Modern wealth management platforms support multi-generational client development

March 09, 2020

Wealth management services play a pivotal role in attracting and retaining banks’ most profitable customers. Demographic shifts will transform the profile of customers with the most profit potential as well as expand the role of wealth advisers most in sync with these new clients’ expectations. Additionally, banks will face challenges associated with regulatory changes, rapid technological advancement and shifts in competitive dynamics.

As a result, banks must aggressively compete to retain assets and win new business. This will create increased demand for wealth management platforms that provide high-end digital investor experiences, solutions to boost adviser productivity and the ability to better profile clients.

The changing face of wealth

Demographic shifts are changing the profile of both wealth managers and investors. One-third of financial advisers are expected to retire during the next decade, according to Deloitte, which will usher in a new generation of tech-savvy, more demographically-diverse wealth managers. McKinsey predicts that the next generation of advisers will expand their roles beyond investment managers and become more like life coaches for investments, banking, healthcare, protection taxes, estate and financial wellness needs.

At the same time, income and wealth are shifting. Younger investors who are or will be beneficiaries of the trillions of dollars transferring from one generation to the next will have money to invest. The challenge of retention for banks looms large especially if a banking relationship has not been established with these beneficiaries.

Historically, wealth transfers from one generation to the next have typically resulted in a change of advisers within a very short time frame. An equally important change in demographics is the impact of women on investing. Women are the primary source of income in over 40 percent of U.S. households, controlling 51 percent of U.S. personal wealth. Many firms that have overlooked the importance of engaging women need to find ways to engage this influential group and will therefore need to reconsider how they approach familial relationships.

Other disruptors

Through the lens of banks’ IT executives, regulatory change rates as the major source of disruption by 87 percent, according to EY. And, four out of five IT executives view regulatory change as the most important short-term business priority.

Facilitated by technology, competitive models continue to emerge, evolve and disrupt the status quo. Although prognosticators predicted that the size of the global robo-adviser market would swell to $2.2 trillion (out of $22 trillion in investable assets) by 2020, current estimates place the figure between $350 and $440 million. While robo-advising has yet to gain substantial traction, traditional wealth managers still face the disruption of nontraditional models, given the level of client interest. EY reports that 70 percent of high-net-worth clients would consider using robo-advisers.

McKinsey & Company predicts the “Netflixing” of advice where up to 80 percent of new wealth management clients will want to access advice in a Netflix-style model – hyper-personalized through data analytics, always accessible and, possibly, by subscription.

Enlisting technology to support multi-generational client development

Best-practice wealth managers are enlisting technology to retain client assets and acquire new ones. The EY study reports that high performers increase adviser productivity in three ways: by investing in front-office technology initiatives, by outsourcing more while capturing more value from technology spending and by employing fit-for-purpose operating models to deliver new digital capabilities.

Competing successfully in the rapidly evolving wealth management arena requires technology to enable high-end digital investor experiences, deeper client knowledge and more personalized advice. Fifty-nine percent of wealth clients state that digital will be their preferred channel for receiving advice – strongly suggesting that high-end digital experiences will become table stakes.

Deeper knowledge gleaned from data analytics will facilitate personalized services according to client profiles. Forty percent of IT professionals in the EY study rated investment in data analytic capabilities to support personalization as highly relevant.

A modern wealth platform provides seamless experiences across channels and generations

What’s needed to meet the expectations of increasingly diverse wealth management clients and managers is a solution that supports multi-channel, personalized user experiences while maintaining compliance with regulatory changes. An example of such a solution is FIS’ modern wealth platform - Unity. This unifying hub provides more seamless user experiences by leveraging innovations in data analytics and an open infrastructure to personalize the client experience, boost adviser productivity and improve efficiencies. FIS Unity enables firms to modernize and expand their wealth services to adapt to the changing needs of investors and continue to grow their business into the future.

About the Author
Melissa Cullen, Banking and Decisions Solutions Division Executive, FIS
Melissa CullenBanking and Decisions Solutions Division Executive, FIS

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