment ensures the wealth management firm can deliver on its client experience promises. ▪ Journey Mapping: Client journey stages link directly to the capabilities required to deliver each interaction in the wealth management relationship. ▪ Capability Gaps: Experience design identifies new or enhanced capabilities needed to support desired client experiences across digital and human channels. ▪ Measurement Integration: Client experience metrics align with capability performance indicators to create end-to-end visibility of experience delivery. ▪ Prioritization Framework: Client impact assessment of capability gaps focuses transformation investments on improvements with the greatest experience benefits. ▪ Channel Enablement: Capability assessment across channels ensures consistent experience delivery whether clients engage through digital, advisor, or hybrid touchpoints. www.capstera.com 17

18. Regulatory Compliance and Capability Management 14 In the heavily regulated wealth management industry, capability maps provide critical support for compliance management, control implementation, and regulatory change preparedness. ▪ Regulatory Mapping: Capabilities link directly to applicable regulations, creating traceability between business functions and compliance requirements. ▪ Control Framework: Capability models provide the structure for documenting control objectives, activities, and responsibilities across the organization. ▪ Risk Assessment: Capability-based risk evaluation ensures comprehensive coverage of potential compliance vulnerabilities across all business functions. ▪ Regulatory Change Impact: New regulatory requirements map to affected capabilities, enabling targeted implementation planning and resource allocation. ▪ Audit Support: Capability documentation provides structured evidence of control environments and regulatory adherence for internal and external auditors. www.capstera.com 18

19. Evolving Your Capability Map 15 Capability maps are living documents that must evolve as the wealth management industry and your firm's strategic priorities change over time. A structured governance approach ensures ongoing relevance. ▪ Review Cadence: Established schedule for capability map review ensures regular updates that keep pace with industry and organizational changes. ▪ Change Management: Formal processes for proposing, evaluating, and implementing capability model changes maintain structural integrity over time. ▪ Impact Assessment: Changes to the capability map include analysis of effects on related artifacts, including process models, application portfolios, and transformation roadmaps. ▪ Version Control: Clear versioning and change documentation provides audit trails and historical context for capability evolution over time. ▪ Communication Plan: Structured approach to communicating capability model changes ensures stakeholders understand and adopt updated versions. www.capstera.com 19

20. Takeaway A well-designed Business Capability Map transforms abstract wealth management strategy into concrete operational focus by providing a comprehensive, stable view of what your organization does. By establishing this foundation, firms can prioritize investments, align technology with business needs, optimize organizational structures, and accelerate transformation initiatives. The capability-based approach ensures that every improvement directly supports strategic objectives, enhancing your ability to deliver exceptional client experiences while optimizing operational efficiency in the competitive wealth management landscape. 20 www.capstera.com 20

21. Next Steps 1. Assess Your Mapping Readiness: Evaluate your organization's business architecture maturity and available resources to determine whether building a custom capability map or purchasing a pre-built industry model would deliver better value. 2. Secure Executive Sponsorship: Identify and engage a senior leader who understands the strategic value of capability mapping and will champion the initiative across the organization. 3. Establish Your Mapping Team: Assemble a cross-functional team with the appropriate business and technical expertise to develop or customize your wealth management capability map. 4. Implement a Phased Approach: Begin with high-level capability domains and progressively elaborate, focusing initial detail on areas most critical to current strategic initiatives. 5. Connect to Transformation Planning: Integrate capability assessment findings into your strategic planning process to ensure investments target the capabilities with the greatest impact on competitive differentiation and operational excellence. 21 www.capstera.com 21

22. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 22 www.capstera.com 22

23. Thank you Like | Share |Comment |Repost www.Capstera.com www.capstera.com 23