For wealth management firms, responding to client trends is an ongoing challenge. Embracing evolving service expectations and fast-paced technological change can be hampered by issues of security, compliance, and strategic prioritisation.
In this section, we take a general look at how firms are doing, before honing in on some opportunities for differentiation in 2024.
Firms’ digital self-assessment
The joint Compeer-Unblu report found that the majority of wealth management firms are undertaking initiatives to streamline their digital offerings. Many are doing this by integrating their current platforms and services. This is proving difficult as legacy technology, operations, and features hamper operational efficiency (Compeer & Unblu).
However, firms based in the UK believe that their current setup is inadequate to mark them as differentiators. That said, they have reached a stage where they can be steady in their current offerings (Compeer & Unblu).
This sense of having a solid foundation is shaky at best. In fact, the majority of firms are not sure whether their current digital setups will be able to meet client expectations over the next five years. The reason for this is largely due to the lightning pace of change, where customer preferences and technological advancements shift from month to month. As a result, almost all surveyed firms have a digital transformation roadmap in place to continue developing their capabilities in the future.
Technology investment challenges
Weighing in on the subject of technological investment, Deloitte offers a rather bleak view of the reality. According to their report, firms will have to invest in technology and “associated controls” but can expect both weak performance and margin pressures as a result. Failing to invest, however, will have even more dire consequences, with organisations falling short of client expectations and internal efficiency goals (Deloitte).
Secure and compliant messaging channels
Promoting frequent client engagement without falling foul of compliance regulations can be a tightrope walk for wealth managers. Client preferences cannot be ignored, which often tend towards text messages or similar messaging platforms. These platforms, however, are rarely compliant, given that they are neither secure nor allow for message recording.
Instead, firms should turn to secure messaging that allows the client to have an advisor in their pocket (Unblu). Secure Messenger is available in-app (even behind secure areas), ensuring the convenience of Facebook Messenger, WhatsApp, etc., while also complying with regulatory requirements. What is more, the omnichannel nature of the technology allows users to continue asynchronous conversations across devices – and also features built-in conversation escalation capabilities.
Increasing relationship manager productivity
Relationship managers are finding it difficult to keep on top of the large administrative tasks that are part of their work. This is having a knock-on effect in terms of their ability to provide advice and deliver a quality service (Capgemini).
In short, they are spending too much time on non-core activities, whether compliance, recording meetings, inputting data, or more. These problems do have a solution.
Process automation for wealth managers
One of the key ways in which advances in Gen AI will benefit wealth management firms is through the automation of manual or repetitive tasks. This can help with everything from client onboarding, processing routine transactions, document verification, KYC checks, and compliance to name a few (Forbes).
The secure digital interaction platform Unblu Spark is an example of this, helping advisors to increase client collaboration while also minimising non-core activities. By offering a versatile mix of AI-enhanced secure messaging, video and voice, and visual collaboration, relationship managers or investment professionals have more freedom to exchange ideas, information, and documents – without sacrificing client authentication, data security, or regulatory compliance.
With better conversational abilities (such as easier meetings, dedicated spaces for focused client interactions, and increased reach), relationship managers are better equipped to scale AUM growth and boost client satisfaction.
Achieving organisational alignment
Another factor in increasing workforce productivity and satisfaction is properly aligning all stakeholders with a sense of purpose. According to a Deloitte survey, when survey respondents “strongly agree” that their firm’s sense of purpose aligns with their own values, they are more likely to speak positively about the company culture. This has direct benefits, including increased efficiency, productivity, and collaboration (Deloitte).
Trends in Mergers and Acquisitions (M&A)
As firms look for ways to increase their AUM growth, there is an increasing trend of M&A, particularly among UK firms. In fact, over the next five years, a substantial number of surveyed firms claimed that they are looking to double their AUM specifically through acquisitions (Compeer & Unblu).
The rise of bonds and mobile investing
Bonds are becoming popular as they offer good yields through fixed-income securities. As a result, there has been a striking resurgence in the popularity of bonds – and yet mobile applications are lagging behind this trend.
Most leading wealth management firms already offer clients a full range of trading and research capabilities via their mobile devices but nearly all only work for equity investors. For clients who are looking to buy bonds while on the go, the option simply is not there (Forbes).
Appealing to younger generations with social media
Only 3% of Boomers use social media as a source for making investment decisions. However, when you consider Millennials and Gen X, this rises to 33% and 21% respectively. Younger generations are increasingly turning to platforms such as YouTube and X (formally Twitter) to get easy access to investment information (LSEG).
For wealth firms, this activity on social media platforms and forums can provide insights into current opinions among specific market segments. It also provides an opportunity to attract new and highly active investors, while increasing long-term engagement.
A new era of index investment strategies
As mentioned, index investing is undergoing a surge, particularly among the mass affluent market as new technologies boost accessibility. What is more, the popularity of this approach cannot be understated.
Around 38% who already have index investments plan to increase their investments this year. And two-thirds of investors – or 66% – who have financial advisors would like to discuss index investing strategies. Yet the demand is somewhat unfulfilled as of yet with 45% of those who have advisors still waiting to discuss index investments.
The picture that is emerging is one of untapped opportunity. The popularity of these types of investments is undeniable and wealth management firms must be proactive in this regard (LSEG).
There are undoubtedly opportunities, whether leveraging Generative AI to streamline internal processes or more effectively target the mass affluent market. However, beyond any one specific approach, the overarching priority is to maintain a strong client experience that meets expectations.
Increased client collaboration is repeatedly shown to be the main marker of success in wealth management contexts. With more meetings and dedicated spaces for client interactions, advisors are better able to scale AUM growth and ensure ongoing loyalty.
In such a volatile year as 2024, all efforts should be focused on this, whether that means minimising core activities (and improving efficiency), enhancing security or compliance protocols, or offering a more varied product offering. Whatever the approach, this year more than any other, clients’ needs must be placed at the core.
Find the whole report here.
