News & Events

06 Jan 2016

Objectway: Taking a closer look at wealth management and technology trends for 2016


It has taken some time, but in 2015 the private client wealth management segment took its first tentative steps toward adopting digital investment technologies that have taken hold in the affluent and retail segments much earlier. Still, for some wealth managers, the journey towards digitisation must feel a lot like needing urgently to get to a destination by driving down a road that is still being paved. With many wealth management technology trends still clearly emerging, it's hard to know which are safe to invest in to meet investor expectations and increase competitiveness. So let's take a closer look at a handful of well-established trends and technologies, starting with the one that is driving the others: the rise of next-generation investors and their appetite for digital technologies.

Next-gen investors driving disruption
Unlike their baby boomer parents, millennial and gen-x investors are not going to have to acquire the bulk of their wealth the way their parents did. Many of these next-gen investors stand to inherit it on a grand scale. According to research firm Celent, this group consists of roughly 160 million investors in Western Europe and the United Sates -- a demographic so large that financial institutions even in the HNW segment can no longer afford to ignore it. What are some of their key characteristics and expectations? For starters, these investors are digital natives, which means in their world digital technologies have always existed. Accordingly, they expect omnichannel real-time access to their data in a variety of digital channels -- from online to mobile devices including tablets and smartphones. They are also cost-conscious and value low-cost high-quality investment services, along with passive investment strategies. Their self-directed investment style has driven a preference for investment information and self-education, as well as a kind of implicit skepticism towards traditional financial institutions and advisors.

The hybrid investment model
It is this group that has engendered the massive digitisation wave and the emergence of automated, web-based robo-advisory services. While robo services have begun to disrupt traditional advisory and segmentation models, they cannot supplant traditional services valued by other investor segments. They have, however, helped to produce one of the clearest and most important wealth management trends for 2016 -- the move to a hybrid advisory model. A hybrid model blends the self-service or self-directed online tools of a robo platform with the collaborative advice-based approach favored by more traditionally minded investors. A hybrid digital platform ideally offers omnichannel access to investment data with a polished customer-centric digital user experience. It provides the investor with an engagement approach along his/her own desires. What exactly does that mean? It simply means a digital online platform that provides sophisticated tools for research, financial planning, goal planning, advice generation, trading, along with a collaboration channel for bouncing ideas off of an advisor. Part and parcel of this digital experience platform are co-browsing capabilities that allow an advisor to concurrently present on the client's desktop while video conferencing or speaking on the phone or meeting in a branch. All these interactions and engagements events are archived, monitored and tracked in a regulatory-savvy fashion.

Lowering costs through platform consolidation and mass customization
Behind the digital experience front end is a consolidated wealth management platform that interacts with the bank's legacy systems and merges CRM and onboarding tools, portfolio management, performance measurement, client reporting, financial planning, trading and settlement. Providing such a personalized & tailored engagement with the investors in a factory-style operationally excellent fashion creates a sweet spot for wealth managers and will structurally harness them for the future. The fastest, most efficient way to deploy a hybrid model and a broader digitisation strategy is to adopt a digital experience platform along with a consolidated wealth management platform. If you have both of these pieces of your system, you can achieve another important industry trend -- mass customization of investment services -- the ability to meet the specific expectations of a large and diverse group of clients in an automated and cost-effective manner.