The pressure is on in wealth management

The speed of technological change and the impact of wealth being transferred from older to younger generations is piling pressure on wealth management service providers. The younger generation expects multichannel service and impeccable customer experience, which many providers lack right now. This gap has to be addressed by wealth managers and advisers or they risk not evolving quickly enough.

The wealth and asset management value chain is hitting a critical point in its evolution. The global pandemic has exposed the lack of innovation when it comes to the ‘engagement layer’ of its proposition, and the pace of change is crippling all parties involved, ultimately to the detriment of the customer. This sector has undoubtedly been a slow starter in embracing the 4th industrial revolution, and without considerable investment won’t be ready for the 5th.

A shift in customer expectations

Wealth management providers are trying to figure out the logic behind direct-to-consumer and will struggle to see it as a viable offering if some of the basics in client engagement still aren’t in play in the intermediated market. Too often, sales and marketing are out of sync, and customer communication consists of generic mailings and performance fact sheets instead of real-time reporting.

The baby boomer clients and advisers haven’t demanded better digital services. But once that wealth is transferred to their spouse and/or family, or the reins of the advice practice are handed over to the next generation, that’s when it’ll start to cause issues. There needs to be an active strategy in creating relationships with spouses and beneficiaries as early as possible, but that needs to be modern, engaging, cost-effective, and enabled by modern technology across the value chain.

Also, the move towards more sustainable investment (ESG) solutions is clearly supporting a shift towards a more diverse and younger demographic taking an interest in investing. Engagement with this audience needs to be much more dynamic, engaging and personal, and away from the traditional launch of a new asset class or fund series. The young investors want to be able to interact and trade in real-time over their mobile devices, not via factsheets, performance charts, or newsletters.

Bridging the technology gap

Many wealth management providers are aware that these expectations exist as they’re experienced in everyone’s day-to-day lives. The problem is too few know what to do about it or are not set up to address the challenge.

At the same time, product and platform providers are neck-deep in ongoing regulatory change, internal ‘transformation’ and re-platforming whilst also trying to manage a lengthy backlog of development requests to not only evolve the platform capability but support the basics of the advice process.

To even attempt to leverage the modern technologies available today to service, support, and engage with new and existing customers is too often overshadowed (and de-prioritised) by all the previous ‘must do’ requirements, pushing these into the ‘nice to have’ pile. In the UK, some providers have enabled digital signatures over the last 12 months and have been lauded as ‘transformational’, yet many providers still don’t offer them, and these solutions have been available for ten years. More widely, Open Banking is yet to fully take off, with a lot of work required to even start considering its next evolution, Open Finance.

Many are running their business on a core suite of technology that hasn’t really evolved in the last 15 years. Platforms haven’t really delivered on the provision of a ‘one-stop shop’ holistic investment solution (to be fair, the regulator hasn’t really helped), and the advisers continue to deal with a myriad of providers and sometimes limited access to key information or when needed an immediate and responsive contact route.

Phone and email remain the primary channels and create long and challenging delays in the business, and the convoluted suite of technology in an adviser’s business equals a triple whammy in terms of inefficiency, poor experience, and higher costs leading to too many being priced out of advice. There are murmurings of new subscription-based advice business models, but these only highlight the need for enhanced technology and engagement strategies. Today this is far from being a feasible option.

There is increased talk of white-labelled platforms being created by a number of the larger advice businesses. This poses a big risk to providers in retaining assets and relationships, but the realities of managing a platform may also shut down that noise. Personally, I think the build your own route is a crazy one to go down; best of breed surely needs to be the answer. Taking on the client money and asset administration responsibilities alone will be a significant challenge and cost to any business, not to mention the funding needed to invest in the ongoing development of the technology to meet the regulatory change.

Invest in platform and engagement

So who pays the price for all these challenges mentioned here? Yep, you guessed it, the customer. In the short term, the customer will carry on tolerating these limited services but won’t stand for them much longer. The next generation will not think twice about going to newer entrants on the scene.

To achieve the higher ambitions of world-class customer experience and engagement, many wealth management providers will have to invest in the engagement layer very soon. Getting the balance is key here, and a twin-track approach to investing in development (one for the trading platform and one for engagement) is needed alongside a singular experience strategy that’s connected and complementary no matter who and how you interact with the business. Extending some of the channels for access will not only alleviate the pressures on the business operationally but also deliver the experience expected today.

Through integration and enablement of a cloud-based CRM solution as the front end, the ability to adapt processes and an enhanced user experience (including that of the end customer) could be relatively easily introduced, and action is required now.

These modern solutions create the opportunity to interact through community portals, mobile apps, and chat in a matter of weeks, if not days, complemented by a suite of fully integrated specialist tools. If you’re lined up correctly, the chance to catch up relatively quickly and begin to get closer to the curve is there.

The challenges are generally recognised by all, the opportunities are there to be grasped, and the solutions are lined up to support. So what’s stopping this evolution? Knowing what’s available and how to progress true transformation.

Report: The incremental integration of digital into wealth management

Financial advice businesses are inefficient — but it’s usually not their fault. They rely on disparate systems from providers and mostly use email to communicate. They spend four days a month on manual tasks (such as collating information across systems), and they spend nearly a month on hold!

Providers say they want to innovate and change, but there are few planned enhancements in the works. Our research suggests it’s worth the investment — too much time is spent on manual tasks, and freeing up adviser time could allow them to reach more clients.

The findings in this report are based on a survey of 100 financial advisers as well as
interviews and data from 11 investment providers undertaken by NextWealth during April 2022.

Duncan Muir

Global Industry Lead, Finance


Duncan has over 20 years of experience in the UK Financial Services sector and has held senior roles in Sales, Marketing, Service and Proposition Development working closely with providers, asset managers and advisory businesses. Bringing this knowledge and experience together with the potential of CRM capabilities he's been able to lead CRM strategy, go-to-market activities and engagement.

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