Managers and their clients adopt innovative technology
Responding to the global pandemic necessitated an acceleration in technology adoption by wealth managers.
While digital disruption remained a far-off issue for numerous industry players, the pandemic forced wealth managers to find ways to circumvent lockdown regulations to maintain regular client contact and service delivery using technological solutions.
However, early adopters have rapidly moved beyond digital engagement and are leaving industry laggards behind.
These early movers are entering the next phase in their digital transformation journey by implementing innovative technologies that can transform the customer experience, reshape client service and inform investment decisionmaking.
“The traditional wealth management model focused on goal-based financial planning, where advisors managed assets over the long term to achieve specific client outcomes,” explains Barrie van Zyl, Head of Account Management at Iress.
“Over the past decade, the industry moved to an adviceled model that provided outcomes-based planning to maximise return on risk. The next evolution under way is a shift to a client-centric model that provides an enhanced client experience using mobile technology.”
According to Van Zyl, the smartphone is a major catalyst for this change. “Clients now expect on-demand access to products, services and data via their device.”
This usage behaviour shapes user experience preferences and expectations, which now apply across industry verticals, from e-commerce providers to wealth management firms.
“Importantly, the pandemic precipitated digital technology adoption and usage among the various generations of wealth clients,” adds Van Zyl.
High net worth individuals (HNWI) now demand hyper personalised service and advice, with easy, intuitive and seamless experiences across to financial services. They also want less friction when accessing investment products or moving wealth offshore.
Furthermore, SA’s dynamic regulatory environment is forcing wealth managers to transform traditional business models and overhaul legacy systems.
Technology is playing a central role in realising these strategic imperatives. For instance, digitisation across the wealth management value chain streamlines operations and standardises processes to create cost and operational efficiencies that deliver better value to clients while helping to meet compliance requirements.
“Platform-based solutions also provide wealth and asset managers with easier access to a wider investment universe across more asset classes, both locally and abroad,” says Van Zyl.
And wealth managers are leveraging technologies such as AI, machine learning and big data to analyse markets better, track investment performance and make the best investment decisions, explains Chetan Ramlall, Analyst at Stanlib Index Investment.
“Accessing these capabilities requires significant investment in core areas like data management, including data architecture and data science, and cloud-based computing. Wealth managers who embrace a data-centric mindset and invest in the relevant infrastructure and skills-sets will differentiate themselves from the competition.”
Ramlall believes that wealth managers will deliver more value to clients as the adoption and use of AI and other innovative data-driven tools accelerates.
“Opportunities will abound, like using robo-advisors to perform individualised riskbased asset allocation for clients, or using machine learning for investment processes and research.”
Moreover, the ability to consolidate a client’s personal, behavioural and investment information across the typically disjointed financial services value chain will create a single view of the customer.
Van Zyl elaborates: “Clients want a consolidated view of their wealth, with the ability to check their investment performance, update their portfolios in real-time and leverage self-service capabilities, such as accessing reports or documents.”
This is currently a major challenge, he says, because the financial services industry is typically structured in silos across banking, wealth, insurance, estate planning and business banking, often within the same organisation.
“However, the ability to seamlessly aggregate data on the back end and integrate systems will become an easier proposition as more systems migrate to the cloud, and more financial services providers adopt uniform data standards.
“Wealth managers who utilise these technologies best within their ecosystem will deliver the seamless experience across every touchpoint that clients expect and gain a competitive advantage as the rest of the industry plays catchup,” he says.
PLATFORM-BASED SOLUTIONS PROVIDE WEALTH AND ASSET MANAGERS WITH EASIER ACCESS TO A WIDER INVESTMENT UNIVERSE