According to Jim Marous, Editor of FinancialBrand.com, “The pace of change will never be this slow again.” And he’s right, fast pace of change is the new norm and wealth managers have no choice
but to keep evolving. Even so, we must never lose sight of the fact that the client is at the heart of everything your firm does.
At Wealth Dynamix, our commitment to the wealth management industry is to drive forward technology to empower advisors and relationship managers to better serve their clients – quickly, efficiently and informatively, without friction, and whilst maintaining 100% regulatory compliance. In our experience, those who have embraced this approach are reaping the rewards, while others who have yet to make the move are increasingly feeling the pain.
2020 requires a step change in attitude and actions, as the wealth management sector becomes ever-more crowded with a combination of long-established providers and competitive new challengers.
Data is the lifeblood of all financial services firms and there has never been more data to sift through. Yet, wealth managers have been slow to leverage data to actively shape client engagement. In 2020, winning wealth managers will use a powerful combination of client and other forms of data such as portfolio performance to formulate more compelling campaigns and deliver more relevant, personalised services that drive AUM growth.
In the 1990s and 2000s, technology transformed financial services with high-speed, high-volume transaction automation, powerful data analytics and innovations including electronic payments. Core banking systems were updated, and books of records and accounting processes were digitised.
Customer relationship management (CRM) was borne in the mid-90s, creating the perfect storm for driving value from client data, with the promise of more accessible and structured data. But, while every financial institution now harbours vast amounts of data, their ability to transform it into truly actionable insights remains limited.
The challenge is to transform big data noise into informative signals that enable client relationships to be managed in a more meaningful and profitable way. To do so, data must be accessible, organised, presented in context and in a form that a relationship manager can easily interpret and act upon.
In theory, large retail banks have an advantage as they hold a wealth of client data spanning many years, but find it difficult to aggregate and analyse as the combination of structured and unstructured data is held in multiple disparate systems. Also, the worth of this data is diminishing over time as clients begin switching lifestylerelated transactions that generates high-value spend data to challenger banks e.g. Monzo and Revolut. The value of big bank data, which is now centred around salaries and regular payments, offers less useful insights. The danger for wealth managers is they could also be left behind under similar circumstances if they don’t act now to properly capture, govern and analyse their data sources.
Although new entrants currently service only a small percentage of the world’s wealthiest individuals, a seismic shift of generational wealth towards those who up their digital game and provide a personalised, data-driven service is forecast. The value of referrals has never been higher, and wealth managers should be laser-focused on client retention, because securing greater share of wallet from existing clients is less costly than new client acquisition.
So, how will winning wealth managers leverage data to service clients more effectively in 2020?
1. Capture the right data in the first instance. Wealth managers must record data that is relevant and will enrich the client’s journey, without being intrusive – just once, not at different stages throughout the client lifecycle, although regular updates should be conducted to avoid data from becoming stale. The expression ‘capture once, use many times’ has to be at the forefront of this strategy, not ‘capture many times and use only once!’
2. Connect systems and processes to eliminate inaccessible data silos. Relationship managers need to spend less time finding and quantifying data, and be empowered to focus on qualitative engagement strategies and client-facing activity. Winning wealth managers will embrace end-to-end technology platforms that span the entire client lifecycle, present data in a form that relationship managers can make sense of and deploy smart workflows that route data to the right place, at the right time and in context.
3. Increase visibility of client data throughout the entire client lifecycle. By capturing relevant data at the outset and making it available cross-functionally, winning wealth managers will gain a holistic view of each client’s preferences, sentiments and goals, and be empowered to offer superior client service.
These wealth managers will gain signals from client data that enable more profitable engagement, onboarding and CRM strategies such as making proactive productrecommendations.
Marketing teams will improve campaign conversion rates by communicating with clients via their channels of choice, with messaging that resonates. Highly-granular, datadriven segmentation will enable recommendations of rich products based on either specific client preferences, or the actions of clients with a similar profile.
CRM will be streamlined and enriched. Through automation, front-office productivity will increase by 30% and relationship managers could spend one day per week less on administration, allowing more time for AUM growth, trust-building and risk mitigation. Client meeting packs will be prepared in minutes or hours,
not days or weeks, and data-driven sentiment analysis will enable relationship managers to proactively boost advocacy in advance.
With data immediately accessible, in easy-to-interpret dashboards, client requests and complaints will be
handled quickly and efficiently resulting in a more trusting relationship and a step-up to the kind of services these clients are already experiencing in their day to day lives.
Wealth managers need to become more FinTech-like by embracing the technology already built for this specialised industry sector with a core focus on the whole client lifecycle or face putting AUM at risk.