WealthTech Matters - The Adviser I Event Summary Paper 2023

The Adviser Our recent event, held in June 2023, at the Royal College of Physicians, London, brought together COOs, CTOs, and CIOs from top wealth managers to scope key business challenges and the impact that technology can have on their resolution.

We have firstly presented and interpreted the scene-setter questionnaire that was designed to provide a finger on the pulse of what the community is thinking, including how it is feeling about the year ahead and the areas that are the biggest concerns.

Within this paper we have summarised the key findings raised at each roundtable session along with the discussion.

Contents

2

01

Introduction

02

Scene setter

03

Roundtable session summaries •

Choice matters – enabling advisers by measuring impact

•

Costs and benefits – leveraging technology to transform client-adviser communication

•

Client Lifecycle Management (CLM) – putting it at the heart of the business and the role of Artificial Intelligence (AI)

•

Growth mindset – keeping up with the pace of change

•

Efficiency generation – how can technology make advisers more efficient?

•

Digital space - adapting to evolving assets

04

About WealthTech Matters

05

About Owen James and The Wealth Mosaic

WealthTech Matters - The Adviser - 2023

Introduction This WealthTech Matters event focused on the adviser, with a series of roundtables held under Chatham House rules. The sessions set out the core issues advisers currently face, how technology can resolve those challenges, as well as transform the industry for the future.

The event was supported by a scene setter questionnaire that was designed to provide a finger on the pulse of what the community is thinking, including how it is feeling about the year ahead, the areas that are the biggest concerns, cost reduction ambitions and the barriers to productivity.

This paper interprets the results of the survey and then summarises the salient points from each discussion.

The session ‘Choice matters - enabling advisers by measuring impact’, led by Alex Whitson, Managing Director at VouchedFor, discussed the importance of defining and measuring the value that advisers provide, and how firms can use Consumer Duty as a rail to provide value to clients.

In particular, 86% of COO respondents placed a significant emphasis on ‘developing better client experience while 64% were focused on ‘investing in technology to better equip advisers’.

This was echoed by the scene-setting statistics, which revealed that if advisers, relationship managers, and other client-facing staff are spending the majority of their time either in front of the client or managing an element of the client relationship, then the focus must be on ensuring their time is spent wisely and efficiently to make that relationship as satisfying as it can be for the client.

In particular, COO respondents placed a ‘significant’ emphasis at 86% on ‘develop better client experience powered by technology’, followed by 64% looking at a ‘significant’ focus on ‘investing in technology to better equip advisers’.

The adviser-client axis remains, therefore, key for firms to unlock value in their technology spend in relation to client engagement.

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WealthTech Matters - The Adviser - 2023

Introduction

Costs COOs within the scene setter indicated that the rough percentage of their annual technology spend for advisers was 35% of overall spend, with 48% of spend allocated to clients. Feeding into the costs and benefits discussion, the roundtable ‘Cost and benefits – leveraging technology to transform client-adviser communications’, led by Luc Haldimann, Co-Founder and CEO of Unblu, looked at changes in this area. The session discussed the importance of choice in communications channels and their importance as a part of the overall adviser-client offering.

Communications Communications were a dominant theme within the scene-setting findings, too, with a focus on face-to-face chosen by 33.8% of respondents. 79% chose face-to-face for ‘providing detailed advice’, and 93% saw them as important when it comes to ‘deepening personal relationships.’

Related to communications is managing the client lifecycle. The session, ‘Client Lifecycle Management (CLM) - putting this at the heart of the business and the role of Artificial Intelligence (AI)’, led by Alessandro Tonchia, Head of Strategy at InvestCloud Europe and Asia, looked at the use of digital tools to gather and triangulate data with the result being improved service throughout the client lifecycle.

This was underscored by the scene-setter data, which revealed CLM as having the greatest potential for innovation out of a choice of 18 opportunities for future business. The use of AI to enhance client data and provide personalisation came in as having the second best potential.

Next generation Related to the client experience is the need to meet the expectations of the next generation. This was tackled in the ‘Growth mindset – keeping up with the pace of change’ roundtable, led by Alistair Venables, UK Lead at additiv. Here, respondents looked at how to prepare for the needs and expectations of the next generation of wealth holders, while also responding to today’s priorities – and balancing the two.

As well as the themes surrounding customer experience, practical solutions to provide efficiency, such as implementing Robotic Process Automation (RPA), were also discussed. The roundtable ‘Efficiency generation – how can technology make advisers more efficient?’, led by Chris Thorne, Senior Solution Consultant at SS&C Blue Prism, looked at the role of RPA and the importance of defining the optimal end result and then breaking down all the components of an end-to-end process and applying automation.

Indeed, the scene-setter data showed that processes were the third lead factor cited when it comes to barriers to productivity (outdated technology and regulation came in first and second, respectively).

