The causes of revenue loss
Revenue loss is structural, not accidental. Structural complexity demands structural solutions. Without integrated revenue infrastructure, firms will continue to absorb spillage and leakage as an invisible cost of doing business.

• The hidden cost of operational complexity 

Revenue loss in wealth management is rarely dramatic or immediately visible. It accumulates gradually, embedded in daily operations, and often accepted as the cost of doing business.  

Industry benchmarks suggest firms may lose between 2 percent and 5 percent of annual revenue due to billing errors, mispricing, under-aggregation of assets, and operational inefficiencies.  

A striking theme of many of the interviews conducted for this report was a cultural acceptance of imprecision. Executives repeatedly implied that a gap between “what should be billed” and “what actually gets collected” is normal. Variance is expected. Reconciliations are routine. Delay is tolerated.  

At the heart of these sources of revenue loss is the increasing operational complexity of wealth management firms. The changes many have made to keep pace with the evolving industry – for instance expanding product sets and a mishmash of still-integrating technology stacks – are adding extra gears to once relatively simple machines. Post M&A firms are more complex still, bringing diverse pricing models, fee schedules, client agreements, and adviser practices into a single enterprise.  

• More products, more platforms = more risk 

A major expansion area for the industry is alternative investments: Goldman Sachs estimates that AUM in the alternatives space among individual investors could expand significantly, reflecting a broader shift in portfolio construction toward alternatives.  

But alternative investments are an additional source of complexity. They introduce non-standard pricing, delayed valuations, and bespoke fee arrangements that frequently fall outside traditional billing workflows. Revenue recognition can vary by product, by manager, and by client agreement, making it difficult to gather a clean, real-time view of profitability. Data arrives late, in inconsistent formats, creating downstream challenges for billing accuracy, adviser compensation, and forecasting. And where alternatives require significant legal, due diligence, and operational resources not easily tied to individual accounts, it can be hard to allocate costs appropriately. 

“Alternative assets are where things really get messy – pricing delays, data gaps, non-standard fees. That’s where leakage hides.”
— Chief Operating Officer, wealth manager 

“The challenge isn’t strategy – it is the mechanics of how revenue actually moves through the firm.”
— Chief Operating Officer, independent wealth platform 

Firms are becoming complex for good reasons. But complexity needs to be supported. Firms that invest in standardised processes, clearer governance, and modern data architecture are better able to support their newfound complexity without sacrificing revenue discipline.  

As product and platform complexity grows, revenue integrity increasingly depends on unified data, standardised processes, and consistent pricing enforcement across the enterprise. 

Spillage: when value is lost before billing even begins 

• Under-pricing is a confidence problem

Spillage occurs when firms under-price services or allow excessive discounting due to weak pricing confidence and governance. It represents value that never enters the revenue system.  

Common drivers include a lack of transparent pricing benchmarks, limited visibility into peer pricing, disconnected systems that obscure client-level profitability, and manual or inconsistent discount approval processes.  

Without benchmarks and peer pricing, firms gravitate toward the lower end of their pricing bands. Discounting made at the onboarding stage, for fear of losing clients to competitors, becomes permanent without systematic review: temporary pricing decisions become long-term revenue drag. The revenue loss doesn’t happen all at once, in a way that firms notice easily, but happens incrementally, client by client, discount by discount.

Some firms find data fragmentation creating blind spots that exacerbate the problem. Delays, manual processes, and reconciliation gaps result in revenue being recognised later than intended, or not at all. This form of spillage is especially pernicious because it’s often invisible to firms running their businesses on AUM or high-level growth metrics. 

“Discounts are usually intended to be temporary, but if you’re not careful, they become permanent – and nobody notices.”
— Chief Financial Officer, national advisory firm

Even a single basis point of under-pricing, across a large asset base, compounds into permanent margin loss year after year.

Spillage is ultimately a failure of pricing confidence and governance. The remedy lies in frameworks that protect value before it enters the revenue lifecycle.

• Broken systems create operational drag

A lack of joined-up technology infrastructure remains one of the most persistent challenges for wealth management firms, particularly smaller RIAs and those that have grown primarily through acquisition. When front, middle, and back office systems do not communicate effectively, firms face data inconsistencies, manual reconciliations, and duplicated work across critical functions such as onboarding, portfolio reporting, billing, and compliance.

This fragmentation transforms routine workflows into time-consuming administrative burdens. One executive interviewed this report described running all billing through individual Excel workbooks with three layers of human review – a process praised by regulators but consuming half a full-time employee every quarter.

Research suggests that advisors can spend 60 to 70 percent of their time on non-revenue-generating tasks tied to outdated systems and disconnected processes. The absence of a ‘single source of truth’ for client and household data further compounds inefficiencies, limiting real-time insight into revenue drivers, client profitability, and portfolio performance.

When systems are fragmented, operational drag becomes a structural drain on revenue integrity – absorbing time, obscuring visibility, and preventing disciplined pricing and billing from being executed consistently at scale. 

• Fragmentation fuels revenue spillage 

Disconnected technology directly contributes to revenue spillage and leakage. Inconsistent pricing rules, misapplied fee schedules, billing errors, and incomplete household aggregation all become more likely when systems are siloed. These breakdowns erode top-line revenue before it is even booked. 

