Better digital tools are needed to improve the productivity of financial advisers © Getty Images

Anirban Bose, CEO Financial Services, Chairman APAC, Capgemini

A string of recent disruptions is keeping wealth management executives on their toes — geopolitical crises, inflation, consumer spending wobbles, uncertain financial markets and a rise in cash deposits, driven partly by increasing interest rates. But, beyond the current political and economic headwinds, the industry is also being changed by innovation and by a surge of investment in information technology.

The Covid-19 pandemic and its ripple effects have revolutionised how business is done. On top of which, companies are having to address a great generational wealth transfer, in which riches are being passed down from baby boomers to millennials. These young new clients are used to a digitised consumer experience as a basic way of life.

But, while a few trendsetting wealth management companies are cautiously pressing ahead on their digital transformation journeys, and looking to seize any opportunities, most firms have yet to find their way.

We have yet to see the industry hit the right balance in developing the technological capabilities to compete in this post-pandemic environment. Many leading firms are still assessing their practices, augmenting their workforces and exploring potential new client segments. As they do this, they are working hard to overcome barriers posed by inadequate business processes across the value chain.

Companies have little choice but to move forward. As we say in Capgemini’s World Wealth Report 2023, digital transformation is a game-changer for wealth management firms — it will either make or break their business.

Meanwhile, their super-rich clients have been suffering declines for the first time in more than 10 years: their combined global wealth dropped by 3.6 per cent in 2022, while their population fell by 3.3 per cent to 21.7mn.

Unsurprisingly, many blame their wealth managers. Our survey shows that only one in two rich people are satisfied with the touch points their wealth management offers, such as face-to-face meetings, a mobile app or website.

The wealthy want more than firms currently offer. As the macroeconomic headwinds get stronger, wealth preservation is top of mind for clients looking to their financial advisers for direction.

The industry needs to get comfortable with these levels of uncertainty and deliver value to their clients in the form of real-time engagement and a customer-centric experience.

The basis of this added value will lie in the way firms equip their staff. A financial adviser’s productivity is therefore the most important piece of the puzzle. Speaking to many business leaders within the industry, I can tell you the intent is there, but the pace of transformation needs to be bolder.

Financial advisers currently spend two-thirds of their time on non-core activities, leaving insufficient time for the interactions that clients most value.

We are seeing a move towards wealth management firms empowering their advisers with the latest client-facing digital tools, access to experts and tools to automate routine tasks. These are all steps in the right direction.

To take it further, these relationship managers must mobilise their resources and present relevant experts at specific stages in a client’s life, such as estate planning. To make this a reality, wealth management firms could offer clients a one-stop-shop digital workstation — an integrated interface to access and bring together disparate features and deliver a superior service.

For instance, Paris-based Indosuez Wealth Management connected discrete departments on a single platform that reduced the time spent onboarding clients by 90 per cent: from a 14-day industry average to same-day onboarding. It also helped them improve the efficiency of complex processes by 70 per cent and boosted relationship manager productivity by eliminating administrative tasks.

Sustainability has come to the forefront too, with clients interested in pursuing environmental, social and governance (ESG) goals in their investments. In line with their fiduciary duty to look after clients’ best interests, some firms are building centralised ESG data hubs as foundations for data collection and analytical tools to provide actionable insights.

This will enable these companies to certify investments and generate actionable insights. Our survey shows 63 per cent of the super-rich want reliable and traceable ESG scores for their assets, and 40 per cent of financial advisers are calling for more data to understand the ESG impact. With time moving on, and patience short, this will soon become a norm for the industry.

A company cannot become a digital leader in this industry and reap the benefits of technological investments overnight. Maximising the rewards from digital transformation efforts requires firms to leverage commercial ecosystems, build artificial intelligence and machine learning tools, and automate processes across the value chain. Firms that manage this can potentially shift their business model from transactional relationships to financial life partnerships. For wealth management firms, this is a recipe for more satisfied clients, higher retention rates and sustained growth. 

Follow Anirban on Twitter @Bose_Anrb

This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article