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A new hope for wealth and investment managers?

28 March 2022 – The greatest challenge to our wealth management industry to continue this level of growth is how to scale the business and replicate the success model without incurring a burdensome level of additional costs.

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The pressure to achieve growth is constant. Therefore, the greatest challenge to our wealth management industry to continue this level of growth is how to scale the business and replicate the success model without incurring a burdensome level of additional costs.

Front-end digitisation in wealth management has been lagging many other consumer-facing industries, and hardly keeping pace with rising customer expectations. At the same time, IT and operations need for modernisation. Many wealth firms still remain saddled with manually intensive processes and complex servicing arrangements, leading to high operating costs, in a scenario of lower margins, fierce competition and ever-demanding regulation.

Investments in digital technologies are helping managers innovate and offer investors more hyper-personalised, data-driven advice and engagement models, data-driven advice and engagement models. Data is fast becoming a core competency, and those firms who will be able to convert it into actionable insights will lead the industry.

Furthermore, as wealth firms look to integrate their front, middle and back office processes and solutions, the lines between these traditionally siloed functions will blur.

The greatest challenge to the industry to continue the current level of growth is most likely to be how to how to achieve scalable and cost-managed growth.

A day in the life of an adviser

Taking a deep dive into the role of advisers, within the next decade they will gradually shed their role as investment managers to advise clients on their financial wellness needs more broadly. In order to profitably serve customers, they will need to be radically leaner than they are today and set a rising bar for operational excellence.

Today, advisers manage typically around 200 or so portfolios on an ad-hoc basis. If the firm scales up and the adviser is dealing with in excess of 500 portfolios, the logistics of reviewing each thoroughly and taking any required actions on a daily basis becomes unrealistic. Outside of the increased number of portfolios to manage, other challenges come on top: increasing volumes of data to consume, more rules surrounding the management of the client mandate to monitor, more regulatory guidelines to comply with, all leading to less time to manage an individual portfolio.

Where can technology assist?

This is where technology can assist advisers and enable them to focus their valuable time and efforts where it is required. Technology can reduce the burden of time-consuming repetitive daily activities through Smart Advisor Desktops acting as “digital assistants”to help.

Coming to the practical daily workday of a wealth or investment manager, let’s consider some of the time-consuming activities.

1. Compliance and continuous monitoring

The number of compliance rules to check within investment portfolios is growing  every  day. Balancing risk   against   return   is   becoming   more   complicated, but by using  technology  this   can   be   done   in   the   background,   continuously and automatically  generating alerts when breaches occur. Using intelligent assistance can help proactively prevent breaches, reduce risk and recommend new investment ideas to act faster and more efficiently.

2. Consistency between pre and post trade checks

As an advisory business, you need to be proactive in making proposals or dealing with clients requiring advice. An AI-based checking engine can automatically check investment decisions, to ensure suitability before trading. Rebalancing can be executed more proactively because the   digital assistant is continuously looking at investments and their objectives, therefore suggesting different courses of action that recommend how best to change the portfolio to achieve the best return.

3. Alerts driving efficiency and adding value to advisory

A digital assistant can help looking across  all information in the book of business at a glance, and  then  prioritises  the tasks  needed today, this week, next month and so on.

Indeed, a branch manager or divisional manager, can also have a team Smart Desktop that consolidates what is happening within their area of responsibility.

Using a Smart Desktop digital assistant approach provides a sharp shortcut to tasks, exploiting a large  amount of existing data from multiple sources and consolidating everything in one place to help manage a book of business more efficiently, making the firm more effective and improving headcount ratios. The focus and effort is then only on automatically highlighted exceptions, whilst the remaining book of business is being maintained, is compliant and on track to meet a client’s goals.

The Smart Desktop approach ultimately enables a firm to effectively manage more clients, deliver more focused attention where it is needed and concentrate on growing the business.