The wealth management industry is on the cusp of disruption, which is driving firms to reinvent the customer experience. As part of the World Wealth Report (WWR) 2019, our Wealth Manager Survey identified the top three factors that will affect firms in the years ahead: increased data and analytics innovation, BigTechs entering the industry, and fee structures/pressures. With an environment in flux, wealth managers need to strategically future-proof their business model to more aptly reflect evolving times.
But where to begin?
Transitioning a firm’s service delivery model to a system based on agile principles can enable significant next-gen capabilities. Technologies such as data-driven analytics, artificial intelligence (AI), and big data can help firms adapt to the changing environment while creating efficiencies and enabling the fast development of new services. Application programming interfaces (APIs) and open banking are further allowing firms to meet new demands by leveraging existing solutions.
Firms are now leveraging technology to implement extensive automation and insight-based solutions. For example, Morgan Stanley launched a next-best-action tool in 2018 that employs machine learning to analyze vast amounts of data (both historical and real-time information), so that the firm’s 15,700 advisers can offer clients investment advice based on asset allocation, tax situation, preferences, and values. The tool helps wealth managers with prompts such as a message to send a customizable email notifying a client that it might be time set up a savings plan for a newborn grandchild.
Evidently, next-gen technologies can make distribution models more nimble and deliver personalized services to clients. With only 40% of high-net-worth (HNW) clients surveyed as part of the WWR 2019 saying they were satisfied with their firm’s personalized offerings, adoption of agile models appears to be critical.
What is driving adoption of agile wealth management models?
Source: Capgemini Financial Services Analysis, 2019.
Firms must also consider the preferences of next-generation HNW clients and provide cohesive offerings across channels. Infact, fewer than 50% of HNW clients said they were satisfied with mobile and online platforms, according to the WWR 2019 survey. In such scenarios, implementation of a digital distribution strategy that is compatible with different HNW clients and transaction volumes is a first step to improving client satisfaction.
In this aspect, future-focused firms will stay competitive by taking an individualistic approach (with value-based segmentation) to cross-sell and up-sell relevant services and prioritize omnichannel engagement that enhances client experience. Therefore, it is important that firms focus on a high-quality agile approach which can serve clients’ holistic needs and bolster their loyalty.
For wealth management firms, adoption of agile distribution models can be a source of both opportunity and risk. The key to seamlessly growing and adapting to the evolving industry is to prioritize agile methods that enable capabilities that are relevant to today’s HNW clients.
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 Financial Planning | OWS, “Morgan Stanley plays the long game on AI,” Jessica Mathews, July 12, 2018, https://onwallstreet.financial-planning.com/news/morgan-stanley-plays-the-long-game-on-ai.