In brief
- Modern wealth management is about omnichannel access delivered by digitally savvy wealth managers — forward-looking experts who understand the benefits of data, direct communication and digital transformation
- To take advantage of the once-in-a-lifetime, baby-boomer wealth transfer opportunity, traditional wealth managers must reassess and remodel their services to deliver credible advice for new-style investors
- Despite new client demands, the typical wealth management client journey has remained virtually the same. Check out the drivers that changed the way end-to-end and individual components are managed
The way we manage money and the levels of service clients expect from their wealth managers are rapidly changing.
According to a recent survey, 30% of investors want to view all their investments (from all sources) in a single app. Similar numbers want easier access to products and services, plus direct digital advisor access. The survey went on to report that 64% of millennials and 51% of investors between 35-54 years old said they were willing to pay more for personalized investing products and services. And 34% of millennials and 35% of Gen X investors said that digital capabilities are a significant factor in advisor choice.
At the same time, advanced technologies, shifting high-net-worth individual and investor demographics and digital-native competitors are making their presence felt in new and ever-more challenging ways.
It seems that change really is the only constant.
Access all areas
Not surprisingly then, we're seeing a greater demand for universal, digital wealth-management tools that embrace increasingly diverse needs and preferences. Which is all fine and dandy, but we ignore the human element at our peril. After all, the industry was built on face-to-face meetings conducted over lunch.
Clearly, the future of wealth management must be omnichannel access delivered by digitally savvy wealth managers — forward-looking experts who understand the urgent need for data aggregation, direct communication and digital transformation.
Using insights from the Unblu 2023 Digital Wealth Management Outlook and other industry giants, we’re going to dig into the top trends and developments set to shake up the money management industry and client-advisor relationships.
Develop new capabilities
A new generation of extremely wealthy investors that experienced the last financial crisis and crested the recent tech and digital media tidal surge has emerged. They recognize the value of digital wealth management and new asset classes prompted by cultural and environmental considerations (e.g., sustainability)
Unfortunately, with a highly volatile investment climate, increasing regulatory demands, growing uncertainty, new competitive patterns and the rising cost of risk, established advisors are struggling to achieve the exceptional results clients routinely expect. Naturally, this state of affairs is damaging advisor/investor relations and allowing fresh business models to gain an extra foothold and extend their market reach. Traditional wealth managers must reassess and remodel their services to take advantage of this upscale opportunity and deliver credible advice.
Ten years ago, Deloitte reported that many U.S. wealth managers and financial advisors were considering retirement (43% aged 55 or over) If that prospect worried industry heads in 2014, where are we today?
Change partners?
Up-and-coming wealth managers are having to adopt new digital practices to remain on top of the US$50 trillion generational (baby boomer) wealth transfer. According to Deloitte, generational wealth transfers have prompted 90% of the heirs to change advisors, so the next tranche of wealth managers must gain the trust of the new-style investors.
However, they’re unlikely to develop an investor A-game or grow AUM without the right support. Companies catching the eye have initiated a top-down strategic shift to make sure technology enhances instead of replacing human expertise. This hybrid client-interaction model provides the basis for a flexible, adaptable and more personalized client journey.
Reduce the threat to wealth generation
Here are some of the current factors disrupting the markets and client/advisor relationship and how wealth managers can remedy the situation:
Inflation: A primary concern. High inflation affects the value of client investments, eroding profits as client-servicing costs increase.
- Wealth managers must become more operationally robust and develop strategies to protect client accounts from adverse pressure
Geopolitical impact: Heightened geopolitical tensions (e.g., relations between Russia/Ukraine, U.S./China, etc.) are putting pressure on AUM growth and squeezing profitability.
- Keep monitoring these risks and adjust your approach accordingly
COVID hangover: COVID’s knock-on effects are still influencing businesses, individuals and the global economy.
