Remembering her Majesty the Queen of the United Kingdom, Elizabeth II, she often said that her public appearances were important because “I must be seen to be believed.”
How can wealth managers help clients visualise their financial plans? Using technology to simulate different scenarios, provide analytics and keep clients engaged is one way to proceed.
Adopting a digital operating model
Most wealth management organisations have tried but failed to digitise their operations. They have spent money and years trying to upgrade existing systems and invest in new technology. Consequently, employees in the wealth industry are unenthusiastic, if not cynical, that digital transformation initiatives will succeed.
How can wealth managers get excited again about using technology to serve their clients better and to do their jobs in a more agile and intuitive manner?
The financial simulation engines deliver on many dimensions, for clients and for wealth managers.
Serving Clients, not Products
Many wealth managers rely on flogging products at clients, but this is not an effective way to build loyalty or revenue. The products are divided into silos, and each product – equities, fixed income, alternatives – is then sold on a standalone basis. What clients need and want is an integrated, holistic framework for viewing their financial situation. By offering a simulation framework that is product-agnostic, wealth advisers can build trust with clients who can plug in their own data to ascertain the best product mix for their situation.
Kidbrooke® has developed OutRank®, a financial simulation engine helping wealth managers to build innovative, reliable and secure financial experiences.
Focus on the lifecycle, not the products
Clients need advice and guidance with respect to their own unique circumstances. Wealth advisers typically gain knowledge about their clients’ preferences and requirements from their interactions, but the data resides in the minds and notebooks of individual advisers. With a simulation engine, advisers can add the intelligence gathered from the population statistics and their institutions’ research departments to their decision-making. This will drive better analysis depending on what phase of the financial lifecycle a client is in.
However, with data simulations, one can engage clients with relevant information about the value of their portfolio within the context of their overall financial planning process. For younger people, it may be difficult to imagine what life will be like in 30 years’ time. Modelling different scenarios can inform decision-making, building awareness and attention.
For middle-aged people, in the so-called “sandwich generation” of caring for children as well as elderly parents, financial planning may be de-prioritised in light of multiple caring priorities and working.
For older clients, closer to retirement, the notion of financial planning may be viewed as something relevant for younger people, when in fact it is never too late to look at one’s portfolio and undertake a comprehensive “financial check-up”. For example, a simple quiz could help clients understand if their risk appetite was too low. They could then be encouraged to speak to their financial adviser who could help assessing attitudes towards risk, reward, and longevity, with a view towards balancing a diversified portfolio.
Ramping up retention
How do advisers engender loyalty? Clients need to know they are valued as individuals, with specific circumstances, constraints and opportunities. They do not want a cookie-cutter solution, which they know is offered to many other clients.
By engaging with clients and introducing them to simulations of different states of the economy and their finances in the future, one can deepen the existing relationship and build an enduring connection.
Clients can be disengaged with financial planning, focusing on other goals involving their careers, homes and families. Equally, they may be anxious or worried about their financial futures. It does not have to be that way. With OutRank®, one can take the client on a journey of discovery: to understand appetites for risk and reward, attitudes towards saving, an affinity for certain asset classes, and scenarios that are possible. Using financial simulations can make financial planning enjoyable.
With Outrank®, Kidbrooke has a track record of working with insurers and other financial institutions to offer a seamless customer experience in the management of pensions, insurance policies and other investments. We offer a unique framework that can be customised for each client of a wealth management firm.
Keeping advisers motivated
They say it is all about satisfying the customer but keeping your front-line staff happy is equally important. According to a McKinsey study, relationship managers in wealth spend 60-70% of their time on administrative activities – not with their clients! If advisers can be equipped with the right tools, they can spend most of their time with clients, which is rewarding for all parties.
In all stages of the customer lifecycle, the ability to create simulations makes every process easier: from acquisition and onboarding to engagement and relationship deepening to client servicing and retention. In the long run, the deployment of technology contributes to client and adviser retention.
Action
How can using a simulation engine help wealth advisers engage with clients? We believe that even sophisticated investors are overwhelmed with information and keen to consolidate their investments across providers and asset classes. Some banks and fund managers offer planning tools, but these may be biased towards a particular product such as funds. Clients need tools that are objective, fact-based and neutral. At Kidbrooke®, we keep our technology transparent, with assumptions articulated, data enumerated, and processes made clear. There is no “black box”; clients understand which data goes into the framework and which data comes out of it. They can interrogate the simulation and reformulate it with different sets of assumptions.
