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Digital wealth management solutions for trusts and foundations

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by Altoo
| 11/12/2023 09:30:00

Significant advancements in digital technology are driving an enormous shift in the wealth management industry. This transformation is altering the way wealth management services are delivered, with major implications for trusts and foundations.

These organisations, which previously relied on traditional financial management systems, are now implementing digital solutions to improve efficiency, accuracy, and client satisfaction. The purpose of this article is to investigate the different aspects of digital transformation in the context of wealth management, with an emphasis on the consequences for trusts and foundations. We will look at the advantages of digitisation, the rise of Robo-advisers, the strategic integration of FinTech advances, and the overall influence on the operational and strategic landscape of wealth management. Moreover, the article will illuminate how trusts and foundations can capitalise on these digital breakthroughs to maximise their operations and better serve their beneficiaries.

The digital landscape in wealth management
Because of evolving digital trends, the wealth management business is undergoing a major transition. New consumer tastes, technological breakthroughs, and shifting demographic, economic, and regulatory environments are driving this transformation. The rapid growth of digital capabilities and goal-based planning is becoming the new industry norm, signalling a significant departure from previous methodologies.

The growing digital tendency of retail investors has established a new benchmark for wealth management organisations. Customers now value the quality of the customer experience over product offerings. This expectation applies to financial guidance, as investors want intelligent and tailored advice, whether supplied in real time or by automated finance algorithms. Wealth management organisations are reacting by developing conscious, intelligent, engaging, transparent, and collaborative digital experiences.

The journey towards comprehensive digital transformation is ongoing. Powerful automated advising engines, dynamic client engagement planning, next-best-action algorithms, and real-time digital engagement models are still being developed. Once completely integrated, these innovations are likely to continue to change the market by delivering individualised material and experiences to individual investors.

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Benefits of digitalisation in wealth management

1. Efficiency and cost-effectiveness
The use of digital technology in wealth management has considerably simplified operations, increasing efficiency and cost-effectiveness. Artificial Intelligence (AI), for example, enables financial advisers to gather diverse information into a unified digital platform while closely monitoring risks and exposure. This results in significant time and cost savings, especially for organisations with large portfolios. The AI spectrum, ranging from robotic process automation (RPA) to advanced machine learning (ML), improves operational efficiency and delivers real-time functionality, revealing possibilities and trends.

2. Consistent and reliable service
AI techniques in wealth management reduce emotional biases in investment, resulting in more consistent and dependable financial advice. This technology assists advisers in maintaining consistency among services by offering tools for complex data processing and establishing detailed audit records. Firms like Tilney Smith and Williamson provide their clients with clarity and confidence in their investment decisions by using interactive graphical visualisations of portfolio data, such as charts and tables, greatly decreasing decision-making noise and confusion.

3. Dynamic and personalised advice
Technological tools are essential for providing dynamic, personalised guidance. Tools such as behavioural profiling aid in determining a client’s risk tolerance and financial personality. This data is then used to determine an appropriate risk level and asset allocation for each client. Firms also employ a combination of client data, internal analytics, and live data feeds to make near-real-time choices that fit with clients’ best interests and risk tolerances.

4. Enhanced customer satisfaction
Customer satisfaction has increased as a result of the digital transformation in wealth management. Digital technologies make it easier to understand the costs and fees involved with financial advice. UBS Global Wealth Management, for example, takes a hybrid approach to digitisation, developing technologies to assist client advisors in providing effective solutions and fostering better client relationships. This method also aids in the straightforward communication of prices and charges to clients, ensuring transparency and trust.

5. Facilitating responsible investing 
Responsible investing is becoming more accessible and transparent because of digital platforms. They give clients greater options for how their assets are allocated, with an emphasis on environmental sustainability, social value, and ethics. This transformation is especially essential for a new generation of investors who want to make a difference in their communities and the planet. Robust digital wealth management solutions are critical for supporting long-term investments by allowing advisers to precisely monitor client preferences and make informed decisions based on comprehensive data.

The role of Robo-advisers and automation
The wealth management sector is undergoing a dramatic transition towards automation and the use of Robo-advisers, signalling a big transformation in how investments are handled and advised. It is expected that by 2025, Robo-advisers will manage more than US$16 trillion in investments. This quick expansion demonstrates the growing reliance on these technologies in the FinTech field.

Robo-advisers offer a range of benefits that are reshaping the wealth management landscape.

