How wealth management firms are bracing for tech disruptions

Published: March 6, 2019 2:07:38 PM

One of the best ways by which the industry can capitalise upon technological innovation is in reporting and data presentation.

The good news is that in the wealth management industry, technology is now finally finding its place under the sun.

:- By Sandeep Jethwani

The ubiquity of technology has thrust industries and sectors across the globe into the vortex of innovation and change. The way products and services are manufactured, delivered and consumed is rapidly evolving. When speaking about evolution, it is difficult not to allude to Charles Darwin. His theory was simple.

It is neither the strongest nor the most intelligent of the species that survive. Instead, it is the species that is most responsive to change that manage to survive. Darwin’s lessons suggest that those who are not able to adapt may end up on the endangered species list. The wealth management industry is currently at a crossroad. It can either adopt technology and evolve or it can shun technology and become obsolete.

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The good news is that in the wealth management industry, technology is now finally finding its place under the sun. However, when adopting technology, it is important that firms do not compromise on the below three factors.

  •     Engagement – clients value accurate information, enhanced service and digital channel        capabilities
  •     Trust – clients value transparency in fees, transaction security and data confidentiality
  •     Performance – clients value a solid understanding of their financial goals and having at their disposal a broad suite of  products and tools.

The next generation of clients view the world through the prism of technology. They are digital natives who engage with technology in many aspects of their lives. Consequently, they expect the same when it comes to managing their wealth. Broadly, the wealth management industry can embrace technology in the following ways:

Technology for Better Analysis

Wealth managers can leverage technology for scenario planning and forecasting that can identify potential consequences, allowing for better decision making. The industry can also make use of technologies to identify client personas using demographic and psychographic data, which can be used to design customer journeys. The use of big data for personalisation can result in improved identification and assessment of risk, which can be leveraged to provide more customised solutions.

Technology for Delivery of Service

Technology can improve the client experience by tailoring solutions and services to their individual needs and delivering these in a seamless manner. While the “personal touch” will always remain sacrosanct in the wealth management industry, technology can enhance communication and delivery of service through multiple channels. Additionally, technological solutions can also help advisors provide valuable solutions at scale.

Technology for Transactional & Reporting Efficiency

One of the best ways by which the industry can capitalise upon technological innovation is in reporting and data presentation. The implementation of improved and more nuanced technological solutions will allow clients to review information on performance, portfolio holdings, asset allocation etc, on their own at any time through a client portal and use online collaboration tools to check in with their advisors. This on-demand access provides an ultimate level of transparency.

Every client is different and in addition to that, clients have changing needs. Technology can help wealth advisors better understand their client’s needs and provide more customised solutions. Having said that, it is important to understand that technology cannot replace the human element required to assess and interpret a client’s needs. Instead, it can be used to complement and enhance the product and service delivery.

The author is Partner and Head of Advisory at IIFL Investment Managers. The views expressed are author’s own.

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