The wealth management and private banking industry has embraced and undergone significant transformations in recent years. These technological advancements and the changing demands of clients have gone largely hand-in-hand. Change elsewhere in the lives of the end customers has been imported into their expectations for their private banking and wealth management needs.

And within the banking industry, we have often seen change led by the retail banking providers - the use of mass mobile functionality, for example, has been one noticeable change that has become pervasive further up the value chain into wealth management.

Integrating technology in wealth management and private banking presents numerous exciting opportunities. Professionals can leverage automation and digitisation to enhance efficiency, expand their service offerings, and reach a broader audience. Wealth managers can provide clients with personalised experiences, using data-driven insights to tailor solutions to their unique goals and aspirations. Technology enables professionals to collaborate seamlessly across borders, tapping into global expertise and networks to deliver optimal outcomes.

But where does trust come in? The wealth management industry is obviously no stranger to the concept of trust. Latterly, with the advent of technology, the industry has needed to move to a model where integrating technology and human expertise can lead to exciting opportunities for professionals and clients alike. All too frequently, we see trust abused, which is the reminder that highlights what a valuable currency it represents.

The trust can reside in a brand and is delivered by the ability to instil trust from clients into individuals, their competence, and, beyond the firm, their access to networks of other professionals.

“Doveryai, no proveryai” or “trust, but verify”, the Russian proverb made famous by former US President Ronald Reagan, means that a responsible person always verifies everything before committing to a common business with anyone, even if the other party seems completely trustworthy.

Security
Trust has long been a valuable adage, but verify - it is essential for today’s wealthy individuals and families. Indeed, while integrated systems and platforms have revolutionised the possibilities for the industry, they have brought new challenges and risks in the digital sphere into play. For example, remote consulting for wealthy individuals and families is now a core proposition for leading wealth management firms. But this brings about authentication and security challenges. Thus, a central tenet underpins success: trust and whether the client trusts the bank to protect their data and affairs.

Applying a 'trust but verify' approach to information security and risk management is essential with today’s speed of business, which is constantly challenged by an ever-evolving and advancing threat and vulnerability landscape. We often trust that security controls and capabilities have been implemented comprehensively and operate as intended. Unfortunately, for many, that is not always the case. As families and businesses evolve, they realise that their environments are not nearly as protected as previously thought. Audits, risk assessments, and security reviews uncover deficiencies in their security. In the most unfortunate of circumstances, families may not know how vulnerable they are until they experience a material security incident from which they believe they should have been protected.

Trust has always been at the core of wealth management and private banking. High-Net-Worth Individuals (HNWIs) and families seek out professionals they can rely on to safeguard their assets and provide strategic guidance. In an era of technological advancements, trust becomes even more critical. Clients need assurance that their financial wellbeing is in safe hands and that their interests are prioritised above all else.

The commodification of family office services
In this second example, we see that the rise of integrated systems and platforms has facilitated the commodification of family office-type services, making them more accessible to individuals with lower levels of wealth. This democratisation allows a broader range of clients to benefit from the expertise typically reserved for Ultra-High-Net-Worth Individuals (UHNWIs). While this shift presents challenges, it also creates opportunities for wealth managers and private bankers to expand their reach and deliver personalised services to a more diverse clientele.

In a recent study - Manifesto Growth Architects cites four key pillars of trust:

1. Delivering on the brand experience.

2. Bring digital-first, but human touch.

3. Using data to be close to your customers’ needs.

4. Engaging in two-way conversations.

Clearly, at the family office and family adviser level, there is a premium on personal relationships and the quality of firm - which is often equated to the brand.

Some key factors to consider
Expertise and services; assess the expertise and services the family office offers. Look for a team with a strong background in wealth management, investment strategies, tax planning, estate planning, and other areas relevant to your specific needs. Consider whether the family office has experience working with families of a similar size and complexity.

Reputation and track record; research the family office's reputation and track record. Seek referrals and testimonials from existing clients or industry professionals. Review performance history, including investment returns, risk management practices, and client satisfaction.

Client-centric approach; consider the family office's approach to client service. Look for a client-centric culture where your unique needs and goals are prioritised. Assess its ability to provide personalised attention, tailored advice, and proactive communication.

Independence and objectivity: determine the family office’s independence and objectivity. Ensure it is not influenced by conflicts of interest that may compromise its ability to act in your best interest. Look for transparent fee structures and a fiduciary duty to prioritise financial wellbeing.

Network and connections; evaluate the family office's network and connections. A strong network of professionals, including legal advisers, tax specialists, and investment managers, can provide valuable resources and expertise to support your financial affairs.

Technology and reporting capabilities; assess the family office’s technology infrastructure and reporting capabilities. Look for modern systems that provide secure access to real-time data, performance reports, and customised financial statements. Efficient and transparent reporting helps you stay informed and make informed decisions.

Cultural fit and communication; consider the cultural fit between the family and the family office. Open and transparent communication is essential for a successful relationship. Ensure the family office understands and respects your family’s values, goals, and communication preferences.

Scalability and flexibility; consider the family office’s ability to scale and adapt to your changing needs over time. As your family and financial complexity evolve, ensure that the family office can accommodate growth and provide flexible solutions.

Risk management and compliance: evaluate the family office’s risk management and compliance practices. Look for robust risk assessment procedures, rigorous compliance measures, and adherence to regulatory standards. This ensures that your family's wealth is protected and managed within the boundaries of legal and ethical frameworks.

Cost and value; consider the cost and value provided by the family office. Assess the fee structure, including management fees and any additional charges. Balance the cost against the quality of services, expertise, and value-added benefits they bring to your family’s financial affairs.

By carefully evaluating these criteria, you can select a family office that meets your requirements and helps you achieve your long-term financial goals.

Adapting to the changing investment landscape
Finally, the choice and selection of private investments have also evolved with the changing investment landscape - but can investors trust their advisers to deliver the right mix? Capital markets, venture capital (VC), and private equity (PE) funding have become more prevalent, providing alternative investment opportunities. Wealth managers must navigate this dynamic environment, staying well-informed about emerging trends and identifying lucrative investment prospects for their clients. Technology plays a vital role in gathering data, analysing market trends, and supporting informed decision-making.

Making sense of it all encapsulates the core challenge faced by wealth management and private banking professionals. In a rapidly changing landscape, they must deeply understand complex financial concepts and provide best-in-class advice to clients. Combining human expertise and technology is key to successfully navigating this landscape. Technology empowers professionals to streamline operations, enhance data analysis, and provide clients with real-time insights. However, the human touch remains indispensable in building trusted relationships and interpreting nuanced client needs.

The future of wealth management and private banking lies in embracing the synergies between trust and technology. As the industry continues to evolve, the ability to instil trust in clients and provide expert guidance will remain paramount.

Professionals must navigate the changing investment landscape, capitalise on digitalisation and modernisation, and cultivate an understanding of clients’ evolving needs. By striking the right balance between human expertise and technological innovation, wealth management and private banking professionals can seize opportunities, creating a positive and exciting future for themselves and their clients.

It is this marriage of the enduring currency of trust and the deployment of technology at its service that will be a hallmark of successful firms.

Interested in reading the full report? You can read this edition of the UK WealthTech Landscape Report online here.