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Digital assistants: alleviating burdens permeating wealth management

7 February 2022 – David Wilson details on Finextra where technology can support advisers and enable them to focus their valuable time and efforts where it is required.

By 2030, according to multiple management consulting firms, advisers will gradually shed their role as investment managers and become more like wealth coaches who advise clients on their financial wellness needs more broadly.

By 2030, according to multiple management consulting firms, advisers will gradually shed their role as investment managers and become more like wealth coaches who advise clients on their financial wellness needs more broadly. In order to profitably serve customers, wealth firms will need to be radically leaner than they are today and set a rising bar for operational excellence. Digital technologies will help wealth managers innovate and offer investors more hyper-personalised, data-driven advice and engagement models. Data will become a core competency, and those firms who will be able to convert it into actionable insights will lead the industry.

Regulatory and compliance burdens will continue driving up costs at the same time that investor and regulatory scrutiny is forcing fees lower. Managers will need to ensure that investment products and related services are continuously updated to align with investors’ needs, driving firms to refocus on strategic positioning. The greatest challenge to the industry to continue the actual level of growth is most likely to be how to achieve scalable and cost managed growth.

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.

This is where technology can support 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 manager, let’s consider some of the time-consuming activities.

Compliance and continuous monitoring

The number of compliance rules to check within investment portfolios is growing everyday. 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 intelligence assistance can help proactively prevent breaches, reduce risk and recommend new investments ideas to act faster and more effeciently.

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.

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.

To know more on how to achieve growth in the current wealth management setting download the full paper here.