According to an EY report from 2023, modern wealth managers face a simple but challenging imperative to “do more for less.” That means delivering more valuable services for more clients without sacrificing profitability for the firm. EY identified technology is a critical factor in rising to this challenge. The key questions, however, are:
- Where should you aim to add value? What should you focus on delivering for your clients and your firm?
- What technological capabilities will best help you deliver on these priorities at cost-effective scale?
According to our research, you should focus your efforts on enhancing performance, personalisation, and perspective – all while maximising productivity for your firm. Below, we outline the technological capabilities that best support each goal.
01 Performance: An Old Expectation Met Better with New Technology
The most basic of wealth management client expectations is that their portfolios grow. Unsurprisingly, EY found that investment performance was most commonly cited as a top decision driver when selecting a wealth manager, with 46% of surveyed clients indicating as such. An overwhelming 73% of the same clients said they would change their investment approach in response to decreasing portfolio value.
You no doubt know that data is critical for making well-informed, performance-maximising investment decisions. The wealth business is ultimately about helping clients achieve numerical results, after all.
You have probably heard data referred to as the “new oil,” i.e. the most important raw material across multiple modern industries. Winning insights (the “new gasoline”) can be extracted from it through analysis. In fact, data is more like sand in that individual pieces of it have little value. Sand is usually bought by the ton for whatever it will be used for; similarly, data is truly valuable only in large quantities. Patterns and trends can be identified best by correlating, comparing, and analysing multiple data points.
As a wealth manager, you should therefore know that good data aggregation – the process of collecting data from various sources into one place – is the foundation of good data analysis. The more high-quality data is available, the better your data-driven insights can be.
A sophisticated wealth platform can automatically aggregate and analyse data from a wide variety of sources. It can bring together market data from the industry’s best sources to enable automated analysis of client’s holdings versus standard and customised benchmarks.
02 Personalisation: The Leading Factor in Better Client Experiences
According to 2023 research from Capgemini, a report-topping 76% of wealth management executives said that delivering a better client experience was their top priority. 68% of the same respondents said they were investing to support evolving client demands.
These demands are all about personalisation, specifically with respect to:
- Advice. Clients, especially younger ones, want data-driven recommendations hyper-personalised to their individual goals and circumstances. McKinsey predicts that by 2030 80% of new investors will want such “Netflixed” advisory.
- Engagement. Capgemini found that phone calls were among high net worth clients’ top two most commonly preferred communication channels across their entire journeys with wealth managers, from choosing a firm through onboarding to receiving advice. Face-to-face meetings also proved popular.
Technology can help you meet both expectations by:
- Aggregating clients’ own wealth data to analyse and monitor. According to Deloitte, “advisors must make use of customer data and analytical technology in order to hyper-personalize their offerings and services, and build trusting—and lasting—client relationships.”
- Freeing up time for one-on-one client conversations. Judging from McKinsey statistics, a significant portion of your workflows are likely automatable. The consultancy found that workers in finance and insurance spend more than half of their time collecting and analysing data, tasks that are ideal for automation using currently available tools.
- Easing on-demand updates on portfolio value and other information. Clients do not necessarily want or need to hear from you every hour with the latest updates on the values of their portfolios. And especially for younger clients, simple questions or requests are often handled best through messages sent whenever and wherever necessary. According to Insider Intelligence’s Mobile Banking Competitive Edge Study, 89% of survey respondents said they use mobile banking. Furthermore, a full 97% of millennials indicated their use of mobile banking.
A sophisticated digital wealth platform will package these personalisation-empowering benefits into one solution that:
- Brings together and analyses each client’s data from banks and a wide range of other sources. Based on the analytical results, you can provide the provably customised advice prized by today’s clients.
- Automates many of the tedious analytical workflows that are keeping your time and attention away from clients.
- Enables self-service portfolio value monitoring as well as one-stop secure messaging between you, your clients, and their tax consultants, lawyers, and other advisors – all via a SaaS portal or a dedicated mobile app. Automated alerts can be set to notify users of market moves, account balance changes, and more. Also, documentation and tasks can be attached to each asset to facilitate record-keeping and eliminate the need to hunt through email chains.
