The wealth management industry is on the cusp of digital disruption by notable cost reductions through automation. And metamorphosed business models with digitally assisted advices driving disproportionate marketshare gains.
The outbreak of COVID-19 has the potential for a disruptive economic fallout. Due to epidemiological uncertainty, the roadmap ahead is a precarious one with a unique concoction of resulting shocks to demand and supply across industries.
“Social distancing” has compelled advisors to rethink on the channel of communication. Wealth management firms need to embrace digital servicing capabilities to stay in touch with their clients.
*Deploy world class practices to meet client concerns globally 1. Upskill advisors: Advisors must have a 360-degree view with an ability to simulate and rebalance portfolios in real-time to ensure safeguarding and sustainability of client assets. During this uncertainty, digitally-enabled wealth managers will help clients in strategic investments.
Advisors can utilize digital platforms powered with AI and ML based algorithms to offer an hybrid advisory as it has all the relevant visualizations with portfolio analysis.
2. Automated performance reporting: Bring on-demand and easy access via dashboard and reports with an analytics-backed portfolio overview, including simulations and performance attribution. Firms must empower relationship managers to make proactive decisions based on “active nudges and alerts”.
* Digital client on-boarding and mobility Clients need not physically visit relationship managers to get on-boarding started. The entire flow has been automated using maker checker processes and by using the OCR (optical character recognition) technologies, face recognition and Video KYC, followed by a FATCA questionnaire and risk profiling.
Firms give ready access to RMs & their clients remotely from any part of the world. Efficiency in client management is the topmost priority, especially in trying times like this.
* Data aggregation
Much of the complexities for wealth managers stem from collation of reports from various sources. Firms can integrate with multiple custodian partners and aggregate, normalize and reconcile the data, create an optimized data layer and then make it ready for analytics.
Technology facilitates accessibility to “long-tail” clients, who are otherwise denied access to such services. Demand-supply gap is bridged by lowering service fees to make wealth management affordable to customers and serve them in the paucity of limited investment managers.
Automation enhances efficiency of processes by advanced algorithms, which allows personalized professional investment advice to meet each client’s unique needs at lower costs. Technology can foster more competitive landscape for digital wealth management.
Robo advisory from leading players are goal-based and driven by seamless on-boarding with minimum hassles and of lesser duration. Robo ensures mapping the customer journeys and drop-off points, and automatically sets off campaigns to activate and retain customers.
It helps create pre-login journeys to engage new customers. It’s easy to configure bank specific profiling mechanisms and create segment wise profiling process.
Amidst the COVID-19 crisis, the key focus areas for financial advisors are:
1. Re-focus and re-strategize: Priorities will change for asset owners. And with investor behavior taking time to normalize, there will be a need to consider appropriate diversification. Invest only on the right moves!
2. Transform the digital journey: Greater strains on a firm’s IT infrastructure will lead to creating more digital business models.
3. Enhance productivity and upskill: Wealth managers must ensure that they have the much-needed equipment, tools, working practices and technology in place which will future-proof their business.
4. Redefine the purpose: Business leaders have the ability to look beyond the crisis and take giant steps to build trust with asset owners, create positive social impact, whilst looking beyond just profits.
Wealth managers need to revisit their books and make robo-advisors an indispensable part of their modus operandi to lead the industry to a next level.
- Chahat Mishra is Sales Analyst, Valuefy Solutions, while Dr. Raja Roy Choudhary is Director at Universal Business School.