- In line with changing generational preferences, COVID has further transformed client behavior and expectations, how businesses operate and how people purchase goods and services (e.g., changing from bricks and mortar to virtual/digital)
Competition: Competitive pressures are intensifying, including the consolidation of small wealth management firms.
- Differentiate yourself and provide more innovative solutions for clients
Understand the wealth lifecycle
Despite these new demands, the typical wealth management client journey has remained more-or-less unchanged. That said, several significant drivers have transformed how end-to-end and individual components are currently managed. Here’s the detail:
As a leading digital transformation and domain expert, Zoreza Global is uniquely placed to help wealth managers to turn the wealth lifecycle to their advantage, analyzing which are their most profitable investors and highlighting ones they could afford to spend less time on.
Here’s how we go about it.
Zoreza Global’s approach to digital transformation in wealth management
Zoreza Global, the analytics and engineering arm of DXC Technology, provides bespoke, end-to-end technology solutions for mission critical systems. We modernize legacy platforms by enhancing digital client and advisor experiences (CX/AX) as well as digitizing back-end manual processes to increase operational efficiency.
Our wealth management end-to-end services
Keep your clients front and center
Wealth management firms can grow by refining customer segmentation and focusing on the demographic/intergenerational transfer of wealth. And as women increasingly control more and more wealth, managers must earn their trust to increase their share of wallet.
Transitioning to a client-led enterprise requires five core-technology building blocks:
Democratize access to non-traditional wealth products
- Develop portfolio construction tools that integrate ESG, alts, crypto
- Enable direct indexing and fractional shares
Modernize data management and use AI/ML to drive curated content and solutions
- Harness data across the ecosystem
- Enable curated content and recommendation engines that incorporate behavioral elements
- Enhance predictive analytics and client/advisor alerts
Automate core advisor processes
- Implement low-touch services (e.g., virtual assistants, chatbots, etc.)
- Continue streamlining onboarding and other front-/middle-office core processes
- Integrate financial planning and other client-facing applications with core processes
Embrace an open tech ecosystem and as-a-Service infrastructures
- Unbundle the wealth tech stack into composable modular components
- Embrace an API-first strategy
- Consider embedded finance strategies and strategic partnerships
Use client-facing digital technologies to elevate the client experience
- Digitize omnichannel engagement and advice delivery options
- Develop robust client profiling and behavioral assessment tools
- Leverage leading-edge client communication and collaboration tools
Streamline the client journey and build trust
Streamlining the client lifecycle management journey and leveraging platforms expedites the process, reducing manual touch points and enhancing the user experience.
Zoreza Global also provides wealth management firms with in-depth market research (e.g., total addressable market, competitor benchmarking, gaps and a supporting business case.) We have over 30 strategists ready to plan a bespoke route to stress-free transformation.
Target operating model (TOM) transformation
Domain experts assess the current state of wealth capabilities across the front, middle and back offices. The team benchmarks client capabilities against competitors to establish the gaps needed to develop a functional business model and future-state vision.
- Operating model and process reengineering
We harmonize and standardize policies, processes and operating models
- Organizational design and effectiveness
Specialists design a fit-for-purpose future-state organizational structure to drive growth, pinpoint efficiencies and manage operational risk
- Culture and change management
Zoreza Global provides advisory support in managing critical organizational changes
Wealth management is a key focus for Zoreza Global
Zoreza Global’s capabilities in numbers
Talk to a domain expert
If you’d like to find out more about how Zoreza Global can help you meet increasingly diverse client demands with digital transformation, visit our website or contact us.
Phillip Cranfield
Phil has 20+ years of experience in IT delivery, strategy and management within multiple industries. His 8+ years within financial services have focused on helping top-tier wealth managers and banks transform their IT estate and developing modern operating models to help deliver their strategic goals. Phil currently leads Zoreza Global’s Wealth Management offerings team, which is responsible for designing go-to-market strategies, business critical solutions and industry-based PoVs for Tier 1 wealth management organizations.