It was thought that cumbersome, overly manual, and time-consuming processes throughout a business resulted in a lack of efficiency, which led to a challenge to growth scalability and negatively impacted cost/income ratios.

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WealthTech Matters - The Adviser - 2023

Introduction

Digital space Finally, the ‘Digital space – adapting to evolving assets’ session, led by Bruce Keith, CEO of Bridgeweave, looked at understanding the component parts of digital assets, how they work together, and for what purpose. This area is not yet well understood or accepted - an 85% drop in the value of crypto in the recent past has not helped! There is also a need for more regulatory clarity in this space so that wealth managers and platforms are clear on what they are dealing with.

Ultimately, the industry seems to be well aware of what it needs to do in terms of tooling to support advisers. There is a need to reduce inefficiencies, move to a model where the adviser is free to add more value in terms of the delivery of the client experience, and add more value through a more engaged human relationship.

Uptake and adoption of new technologies, however, are generally still at quite an early stage, even though the technology tools are there and ready to use. Firms that are more forward-looking know that these issues are rapidly becoming ‘table stakes’ and that many of the needs of the next generation will be around tooling to help the adviser in terms of efficiency and client experience. Not investigating how best to adopt such tools thus risks missing out on the opportunities afforded by the next generation, as well as disappointing the current client base – many of whom have high standards and expect a high level of service as standard. How this plays out remains to be seen, but those not investing in tools to help the adviser risk alienating themselves from the market.

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WealthTech Matters - The Adviser - 2023

Scene setter

Scene setter WealthTech Matters - The Adviser Our scene-setter questionnaire, completed in the run up to the event this year, is designed to provide a finger on the pulse of what the community is thinking, including how it feels about the year ahead, the areas that are the biggest concern for businesses, cost reduction ambitions, and the barriers to productivity.

Key data points

The bullish rating for 2024

7.3 out of

Barriers to productivity

Business concerns (ranked out of 13 options)

Regulation (3.38) Processes (2.88)

3.88

3.38

2.88

Communications (2.25) 2.25

Productivity Innovation Sourcing new clients Recruitment and retention Geopolitics

Outdated technology (3.88)

2.13

10

Siloed operations and company culture (both equal) (2.13) Client discovery, engagement, and management together account for 77% of an RM’s time.

Technology concerns

Cost levers Proposition and strategy (4.9)

Data management (2.50)

Workforce optimisation (4.8)

Operational efficiency for processes (1.92)

Compliance and control (4.1) 6.5

4.9

4.8

Outsourcing (3.4) 4.1

Innovating whilst maintaining business as usual (BAU) (1.83)

6

Digital and automation (6.5)

Bringing down costs and time for advice (3.04)

3.4

3.42

3.04

2.50

1.92

1.83

Operational scalability (3.42)

WealthTech Matters - The Adviser - 2023

Scene setter

Key data points

Client engagement and revenue

Client engagement and revenue

85% of COOs place a significant

64% see a significant focus on

emphasis on developing better client experiences powered by technology

investing in technology to better equip advisers

Innovation possibilities

Preferred communications channels by clients

CLM (3) Using AI with client data (2.7) Goals-based planning (2.6) 3

2.7

2.6

1.8

34%

1.5

Face-to-face

Biometrics (1.8) Open APIs (1.5)

Video conferencing

25%

Technology spend Website app

Advisers

21%

35%

Email

Clients

11%

48%

Phone

Other

10%

7

12%

WealthTech Matters - The Adviser - 2023

Scene setter

Strategic challenges

How bullish are you about the year ahead?

How does this compare with CEOs from other industry segments?

The bullish rating is 7.3 out of 10, which is encouraging given the broader market and geopolitical events - there has been no change since our last survey. Indeed, compared to the other groups in our ongoing scene-setter surveys (wealth management and private banking, large advisory distributors, mid-sized advisers, paraplanners and retail banks and brands), this survey cohort was neither in the most optimistic nor pessimistic of moods. However, participants seem to be considerably more upbeat than wealth management and private banking CEOs, who scored the lowest with a less than bullish score of 5.8.

That said, responses are slightly less optimistic than in other groups, notably the large advisory distributors and paraplanners, who both score 7.7.

What’s keeping you up at night on a business level?

There is a lot going on around the business, as ever, but the top five concerns cited at this point in time are: achieving greater productivity; innovation – maintaining the pace; people – finding and keeping them; geopolitics – market volatility and reducing the company’s cost/income ratio. None of these focus areas should come as a surprise to anyone, and, no doubt, those outside of financial services also have a similar set of focus areas. There is, of course, no silver bullet to any of these issues (not even the grand promises of AI… just yet!). Each area is hugely interconnected with the rest: greater productivity is the result of innovation, which helps retain and reward people and will drive down the cost/income ratio, and so on. But keeping on top of these and other factors is the result of daily activity, progress, planning and execution.

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WealthTech Matters - The Adviser - 2023

Scene setter

What are the challenges that are currently applicable to your business from a technology perspective?