“The way I see it, wealth management involves both data and human relationships. Advisors need to strike an optimal balance to deliver valuable, data-driven insights the way their clients want these insights delivered,” says Simon Kaufmann, Head of Business Development at Altoo AG.
03 Perspective: The Big Picture for Clients with Diverse Portfolios and Service Providers
Your clients likely know they should not put all their investment eggs in one basket. Research suggests they think along the same lines when it comes to their financial service providers.
According to EY, the tumultuous markets of the early 2020s prompted 33% of wealth management clients to seek advice from a wider range of sources. This trend will likely accelerate: 53% of clients worldwide said they would seek out independent advice in the event of future volatility, and 28% plan to do so regardless of market conditions.
Similarly, Cerulli identified a preference among investors to diversify their service providers: while 74% of the affluent individuals the consultancy surveyed said they believed their primary investment provider could solve all their financial needs, a less impressive 58% would said they would prefer to work with only provider, and only 37% said they take care of cash management at the same firm handling their investments.
EY suggested embracing demand for multiple opinions and service providers by acting as an orchestrator within your clients’ broader investment environments. The consultancy expects that by 2026 18% of clients will be using fintech solutions, most of which are not confined to working with any one financial institution in particular.
A powerful way to position yourself as your clients’ wealth orchestrator is to partner with a fintech able to visualise all their financial data. With such a partner, you can give clients a complete, easy-to-understand view of all their assets held at different institutions and illustrate how your recommendations tie in with what is literally the big picture of their finances.
According to Simon Kaufmann:
“Most clients think first about how their overall portfolio looks before diving deeper into how to improve specific aspects of it with decisions about investment opportunities, liquidity needs, or allocation adjustments, for example. It is important to provide a comprehensive overview of each client’s entire wealth with options to drill down into details – even granular ones like transaction fees – for individual holdings. Zooming out or zooming in, you should help clients see their wealth from every angle.”
04 Productivity: A Capacity Challenge in a Competitive Industry
As they face mounting fee pressure, new and evolving distribution channels, and the emergence of innovative products from fast-moving competitors, wealth management firms’ ability to stay profitable depends more than ever on ensuring their teams’ capacity to deliver superior, personalised services.
Capgemini found that more than half of high net worth individuals factor in the availability of value-added services like inheritance planning when choosing a wealth manager. Less than half of the same individuals, however, were satisfied with their current relationship managers’ abilities to deliver such services.
Behind this mismatch, Capgemini identified disconcertingly poor relationship manager productivity. Relationship managers were found to be spending more than two-thirds of their time on non-core activities that do not generate revenue. Training, onboarding, and compliance were their biggest drags on productivity, taking their time and attention away from core activities like portfolio management and all-important client interactions.
The results, according to Wealth Dynamics, are a tremendous amount of missed opportunities, with 42% of clients being contacted only once or twice a year. Only 10% of wealth managers said they believed their customer relationship management or contract lifecycle management solutions were good enough to satisfy their growth objectives.
Correspondingly, Salesforce and WealthManagement.com found improved productivity was one of the top two goals for 84% of surveyed wealth management firms with regards to evaluating technology needs and new investment areas. 62% highlighted an improved client experience and 34% indicated better profitability.
An advanced wealth platform can streamline the process of formulating and visually communicating personalised, performance-maximising advice. Instead of manually navigating spreadsheets and creating reports, you can have all the data necessary to support your recommendations available in a few clicks, beautifully presented and easily understandable. Designed to be intuitive for all users, both advisors and clients, onboarding and setup should typically take only a few weeks.
All three of wealth managers’ top reasons to digitalise as identified by Salesforce – improved productivity, client experience, and profitability – are in fact different sides of the same tech-enabled scalability coin. Heightened productivity stems from dedicating more time to personally adding value for clients. This value comes in the form of tailored, data-driven advice to maximise performance that is aligned with their personal goals and contextualised within their overall financial lives. The extent to which your firm delivers this value, likely by incorporating an element of wealth orchestration into your offerings, becomes the decisive factor in achieving profitable scalability.
