By Brett Williams, managing director, SEI Wealth Platform UK
For several years now, the way wealth managers work with clients, and the expectations they face, has been changing. To a certain extent, this is due to a demographic shift as a new generation of investors emerge, but it is more than that. On the one hand, wealth is rising and clients’ circumstances are becoming more complex, and on the other new technologies are creating new ways of managing investments and accessing financial products.
As wealth management firms face up to addressing these challenges, as well as capitalising on the opportunities that lie ahead, technology will be a critical tool in enhancing their business processes for the long-term objective of sustainable growth. Wealth managers need to invest in technology both in the front office and in the engine at the back. The two go hand in hand and together are likely to be the key to success.
Meeting client needs with more sophisticated offerings
As global wealth levels rise, firms must find new ways to serve increasingly complex client circumstances alongside adapting their offerings to new requirements and expectations. At the same time, they face fierce competition from disruptive market entrants, such as fintechs and robo-advisers, which are jostling for market share. Such an environment will increase the importance of efficient operating models and the ability to provide high-quality financial advice along with a range of client-specific product offerings.
To meet these demands and remain competitive, firms should look to invest in digital innovation, develop specialist services and solutions, and seek acquisition targets that enhance their overall offerings. Previously, this would have been an expensive endeavour available only to the largest wealth management groups, but technological advancements have put this within reach of a much larger portion of the market.
New tools such as machine learning and advanced analytics can help private banks and wealth managers to gain a deeper understanding of new client opportunities and the products that will be best suited to them. In the past, it was typically costly and time-consuming to provide fully customisable solutions for every client, but fully digitised products can allow firms to meet the needs of varying client objectives, whether they are seeking sustainability and impact-themed portfolios or access to alternative asset classes.
Creating strong client experience at scale
Meeting client expectations in the future will involve more than offering technology and products to appeal to new client demands. Human interaction has always been important in wealth management, and the ability to offer high-quality service at scale will be influential. Research by McKinsey found high levels of dissatisfaction with private banks during the Covid-19 crisis due to a lack of contact and poor communication. The research found that one in five clients moved assets to a different bank because of their previous bank’s performance during the crisis.
While fintechs and robo-advisers may be chipping away at the traditional wealth management model, personal relationships will remain a key differentiator in the sector, particularly for wealthier clients. Rather than shun the traditional wealth management model, clients are likely to look for better relationship management in tandem with advanced digital solutions.
This highlights the benefits of putting in place a forward-thinking and robust technological base that can grow with the business, meet client expectations and provide better service. When deployed properly, technology can streamline processes and services, allowing more time to be spent on key strengths, such as developing and maintaining client relationships. During a time when client loyalty is low, firms that are able to demonstrate technical capabilities in addition to superior service are likely to have an edge.
The opinions and views in this commentary are of SEI only and are subject to change. These opinions and views should not be construed as investment advice. While considerable care has been taken to ensure the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information and no liability is accepted for any errors or omissions in such information or any action taken on the basis of this information.
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