Financial services research firm TowerGroup says that most financial firms are struggling to offer integrated wealth management services.

The Boston-based firm says that there has been plenty of talk about the promise of wealth management to unlock greater value from high-net worth and “mass affluent” customer segments. Yet it finds that “rhetoric continues to outstrip practice at the majority of institutions, where integrated approaches to wealth management have yet to displace existing structures that serve retail clients in relative isolation from one another.”

In its new research, TowerGroup explores the continued opportunity for, and key barriers to, broader wealth management implementation. It finds that significant wealth is still being created today despite a more uncertain economic context, with the number of millionaires in the U.S. rising at a compound annual growth rate of 12% through 2008.

It says that existing “silos” separating business units within and across financial services institutions continue to present the single greatest barrier to the implementation of integrated, customer-centric approaches to wealth management.

“Fiefdoms are the single most important reason why wealth management as a financial business model has not achieved the traction anticipated by institutions, software providers and professional service firms,” said Dennis Ceru, director of the Retail Brokerage & Investing practice at TowerGroup and author of the research.

“Despite recent rhetoric to the contrary, most financial institutions business units are still engineered to run as distinct entities within an enterprise, and are managed as separate profit and loss centers supported by separate technology groups. This stops customer-centricity dead in its tracks.”

Ceru noted that effectively retooling the siloed financial organization to function as a seamless and client-centered wealth management enterprise requires nothing less than business process reformation. “Slick software, renamed business units, client experience enhancements, and new corporate visions all pale in their fragmented efforts toward what remains a systemic and systems-wide problem,” he said.

It argues that the technology required to break through these silos exists today, including account aggregation, database normalization, portfolio management/reporting and developments in delivery channel architecture. Customer relationship management remains the most crucial subcomponent in integrating customer information with business process to create a wealth management enterprise.