The risk is especially acute for firms managing assets across multiple custodians or alternative investments. Without real-time data aggregation and reconciliation, even well-intentioned pricing policies can break down in practice. A survey indicating that 30 percent of investors want a fully consolidated view of all investable assets in one application highlights how widespread – and problematic – data fragmentation remains. 

Fragmented systems undermine even well-intentioned pricing strategies, making integration a prerequisite for consistent revenue capture. 

• Integrated platforms as a revenue safeguard 

Firms that invest in end-to-end digital platforms and automation are better equipped to curb revenue spillage and protect recurring fee income. Integrated systems reduce manual errors, reconcile data inconsistencies, and enable standardised pricing enforcement, automated fee transitions, and real-time exception monitoring. 

Beyond cost savings, modern technology tends to improve both operational efficiency and client experience. Industry research shows that a majority of RIAs view digital tools as critical to growth, competitiveness, and client engagement. Moving from fragmented legacy systems to unified, data-driven platforms is therefore not just an operational upgrade – it is a direct lever for strengthening revenue integrity and converting AUM growth into realised, sustainable income. 

Integrated platforms transform revenue management from a reactive control function into a proactive safeguard of margin, trust, and scalability. 

• Spillage – the takeaway 

All growing firms experience spillage. The differentiator is between those that measure it, understand its drivers, and reduce it deliberately, and those that do not.  

Those that do are better able to convert complexity into sustainable revenue. Those that do not risk leaving value on the table. 

Leakage: where earned revenue is never realised

• Accuracy without integration is not enough

If spillage represents value never captured, leakage represents value earned but not realised. Leakage occurs when fee calculations are incorrect, asset data is incomplete, invoices are delayed, or reconciliation happens long after the fact. It’s the outcome of increasing complexity, as performance-based, multi-custodian, multi-asset-class, and multi-tiered relationships increasingly demand precision at a scale many firms aren’t yet set up to provide.

Data fragmentation creates leakage, as account-level and relationship-level data sit in different systems and create mismatched calculations. Manual workflows create leakage, as spreadsheets and email chains introduce risk, delay, and human error. And a lack of operational transparency creates leakage too, as discrepancies go unnoticed for months or years in the absence of a clear revenue book of record.

Manual billing and reconciliation remain widespread. One RIA executive explained:

“Our fee billing is incredibly inefficient. It’s accurate – but it’s a massive opportunity cost.”

Another CFO added: 

“We’re still reconciling revenue well after quarter-end. That delay hides issues and makes leakage feel normal instead of actionable.” 

Leakage exposes the limits of accuracy without integration, highlighting why end-to-end revenue visibility is essential to converting value into realised revenue. 

• Product complexity: where leakage really accelerates 

More services, more billing risk 

The expanding mix of products and services in US wealth management has materially increased revenue complexity across the client lifecycle. Adviser research shows that growth in the HNW segment is increasingly driven by offerings such as tax management, private markets, and customised model portfolios – all of which carry more intricate fee structures and operational requirements than traditional AUM-based billing. 

At the same time, the industry’s shift toward fee-based models continues to intensify. Cerulli projects that 77.6 percent of the industry will be fee-based by 2026, while ongoing fee compression means that even small billing errors can have a meaningful impact on profitability. The combination of more complex services and tighter pricing creates an environment where minor inconsistencies can translate into substantial missed revenue. 

Bespoke offerings create operational blind spots

As firms introduce more tailored solutions – including tiered pricing breakpoints, negotiated discounts, performance-based add-ons, and alternative investment billing structures – the risk of leakage rises. Common failure points include missed household aggregation, misapplied fee rates, incomplete implementation of negotiated terms, and delays in billing during onboarding or service changes. The more customised the client experience becomes, the harder it is to operationalise pricing consistently at scale without strong systems and controls. 

As billing models become more sophisticated, execution risk rises accordingly. Firms with broader product mixes often require tighter pricing governance, clearer product and service catalogues, and stronger revenue operations controls to prevent complexity from quietly becoming a recurring drag on profitability. 

As offerings become more bespoke, only firms with disciplined pricing and integrated execution can prevent complexity from becoming a persistent drag on profitability. 

Interested in reading ‘Optimising revenue management: spillage, leakage, and pricing discipline’? You can read the white paper online here.

About the WealthTech Insight Series (WTIS)
This research is part of The Wealth Mosaic’s WealthTech Insight Series (WTIS), an ongoing and
developing research process, mixing online surveys and interviews, and focused exclusively on technology in the wealth management sector across the world.

Rather than a one-off research process, the WTIS will seek to build an ongoing program of research among wealth managers of different types across the world on a broad range of technology and related topics, building up an aggregated knowledge base of both qualitative views and perspectives as well as quantitative data points.

Discover our white paper collection!

• Managing model portfolios on multiple platforms – read here
• Productivity and growth in wealth management – read here
• The quest to become the best – becoming the trusted wealth coach and adviser – read here
• The role of technology for recruitment and retention within wealth management – read here
• The European wealth playbook for growth – read here
• From survival to reinvention: the new playbook for technology spend in wealth management – read here
• AI and analytics in wealth management – read here

About PureFacts
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As a strategic advisory firm, Pirker Partners supports decision makers at these firms with a flexible, ongoing engagement model by delivering focused, strategic advice and thought leadership on current themes relating to business and technology innovation, and to act as a platform for dialogue between the various parties involved.

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For wealth managers, the buy side of our marketplace, The Wealth Mosaic is designed to enable discovery of key solutions, solution providers and knowledge resources by specific business needs.

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