The pandemic fundamentally realigned the relationships between wealth managers and their clients. Suddenly the face time that was at the cornerstone of so many relationships was made impossible, at least in a physical form, writes Brian DuVal, head of wealth and retirement at tech services provider FIS.
From changed circumstances came innovation. Advisers found ways to build their relationships in new ways. There were video calls and more emails, print communication for the technology reticent and apps for those born savvy.
With the end of mandated social distancing on the horizon, the question for wealth management firms is how much to continue on the course set during the pandemic.
Whereas decisions made during lockdown were by necessity quick ones, many executives now have the luxury of some time to consider their options and the ability to take a longer-term approach.
The temptation might be, especially for those with practices that skew older, to wind back the clock towards regular mailings and bi-annual check-ins to run through investment strategies. But the changing industry conditions mean this is a dangerous path for those looking to grow.
A recent FIS survey asked executives at wealth management firms about their plans and attitudes on areas around investment and technology, and ultimately how that impacted their growth strategy.
Help with clients
Client satisfaction will be critical. For UK wealth management firms, one of the biggest ways to target growth over the next 12 months is increased retention of existing clients.
Wealth managers must take into account approaches what clients found useful during the pandemic, such as video communication and simplified portals to access client information.
Ask clients what methods they prefer, and prioritize these areas to continue even after offices open up. Information will need to seamlessly flow between newly opened avenues of communications.
Clients won’t be happy using an application if they are forced to re-enter large amounts of personal information each time, and they will be equally displeased if their adviser isn’t aware of changes or preferences expressed the day before online.
Regulators have mostly rolled-back early lockdown exemptions on regulations around data privacy and compliance.
That means that communication must be flexible but also secure – a prime case for building protected technology.
Rising cyber-incursions and ransomware attacks place a further premium on building secure information chains.
New infrastructure might also need to support workforces that aren’t returning to central locations or physical offices at all.
Managed services offered through a private cloud are an increasingly proper way to offer applications that are both secure and location-agnostic.
In the technological arms race, smart wealth managers are worried about falling behind. Consumer technology continues to race ahead with unstoppable momentum – increasing the baseline expectations of customers of all ages.
Some 24% of executives surveyed said outdated technology was one of the largest concerns. There will be more resources to upgrade these systems, but not infinite ones.
The majority of firms are budgeting for an increase in resources year over year, although the most of those increases were described as ‘moderate.’ That places a premium on investing in areas with the biggest possible return on investment.
Artificial intelligence is a likely target. The biggest reason to invest in artificial intelligence/machine learning over the next 12 months is to enhance process automation and operational efficiency, as indicated by 47% of UK wealth and retirement firms.
The potential uses for artificial intelligence in improving the end users’ experience are myriad: faster, more accurate reporting; more granular analytics on investment strategy, smart prompts for individual advisors to have better conversations with clients.
The UK’s wealth management industry has been under pressure before the pandemic from an aging client base and increased burden of regulation. Underinvestment in technology has the potential to make a bad situation even worse.
British advisers feel less confident about their technology compared to peers in America. They were significantly less likely than Americans to measure their cybersecurity, resilience and surveillance and compliance capabilities as ‘very effective.’
Now, in this moment of rebuilding and new path, is a chance for smart firms to look forward and build an infrastructure that will allow for the emerging ‘hybrid society’ enabled by technological advancement.
This article was written for International Adviser by Brian DuVal, head of wealth and retirement at tech services provider FIS.