In this series, The Wealth Mosaic (TWM) interviews leading members of the wealth management and FinTech communities to find out more about them, their journey, their perspectives on the market and how they see the future.

Recently we spoke to Mark Trousdale, Chief Marketing Officer and EVP of Business Development EMEA at InvestCloud. We discuss how, whilst the wealth management industry has largely come to terms with the changing expectations brought about by the experience of the last three years, the industry has yet to catch up. The resulting shift in focus for the front office toward revitalising the client experience necessitates robust digital tools to help firms with client retention, client growth and operational efficiency.

Hello! Please Introduce yourself!

Hi I’m Mark Trousdale, part of InvestCloud’s founding team and executive team. I serve as Chief Marketing Officer globally, and I also look after business development in Europe.

What was the impact of the Covid-19 pandemic on the wealth management community? How does technology need to change to accommodate all of that?

The pandemic has pushed a great many aspects of life online, not least of all financial interactions and, increasingly, financial advice, even if a human sits behind it. On the face of it, this increased digitisation might be seen to run counter to the growing demand for greater personalisation by clients.

But on the contrary, technology is an ever-more important resource for wealth managers and other advisers, aiding engagement with clients and enabling hyper-personalised communication and planning, as well as presenting opportunities for progressively more sophisticated and personalised portfolio construction through shopping for and executing on the right financial products to fulfil client plans.

The way that advisers and clients interact – whether the frequency, the depth or the breadth – have driven widespread changes in expectations on the part of clients, and these changing expectations have driven the need for technology needs to deliver on ever-expanding capabilities. If wealth managers can harness technologies to do this, they can delight the clients on a service level, meaning they vastly improve client retention and drive referrals. But being able to achieve this is down to leveraging the right technology to do it.

Digitisation: How has adoption sped up in the past year to meet client demand? What are the specific functions that have been the focus for digitisation?

Even as human interactions normalise again, the financial services industry has shown a broad recognition of the sustaining value of digital communication. Technology has become even more of a lifeline for maintaining relationships and has demonstrated its ability to strengthen relationships outside of the face-to-face. Strong relationships depend in no small part on empathy.

To maximise empathy in their client relationships, advisers also need to leverage the right digital solutions to be able to offer digital empathy. It starts with better understanding clients by using digital enablement solutions and behavioural science techniques to understand individual client needs, preferences and behaviours, and then presenting appropriate choices and digital experiences that maximise digital engagement and fulfilment. By showing that the adviser truly understands and shares the feelings of the client – and is taking action based on them – this is what takes the client-adviser relationship to the next level.

By nurturing relationships, not only do you increase the chance of retaining the client (and their business) through brand entanglement, but you also grow your client base by opening the door to mobilising that client as a referral source.

What do clients want?

Clients do not stick around if their experience is poor. McKinsey’s research shows that 70% of the client experience is based on how the client feels they are being treated, which has a lot to do with whether communication is good or not. In this sense, good often means that the communication feels authentic, and that it feels appropriately tailored to the individual client, providing clients what they want, when they want it.

Beyond delivering great communication, when you give clients the sense that they are affiliated with a community of like-minded individuals, it provides a strong sense of belonging.

What are the biggest influencing factors when it comes to client retention and growth?

The retention of existing clients should be at the top of your firm's to-do list. It is significantly more expensive to acquire a new client than to retain an existing one – in fact, according to the Harvard Business Review it can be 25 times more expensive. There are actionable steps, using digital tools, that will go a long way toward keeping clients happy and engaged.

Retaining clients means giving them what they want, as we just discussed. But equally it means anticipating needs and wants they don’t even know they have, like Apple. For example, the right digital tools put all clients’ assets in one place. That means the client’s investments, financial plan, bank account balances, documents, educational materials, personal notes, correspondence and more are all together, always to hand. This is what we call a ‘life vault’.

When you provide something like this to a client, it is of massive value to them, but equally it creates massive brand entanglement with your business. When you create brand entanglement, it’s really hard for a client to want to leave. Brand entanglement is all about driving loyalty through adding unique value that clients can’t find elsewhere.

Client growth is also fundamental to all businesses. The best way to grow clients in any industry is through referrals, and the most effective way to achieve this is by creating exceptional digital experience and added value that gets clients talking and sharing. Think about YouTube vs Vimeo, two video hosting platforms with one key difference – the share button. YouTube is still extremely relevant, whereas you may not have heard of Vimeo. The share button (a type of digital referral) is one of several techniques that deploy the behavioural science principle of Community – one of seven dynamics of gaming theory that InvestCloud uses in the configuration of our apps. 

This ability to share is particularly powerful in that it mobilises your clients as an extension of your sales force. In terms of business value, Bain & Company report that a net promoter score (between 7 and 10) has a customer lifetime value that is 600%-1,400% higher than a score 0-3. The numbers do not lie.

Data: What is the new norm when it comes to gathering data and making sense of it to provide a relevant and personalised service?

The financial industry has become hamstrung by legacy technology and data silos, as well as complicated and inflexible ‘point solutions’ that are extremely challenged when trying to work with each other. These systems simply do not integrate well, and the result is that data is everywhere – totally disorganised and difficult to use. Because of this, time and energy are being drained by many ‘swivel chair’ practices. Not to mention, lacking integration contributes to adviser and other employee churn.

This is somewhat driven by a misconception that the complexity of our industry is unique and unsolvable. But we know technology has solved many complex problems, at scale. The right digital tools create massive operational efficiency via streamlined data management. They allow advisers to enter data once, and only once, and focus their energies on delivering exceptional service, resting assured that they have accurate data.

In order to achieve this, wealth managers should use a digital warehouse to overlay existing systems, and this digital warehouse should incorporate a comprehensive financial data model in order to normalise all clients’ financial data into a single location, for a single version of the integrated truth. The digital warehouse should also deploy data science principles to unify data from disparate and complex sources, creating actionable insights for clients.

It can also provide deep analytics on individuals’ actions across an ecosystem of clients, advisers and asset managers. This means that relationship managers, advisers and support staff like paraplanners can spend more time serving their clients, instead of rekeying data and worrying about mistakes.

When you combine streamlined data management with powerful apps – like client lifecycle management, CRM, suitability, risk profiling, reporting and the like – you start to achieve multiples of value from the data entered once, and only once.

What does the future hold? What do you think will be the major topic of discussion in 12 months’ time and why? What technological changes will have happened and what will be then top of the list?

The last three years have focused the wealth management industry’s attention on what is not going well, what clients really want from their wealth management relationships and how those relationships are tested during a bear market. I find that hopeful – hopeful because it means wealth managers are moving beyond the sense of comfort that some of them had been lulled into whilst the good times continued to roll, and they’re actually talking about making dramatic changes to keep up with client retention, client growth and operational efficiency imperatives.

But talk is ineffectual without action. Therefore, I believe the next 12 months are going to be about taking actions to achieve firms’ goals. There is likely to be a lot of critical thinking done and hard decisions taken about value drivers in wealth managers’ businesses. It is already clear where legacy technology and point solutions are falling short. Sometimes this is about raw functionality gaps, but more often it is about the missing ‘X factors’: being design led and Cloud first; applying behavioural science principles; leveraging a digital warehouse with a sophisticated data model; and avoiding hard coding in order to hyper-personalise and move at speed, affordably.

InvestCloud for our part has focused and will continue to focus on these important technology differentiators, in order to continue to deliver value to our clients.

If you would like to take part in ‘The Wealth Mosaic Talks To…’ interview series, please get in touch with us at office@thewealthmosaic.com.