For this piece, we spoke to Ian Ewart, Adviser, Investor and Non-Executive Director. He says that delivering enhanced service is highly dependent on technology and that a collaborative approach between vendors and wealth managers is important in achieving this. But, he says, although it has never been easier to create technology to solve a problem, it has never been harder to sell it or to even be visible in a fragmented and opaque marketplace.

Please introduce yourself
I have been in the industry for over 30 years, and during that time, I have seen the industry transform with new opportunities. Although there are challenges, overall, it remains a very profitable sector. There is broad potential across multiple aspects for firms and end customers. The goal of the wealth manager has always been to service their customers and provide them with what they want, where they want and how they want it. Whether that is wealth preservation, accumulation, business planning, succession planning, taxation advice, trust structuring, or philanthropy – true wealth management goes far beyond managing a portfolio of investments. Today’s issue is providing that overall service, intermediate service and advice, and being genuinely relevant and valuable.

Wealth managers need to ask themselves what they can do that is over and above. It could be in terms of educating clients, addressing next generation challenges, and ensuring that they are fully informed at all times of what is happening and why. They need to play the role of a valued but critical friend, showing clients the topology and guiding them through it, being the voice of reason and the calm on what can be a choppy voyage through the economic cycles.

 What are the major issues facing the wealth management industry?
A major question facing wealth managers is how to stay relevant in a world where many aspects of your service are readily available, intermediate, and online. Clients are paying for the convenience of having all their affairs looked after by one entity and having a single point of contact in the relationship manager of each firm. But relationship managers might be working with multiple firms, and the opportunity remains to be the end client’s consolidator. Consolidation and the value overlay for reporting, tax and the drive to simplicity are important drivers.

The other significant advantage that the wealth manager confers is the ability to manage complex affairs and access specialist advice via relevant professionals such as lawyers and accountants. Therefore, any wealth manager needs to be able to respond to that complexity and bring value to that client that adds something they would not be able to get online. The other side of the equation is that they need to recognise that technology means they can, for the most part, let go of all the basic stuff that people can do for themselves online – where there might be low value-added, and simplification would be welcomed. Not yet true for all, but there is definitely a growing familiarity.

How do ecosystems come into play here?
One potential model for going forward is to use the embedded finance model and embed those simple, basic wealth management elements and other offerings, such as pensions, so that the door to the wealth manager is opened, and from there, the relationship can grow and evolve. The other is for the wealth manager’s own technology stack to become an ecosystem and offer clients those everyday services and products – thus acting as a touchpoint and a conduit.

Wealth managers have to recognise the democratising aspects of technology – today, they can offer hyper-personalised services to many end clients, which previously would just not have been possible. This combination of technology and human work, the marriage of digital and analogue services, can be a winning combination.

This is technology enabling a better experience and a better-managed relationship.

How has technology impacted service delivery? Are wealth managers ready and able to digitise their businesses?
Customers are on an unstructured journey and are not sure what to expect. Covid-19 brought about 10 years of technological advances in 18 months. Different firms are hooked onto different parts of the advancements. Instead of wanting the relationship managers to answer a phone call, clients can now book a call at a time of their choosing.

Today’s question is not what can be digitised, it is what should be digitised. People are obviously drawn to convenience, but this is very much an industry based on people, and the adviser is the key holder to so much knowledge, experience, and context. That could never be digitised.

It should not be forgotten or minimised that the role of cyber and fraud security is key in maintaining privacy. Indeed, wealth managers should expect to offer cyber consulting and digital family privacy services going forward – as it currently happens with the larger family offices.

How can technology help the adviser?
Technology is the enabler of the adviser. The proper functionality and integrations with an ecosystem of professional services mean that the client gets a supercharged adviser who has access to insights, real-time portfolio information and the means to communicate that to the client in a convenient and timely way. Technology can provide automation, thus freeing up the adviser to spend more time with the client, enhancing the customer experience – or servicing more clients. On a basic level, the technology needs, therefore, to give the wealth manager a platform from which they can successfully provide an enhanced service to the client. 

How can wealth managers and technology vendors best work together?
It makes sense to collaborate on the technology stack and the various pieces within. Wealth managers need to view an ecosystem approach as a means of getting the best of everything and having a reduced concentration so that no single provider is systemically important.

However, for vendors, it is difficult to get to proof of concept, funding, and then getting in from wealth managers. Although it has never been easier to create technology to solve a problem, it has never been harder to sell it or to even be visible in a fragmented and opaque marketplace. Indeed, with many wealth managers, there is a huge procurement wall which means that very few people actually have the knowledge and experience to go out into the market and source what they need. Sandboxes exist, but they can be expensive and hard to run successfully. Outreach is thus problematic for both vendors and wealth managers alike.

What will we see, over the next year or so, regarding technology adoption and new trends in the wealth management industry?
People tend to overestimate the importance of the short term and underestimate the importance of the long term. Something that the industry is going to have to deal with is the societal problem of wealth concentration. It seems there is a demand for a fairer society and for their clients to be able to scope and describe how to use their wealth for good. So, I certainly believe impact investing will become a preferred investment style increasingly, be that through ESG overlays or philanthropic activity or portfolios constructed with impact outcomes in mind.

There is, with some clients, an uneasy backdrop of conscience when it comes to how the wealth was made and grown in the first place, and this will need to be addressed as part of the wealth manager’s overall holistic remit. The environmental and societal impacts and concerns will mean the adviser is more frequently required to turn their attention to a broader range of investment concerns as the ethical considerations are broadened.

If you would like to take part in our ‘TWM talks to…’ series, please get in touch with us at office@thewealthmosaic.com