Greater accessibility
When compared to traditional human advisers, Robo-advisers are more accessible, inexpensive, and user-friendly. This accessibility improves wealth management services, making sophisticated investment advice and management available to a broader variety of investors.

Holistic financial management
On a single platform, these AI-powered systems provide full financial planning services. This includes managing portfolios, meeting investing goals, and reducing obligations. Robo-advisers ease the investment process for both beginners and experienced investors by providing a one-stop solution for varied financial demands.

Reduced risk of bias
Robo-advisers use mathematical algorithms for investor evaluation, ensuring that the advice provided is objective and free from human biases. This feature is particularly crucial in a field where feelings and prejudices can have a big impact on financial decisions.

Facilitated goal-setting and management
Robo-advisers generate investment objectives based on user profiles, encouraging sensible and long-term financial decisions. This level of customisation ensures that investing strategies are tightly aligned with each investor’s particular goals and risk tolerance.

Aside from Robo-advisers, intelligent automation in wealth management includes technology such as machine learning (ML), robotic process automation (RPA), and no-code development. These technologies simplify and enhance a number of business processes, including client onboarding, asset transfers, compliance monitoring, and investment research.

Collaborating with FinTech for innovation
Collaboration between traditional wealth management organisations and FinTech startups is becoming increasingly important from a strategic standpoint. The average investment in FinTech by financial institutions has increased from US$2.3 million in 2019 to over US$10 million in 2021, demonstrating the industry’s growing reliance on FinTech. These collaborations are generally motivated by the need to address evolving client needs for increased accessibility, improved user experience, transparency, and customised services.

To meet the changing needs of clients, FinTech organisations have created crucial features like platform trading, Robo-advising, and mobile money management. This has resulted in the industry’s increasing digitalisation and democratisation of assets, appealing to a broader variety of investors than traditional wealth management could.

Traditional wealth management firms are adjusting to remain competitive through acquisitions and collaborations with FinTech firms. Morgan Stanley’s acquisition of E-Trade for US$13 billion in 2020, for example, exemplifies this tendency. These collaborations not only improve technology capabilities but also allow enterprises to offer hybrid services that combine the ease of digital platforms with the personalised touch of human guidance, catering to a broader range of investor preferences.

Implementing a strategic digital transformation
Implementing a planned digital transformation in wealth management necessitates a comprehensive approach that goes beyond simple technological changes and necessitates a fundamental shift in culture and practices. The following are important steps in this transformation:

1. Customer-centric approach
Focus on the customer journey, using advanced analytics to understand and improve how customers interact with the firm’s services in a digital context​.

2. Diverse transformation models
Explore different models for transformation, such as creating a new digital business, developing adjacent digital capabilities, or transforming the entire organisation to be digitally-centric.

3. Agility and adaptability
Build a flexible digital strategy that allows for rapid changes and adaptation, moving away from traditional, rigid business models​.

4. Emphasising advanced analytics
Prioritise the use of advanced analytics to enhance capabilities and create a competitive advantage, such as understanding client segments and economic trends​.

5. Governance and structure
Develop a governance model that supports digital decision-making and transforms traditional organisational structures to be more digitally aligned​.

6. Leveraging two-speed IT
Implement a two-tier IT strategy that separates engagement systems from record-keeping systems, thereby speeding up service delivery and innovation​.

7. Identifying digital talent
Conduct a gap analysis to identify the digital skills and capabilities needed to drive transformation and create new value​.

8. Measuring digital progress
Develop and utilise a set of digital metrics to track and measure the progress of digital initiatives across the organisation​.

Each of these processes is critical for a successful digital transformation because it ensures that technological, process, and organisational changes are coordinated and aimed at improving the overall efficiency and effectiveness of wealth management services.

In light of the evolving digital landscape in wealth management, The Altoo Wealth Management Platform emerges as a particularly advantageous solution for trusts and foundations. This platform is designed to address the unique challenges and requirements of these organisations, offering streamlined asset consolidation, enhanced reporting capabilities, and insightful analytics. It simplifies the complexity often associated with managing diverse portfolios, enabling trustees and foundation managers to maintain a clear and comprehensive overview of their assets. Furthermore, Altoo’s commitment to integrating cutting-edge digital tools ensures that these organisations can engage in more informed decision-making, benefit from increased operational efficiencies, and better align their investments with their mission and values. By leveraging the Altoo platform, trusts and foundations can navigate the digital transformation of wealth management with confidence, ensuring both robust financial health and a strong alignment with their strategic objectives.

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