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Now is the time to introduce an end-to-end digital journey

Thomas Schornstein, Head Sales at additiv, looks at how best to position a digital offer within wealth management

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by additiv
| 20/04/2020 12:00:00

The wealth management industry faces multiple challenges: intense competition, fee compression, low or negative interest rates, stricter regulations and clients seeking for new servicing models, especially in the present Covid-19 situation. This forces many decision makers to review their operating and service models, and finally introduce new digital channels.

Although the digitization of the wealth management industry is not a new development, many financial institutions are realizing the importance of a digital channel embedded in a hybrid wealth management offer only now.

Digitization is not a catch-all problem solver. For example, it doesn’t help if you cannot acquire new clients in the first place. But if you are gifted with a high number of existing clients who ideally are already using some digital services, it is very likely that an additional digital offer will be readily accepted. In the present crisis, it is key that personal service doesn’t result in any physical contact or meeting the client advisor in the same room. The advisor must be able to support and discuss with their clients all relevant aspects of the portfolio online in a seamless manner. This can be done by using video conferences, secure chat communication and document exchange.

Positive effect on advisor efficiency
A hybrid wealth management digitization journey must include both advisors and call centre agents, and clients. So how should the digitization journey begin? It doesn’t have to start directly at the client facing end. In fact, it makes sense to optimize the processes around your most valuable client-facing advisors in parallel with training your existing call centre agents, thereby allowing firms to service clients in a highly efficient manner remotely (including home office) and in person. Greater advisor efficiency will correlate closely with top line growth and keep their motivation levels high. Client advisors require easy access to all relevant client information to reduce the preparation time and drive successful dialogue with their clients online or in person. The implementation of end-to-end processes is reducing the post client-interaction workload.

Figure 1: Phases of digitization in wealth management

Empower clients and advisors alike
To further enhance the client journey, the next stage is to work on external efficiency. This further reduces the workload of your advisors by involving clients directly in an increasing number of tasks. The idea of advised self-service can be a sensitive topic but should enjoy greater acceptance from clients during the present corona crisis. Introducing new digital journeys supported by the client advisor within a hybrid advisory model promises the highest probability for success. For training purposes, it is crucial that the dashboard view of the advisor and the client are identical.

Portfolio reporting is one area that is ripe for efficiency gains enabled by digitization since it is usually a very time-consuming task for every client advisor. Thus, a mobile client cockpit available 24/7 with state-of-the art login security features, and seamless user experience, should be an easy sell to any client, and in fact is rapidly becoming an expected feature from a client perspective. Portfolio reporting can still be a differentiator versus the competition if features like performance contribution, access to historic data and sensitivity analyses are embedded.

Once a client is digitally on-boarded and is using the client cockpit frequently, further enhancing the digital offer by introducing investment products through this channel is straightforward. Extending the product offer to single securities like ETFs, funds and equities is a logical next step. It is important to bear in mind that clients still expect to receive the right guidance within this process. A proven approach is to work with model portfolios for different risk categories which are customisable. Client risk profiling is either already conducted during the on-boarding process or can be done at this stage.

In addition to a pure advisory based investment product offer, it is also advisable to introduce discretionary mandates with best in class diversification benefits. This product suite can either be based on in-house discretionary mandates for each risk profile, or be based on a multimandate approach with different strategies from internal and/or external asset managers. Using external partners with strong brands could stimulate sales, in particular, for a new market entrant in wealth management. The portfolio management of these mandates can be done either the ‘classic’ way, or with fully automated algorithm-based portfolio optimization engines which include rebalancing features. In cases where the minimum investment amount is set low, there is no choice other than having a highly automated and scalable solution in place with very low marginal costs.

Value proposition
After having increased the service and interaction level of your advisors and the direct involvement of your clients in the process, you might want to consider using the power of digitization to extend your existing value proposition.

In order to keep client proximity high, more complex client solutions with an additional revenue potential can be introduced. As an example: if you would like to increase the share of wallet with your existing clients, you would aim to introduce services like financial planning, asset structuring for the next generation, access to ‘real’ assets, overlay risk management and global custody solutions, just to mention a few. We recommend covering these topics within a hybrid approach.

In summary: the ambition in this final phase of digitization is to become the client’s main point of contact for all finance related topics. The smart interaction between self-service digital channels and interaction with a client advisor (online or personal) should allow every client to choose her or his preferred model of banking. It might not be identical for a technically savvy ‘millennial’ and a ‘baby boomer’ who is approaching retirement.

Nevertheless, investment units of banks in cooperation with client advisors will orchestrate all client interactions (self-service and hybrid) and generate performance for clients and revenue for banks, fully multichannel.

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This article originally appeared in The Wealth Mosaic's 2020 Swiss Wealth Technology Landscape Report. Click here to access and download this report: