How to optimise Digital Wealth Management
By Priya Bajoria, Senior Vice President, Financial Services, Publicis Sapient
COVID-19 has had a devastating impact on hundreds of thousands of lives, even in the most economically advanced countries of the world. In the last six months of the pandemic, two major shifts are visible in investor behaviour. A typical investor is very concerned about their personal health, their job security and their financial wellness. Their risk profile and needs may also have changed in recent times. They are looking for more active handholding from their advisors, both in the near-term to help them manage their financial obligations and in the medium/ long-term to protect their wealth. The other big change seen in the last few months is that the typical individual investor has also become more digitally savvy and is more comfortable using mobile apps for accessing their personal finances as well as utilising automated solutions to get access to customer service, more than ever before.
The other important consideration for the wealth management industry is that a large portion of their workforce including advisors and their operations team have been working remotely. The virtual engagement model is here to stay, for the foreseeable future, where more effort will be required to build and maintain a trusted relationship between the advisor and client. Employees of wealth firms have to be equipped with new and improved tools for data, analytics and operational workflows to be able to service their customers better while meeting strict compliance requirements of sharing information with clients.
The time is now ripe for the wealth management industry to optimise the usage of digital technologies to improve the engagement with, and servicing of their customers. This will ultimately help with client retention, which is amongst the most valuable outcomes that firms can expect in these challenging times. In order to remain competitive, especially in the context of digitally native fintechs or non-traditional competitors like the Big Tech, traditional wealth firms will have to prioritise investments towards the following:
Understanding Clients Better – Utilising non-traditional unstructured data in conjunction with traditional information about client assets, liabilities and risk profile will help provide a 360-degree view of clients. Some examples of these data elements include information around broader life goals, health care, real estate expenses, different kinds of insurance, tax planning, etc. Advanced data models will need to be built and sophisticated algorithms used to gather meaningful insights using this data. This in turn will allow advisors to assess the overall financial health of their clients and provide holistic advice to them, cutting across silos.
Focused Client Acquisition – Instead of going after the traditional sources of meeting new clients in a physical setting or generating new sales leads across a broad set of clients, firms have to get more efficient about client acquisition. By using Artificial Intelligence tools for personalisation, customised offerings can be created for clients, thereby leading to better rates of conversion while keeping outreach costs low. Digital solutions can also be leveraged to improve financial literacy and help individuals realise the value of saving, investing early and managing risk with timely financial advice, thereby increasing the target client base.
Enhancing Operational Effectiveness – Investing in modernising legacy technology and leveraging cloud solutions is essential to maintaining agility and staying competitive with digitally native firms. Standardised workflows like account opening and portfolio reporting need to be fully automated and data sources integrated using APIs to reduce the time-to-market to make new offerings available to clients. At the same time, stronger controls are required to mitigate operational risk and reduce chances of fraud, especially when clients and advisors may both still be learning to access and share data remotely.
Eventually, we will begin to see a convergence of the digital and human worlds in the context of wealth management. Cognitive wealth management (CWM) will emerge as the hybrid model of providing advice between the traditional human touch model and the digital first model. This could be that happy ‘nirvana’ state, where investors have access to all the digital technologies and can still tap into human advice and judgement as needed. CWM will also lead to democratisation of wealth management, where trusted financial advice is easier to access, and an individual does not need a minimum threshold of net worth to get access to that advice. Customer Service in CWM will also evolve from being triggered by specific events or periodic reviews based on pre-set frequencies to proactive in the micro moment. There would be no limit to using data (both structured and unstructured) to inform advice, cutting across traditional silos. Backed by holistic and complete data, the risk and return calculations will also become more accurate and dynamic as opposed to being based on a historical view of limited data. Ultimately, if digital technologies can make financial advice more affordable and relevant for the masses, wouldn’t that be a win-win for all.
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