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OCT 12, 2021

The digital agenda outlook, for wealth managers

Tariq Khan

Client Development Director

Reading time: 2 min


The Goodacre Securities Industry Conference was the “cannot miss” appointment for the UK Securities industry to discuss around the priorities for Wealth Management firms over the coming 12 months. Digitising wealth management is top of mind. As Objectway’s recent research with senior wealth managers and many ongoing conversations with board level executives confirm, the sector sees this as critical in order to achieve client growth and operational scale. Covid-19 has amplified the spotlight on digitising the sector. Indeed, 75% of clients believe that improved digital engagement will make them want to see their wealth manager even more. Client demands have changed and their digital experience is now a real differentiator between firms: a personalised experience is seen as a reason to stay with or choose another firm. As a result, firms must ensure that their digital channels are fit for purpose when it comes to delivering a great overall client experience.

Achieving hyper personalisation

More than half of 48 wealth management firms that Objectway spoke to earlier this year are developing their own hyper personalised strategies and their current state of progress varies considerably. Most firms would like to be able to offer personalised portfolio construction based on client preferences, and 4/10 firms are currently implementing this. One of the major hurdles is the state of data in wealth firms. This is often wide spread in multiple systems and manually inputted leading to duplication and error. Firms are aware and realise the importance of addressing this as they look to change/upgrade their systems.

Achieving operational scale

The vast majority of firms in the industry are not scalable and haven’t been for many years. One of the main reasons for this is inefficient IT and Operations. IT costs as a percentage of total revenue vary significantly across the industry. The median is close to 10%, however the peak is over 30%! Legacy IT systems are a major contributor to this statistic and most firms are burdened with multiple systems, which are not well integrated and require many manual workarounds to communicate. Currently, there is a negative correlation between IT spend and profitability in the market. Firms appreciate that changing and simplifying their IT estate will be a major challenge. There is a shift in the market to consider flexible modular architecture as opposed to a one size fits all approach. Overall, there is a massive opportunity in the sector to improve efficiency and scalability through digital change.
Indeed, during the conference Objectway discussed examples in the industry of firms who have successfully managed to grow at scale post digital transformation.