Digital transformation has sparked a shift in how financial advisors run their businesses and serve clients. Yet innovation in the wealth management space still has room to improve.
According to our research, advisors believe that gaps in their tech stacks affect their livelihood. In fact, 65% of advisors surveyed for our 2024 Connected Wealth Report say their technology setup needs improvement. An alarming 92% would switch firms over bad technology, and in fact, 44% already have. Digital transformation is aimed at helping firms keep their top talent and attracting young advisors by improving productivity and taking back-office efficiency to a whole new level.
Of course, gaps in technology vary and each firm starts its innovation journey in a different place. That said, across the board, we’re seeing firms step up their investments in innovation and automation in four key areas to move the needle farther and faster.
These entry points have a few things in common. First, they all boost efficiency, allowing advisors to spend more time serving households. What’s more, these are not siloed capabilities, rather, they support and reinforce each other to cover many firmwide needs.
Finally, they are all advancing fast thanks to artificial intelligence, which continues to quicken the pace of change in the digital transformation journey for firms and their advisors.
Account opening
First impressions matter. For advisors, meaningful digital transformation comes in the form of fast, frictionless new account opening solutions that help them build client trust and bring assets in the door faster. Yet few firms can boast having a reliable, straight-through processing solution for new account opening that encompasses multiple account types, business lines, and custodial relationships.
Advanced digital onboarding solutions dramatically streamline account set up and transfer of assets by removing steps traditionally handled manually by advisors and the back office. Using integrated, online communication tools and forms that auto-populate with pre-existing data, advisors are able to get clients up and running via electronic signature in a unified and seamless manner. These solutions eliminate days – and sometimes weeks – of paper pushing and chasing data. With burdensome barriers (read: paperwork) that have historically complicated the process now removed, advisors can focus on holistic financial planning and adding value for their clients.
Data and reporting
The evolution of big data and advanced analytics have helped modernize reporting in wealth management. Yet there’s a wide gap between advisor expectations for data quality and the reality of where most firms find themselves. Sixty one percent of the advisors in our survey agree that “bad data” is the primary obstacle they face in doing business today – and that’s exemplified by inconsistent and misleading data contained in many client reports. When advisors and their teams must manually compile reports from multiple systems and sources, data errors can be easily overlooked from one report to the next, leading to a breakdown in planning and ultimately, client trust.
The best data and reporting solutions today leverage technology that can bundle and run fully reconciled reports incorporating all account types and assets – insurance, investments, estate solutions and even held-away assets. Customized reports that once took hours to compile are generated in moments –saving advisors time and effort. Thanks to innovative data solutions and next-level analytics, advisors can provide their clients with reliable, truly personalized insights and guidance based on their needs and risk tolerance. Even better, the data is the same across sources and systems, meaning there is no longer the never to worry about values or data being represented differently in two places.
Client portal
Seventy-four percent of clients stay up to date on their account balances by visiting their advisor’s client portal at least weekly. Expectations about the user experience, features and functionality have ratcheted up, with advisors putting improved client portals on their wish lists for next-wave upgrades and innovation.
The table stakes here include an easy-to-use interface, with a simple, single-sign-on to give clients a complete picture of their financial lives. But that’s not enough: State-of-the-art client portals provide real-time holdings and balances of accounts, portfolio performance, insurance policies, physical asset tracking, statements, and tax integrations. They allow advisors and clients to review the same data and analytics—collaborating in real time with securely encrypted messaging and document vault features.
Advisors are also calling for solutions that allow clients to configure a custom experience so they feel informed and can make decisions with confidence. Finally, personalized dashboards and mobile apps give investors a detailed view of their financial landscape. These are the tools that help advisors stay connected to their clients and engage them in the financial planning process.
Compliance and risk management
Increased regulatory scrutiny means firms need to transform how they track and enforce compliance. From gifts and entertainment disclosure to the reporting of personal securities and political contributions, typical record-keeping mechanisms are time-consuming and prone to inaccuracies. In fact, 41% of advisors in our survey say that their back-office technology could use an upgrade, with specific asks for improvements in data integration, e-signatures and disclosure reporting.
New solutions dramatically overhaul advisor surveillance and record-keeping for advisors and the back-office. By leaning into integrated data and automated document management, firms can stay on top of their compliance monitoring, record-keeping and reporting obligations so that associated tasks are completed accurately and promptly. When data only needs to be entered once to populate across multiple fields, the likelihood for errors decreases dramatically and tasks are completed in a fraction of the time.
By embracing new solutions, enterprise wealth firms can become more operationally efficient to better meet the needs of tech-savvy clients. But make no mistake, the transformation is just getting started: Fueled by tech-savvy (and oftentimes younger) clients who are harnessing automation to become more productive in other parts of their lives, advisors and their staff are hungry for new solutions – so firms must align around these needs in order to compete.
Interested in reading the US WealthTech Landscape Report 2024? You can read the report online here.
ABOUT THE US WEALTH LANDSCAPE REPORT 2024
The US WealthTech Landscape Report 2024 has been designed to showcase the pivotal role that technology plays in the evolving landscape of US wealth management.
With the rapid pace of change in financial services, understanding technology's impact on this sector is more crucial than ever. This US-focused Landscape Report features a series of insightful articles that explore the trends, challenges, and innovations surrounding technology adoption in wealth management. Contributions come from a range of organizations, including Advisor360, Alpha Tech Partners, Aureus Advantage, Croesus, Diamond Wealth, ERI, First Rate, J.P. Morgan Wealth Management, Malka Media, Pirker Partners, Seismic, and Transcend Capital Advisors.
The report also features a section dedicated to a series of solution provider showcases, offering insights into the offerings and capabilities of the firms featured. This section is designed to provide an overview of a selection of solutions available on the market today, showcasing some of the available technology tools and partners that might address your business needs. Finally, we culminate the report with the directory section that introduces our online Solution Provider Directory (SPD) and references the size of market relevant to the US wealth management sector.
Interested in reading the US WealthTech Landscape Report 2024? You can read the report online here.
ABOUT THE WTLR SERIES
Our goal with our WealthTech Landscape Reports (WTLRs), is to collate relevant, insightful content and comments from both wealth managers and vendors operating in a specific region. Each WTLR is founded on a curated directory of hundreds of relevant technology and related solution providers to the business needs of the wealth management community in focus. The directory is supported by a rich variety of thought leadership articles and interviews with industry participants from both buy and sell side, plus a section of Solution Showcases. We also look at country, regional, and sectoral trends.
If you are interested in contributing to our WealthTech Landscape Report series, don't hesitate to get in touch.
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