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Data-driven Transformation in Wealth Management

Today’s clients want a cutting-edge client experience. To deliver it, wealth and asset management firms must boldly embrace data-driven insights.

The wealth management advisory ecosystem is undergoing major disruption and digital transformation has been an important theme for a long time, but its adoption has been relatively slow in most cases. The wealth management industry is dealing with multiple disruptions such as shifting demographics, changing business models, and increased competitive pressure. Digital technologies are acting as catalysts to this disruption, and the expectations of both the investor and advisor are rapidly increasing.


The pandemic has made today’s economic environment more volatile and uncertain than ever before, and this has accelerated the need to adapt and be digitally enabled for success. As happens in most client-advisor relationships, trust is a key component. Advisors need to be equipped with deep insights about their investors to service them in a hyper-personalized manner and provide them with a first-class customer experience to gain and retain that trust.

What is driving this transformation?


There are several factors that are fueling the transformation in wealth management, but the number one amongst them all is the change in expectations from investors. An important demographic shift and the appearance of new technology are reshaping how investors view their relationship with their advisors. Some of the key factors driving transformation in the wealth management ecosystem include:

  • Demographic shift of wealth: Intergenerational wealth transfer from older generations to their heirs and rising millennial wealth.

  • Evolving business models: Regulations and digitalization are reshaping wealth management and the result is that financial advisors are becoming less product-focused and more relationship orientated.

  • Change in investment influences: Younger investors are getting influenced by digital trends, evolving social values, and different investment philosophies

  • Demand for more personalised service: Customers are increasingly dissatisfied with a one-size-fits-all service model and they demand the transition to needs-based personalisation.

  • Cybersecurity: Mandatory focus of the industry on cybersecurity in the digital age due to rising digital threats and privacy concerns from investors.

  • New communication channels: Advisors need to use virtual and more-immediate channels to communicate with their clients.

A playbook for analytics-driven wealth management


Remote working is the new normal but it presents more challenges around adaptation, efficiency and information security. Digital transformation is already underway in wealth management, and the pandemic has given it a big push but it is still a long way to go. The success of the digital transformation of your company requires orienting the organization toward a digital mindset and the following 5 ingredients will help you make it a reality:


1. Set a leadership vision

Digital transformation is often restricted by legacy platforms, narrow silos and data spread. As a result, new applications can fail to pick up enough momentum to make a real difference to the company’s performance.


Successful digital transformation requires firms to also redesign their legacy processes to eliminate inefficient and non-value-adding activities. Without applying digital design principles, the results of such transformations can be underwhelming.


With that in mind, executive teams should communicate a vision to the business and create a safe environment for large-scale transformation.


2. Data As The Backbone Of Your Digital Transformation

Data and technology together form the backbone that supports analytics-led transformation. A strong analytics backbone requires a rigorous standard of data management, coupled with informed decisions about the IT applications and systems to employ.


Data growth, ensuring data quality and integrity, harmonizing diverse data sources, and putting good data governance practices are essential to ensure data lakes do not turn to data swamps and are able to generate actionable insights for decision-makers.

3. Advisor Enablement Is Key

As the financial advisory industry pivots from a reactive model to a predictive one, advisors need to anticipate their client’s needs and provide personalized advice tailored to their goals and life events.


The industry is more competitive than ever with the appearance of new digitally enabled players and financial advisors want tools to gain a competitive advantage and be more efficient. Today, they require insights to offer hyper-personalization and get a 360 view of their clients.


Advisors want a unified experience and functionalities such as account aggregation, client portals, and CRM and client servicing tools, without having to constantly pivot between platforms. Digital advisor enablement is, in the wake of the pandemic, more important than ever and firms should be doubling down on these initiatives.


Read more: Fisher Funds’ transition from reactive to predictive customer success

4. Personalised Omnichannel Servicing

Investors' demands have undergone an evolution in recent times, and now they demand highly-personalised and dynamic experiences. With the ease to change firms or to transfer their wealth to a new operator and the highly competitive landscape, providing a first-class customer experience is paramount to improving customer satisfaction and reducing churn.


An omnichannel experience for advisors and clients will help them service their stakeholders effectively. It is important to record the outcomes of these interactions and to use digital collaboration channels to further evolve and keep up with clients’ demands.


5. Adoption Of New Technology

Analytics-driven transformation at scale should be predicated on collaboration, team self-steering, and an iterative approach to problem-solving. Many wealth management firms were already on their cloud adoption journey to improve flexibility, scalability and resilience and reduce infrastructure complexity. The pandemic has not affected the cloud strategy of organizations; rather, given how firms scaled with increased trading, volatility and application usage, it provided validation for resilience and scalability offered by the cloud.


AI/ML in wealth management is gradually shifting from automatically creating boards to predicting outcomes and learning from clients’ patterns. Predictive analytics are the most notable use of AI and ML at the moment, but the industry is rapidly shifting towards transformational prescriptive analytics solutions. Using AI and ML advisors will optimise their time to interact with the clients that are most likely to convert and will be able to offer them the optimum package for both the firm and the investor.

Optimise for the present, prepare for the future:


In the future FinTech companies will not be the only industry disruptors, we can expect tech giants like Meta, Amazon and Google to step into wealth management. The adoption of digital technologies and harnessing of data today will be key to the survival of wealth management firms, otherwise, it will be hard to stand a chance against such competition.


Wealth management advisors should be enabled with the power of data and advanced analytics to deliver optimum customer experiences and gain and maintain the trust of their clients. Advisors need new intel and more sophisticated methods to personalize and provide new insights to clients, AI and ML are no longer just an option, but critical survival needs for wealth management advisors and firms.


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Sources: Forbes | McKinsey | Virtusa | KPMG | FintechNZ | Salesforce |