In terms of technology-focused challenges, these clearly overlap (as one should expect) with business challenges. The top five concerns are:

Technology concerns

3.42

3.04

2.50

1.92

1.83

Operational scalability (3.42) Bringing down costs and time for advice (3.04) Data management (2.50)

Operational efficiency for processes (1.92) Innovating whilst maintaining business as usual (BAU) (1.83)

Clearly, the first two sit ahead of the rest by weight of response (the weight is the rating respondents gave to whatever they have been asked, from a scale of one to five). Achieving operational scalability leads the way a result of increased costs and complexity in and around businesses, as well as perhaps being a little late to the game in terms of applying modern technology and processes, and the overwhelming opportunity to be had by delivering an efficient foundation to a business, and thus support growth.

Bringing down the cost of advice is, again, a topic that reflects not just the cost side of business, but also the market opportunity. Delivering advice through people alone is expensive and not scalable. The only way to truly grow an advice business is through the effective use of technology to find, engage, onboard, and manage more clients. Easier said than done, of course, and factors such as the evolving and sometimes confusing regulatory framework make the task harder, as this quote from the survey highlights: “The line between advice and guidance is clear, but not necessarily drawn in the right place. It’s time to get the regulator engaged in a positive way to recognise this and help, rather than create two distinctive views of the world that do not meet enough client needs”.

Third on the list is data management. In some ways, it is surprising to not see this as the number one challenge, given how data has emerged as a core aspect underpinning so much else in business, especially with regard to technology, processes, efficiency, services, and so on. The commercial value to any organisation of its data is not just about the value of data itself, but the value of data to deliver on a broad set of business requirements. The right data, in the right place, at the right time, which is accessible and contextual, will deliver across so many aspects of business needs – scalability, advice, efficiency, innovation, and so on.

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WealthTech Matters - The Adviser - 2023

Scene setter

Productivity and profitability

What do you consider to be the main barriers to greater productivity within your business?

Looking at the barriers to greater productivity that respondents face within their business, three areas stood out from the responses: •

Outdated technology

•

Regulation

•

Processes

Citing outdated technology as the leading barrier to greater productivity is no surprise, but it clearly remains both a concern and a strategic priority to improve for the wider industry. Bluntly speaking, for the vast majority of businesses in the wealth management space, if not all, a modern and robust technology infrastructure is a must for firms to meet their challenges, deliver efficiency and scalability, and rise to the opportunity that sits before them. At some point, unless replaced, improved, or significantly overhauled, a legacy technology stack will be an impediment to achieving the business’ goals. The question, therefore, is how the industry can move forward so that technology is categorised as an enabler rather than a barrier?

The second barrier to productivity cited was regulation. Clearly, the regulator and its rules are sometimes seen as an impediment to businesses rather than an enabler. As noted with regard to advice, if regulation lacks clarity or is too quick to change, it has more of a disruptive effect on business, at least in the short term.

No doubt, the current deadline of the Consumer Duty is weighing on respondents’ minds.

The third lead factor cited was processes. If we tie together elements such as outdated technology with elements such as new regulations, one can easily see the result: cumbersome, overly manual, and time-consuming processes. Multiply that many times for each part of the business, and the result of processes is a lack of efficiency, which results in a challenge to growth scalability and the impact on cost/income ratios.

Other leading factors cited included communication, operating in silos and company culture.

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WealthTech Matters - The Adviser - 2023

Scene setter

How much time each week do your RMs spend on the following activities?

A pertinent question, as much anecdotal evidence would suggest that client-facing staff cannot spend enough time doing what they really should and want to do – which is to focus on the main elements of client relationships. But our analysis of the responses shows that relationship managers (RMs) are spending the majority of their time on client-facing activities and by a significant amount.

The areas which have a clear focus on client discovery, engagement, and management, which together account for 77% of an RM’s time:

11

16%

•

Holding meetings -

•

Preparing client reports -

•

Researching and monitoring existing clients – investments -

•

Preparing for meetings -

•

Researching and monitoring existing clients – life events -

•

Updating records in accordance with regulatory requirements -

•

Researching potential clients -

•

Training -

•

General networking -

•

Other -

16% 14%

13% 12% 11%

6%

5% 4%

2%

WealthTech Matters - The Adviser - 2023

Scene setter

However, what we can absolutely bet the house on is that all of the above activities are ripe for the improved support and deployment of relevant technologies and processes. Indeed, other responses from the survey indicate that this is likely to be the case. If RMs and other client-facing staff are spending the majority of their time either in front of the client or managing an element of their relationship, then the focus must be on ensuring their time is spent wisely and efficiently: easier access to information, insights and solutions; better tools to record and create actions from client meetings and other forms of communication (i.e., email, WhatsApp, etc.); more automated integration between relevant systems such as client onboarding; CRM; core banking; portfolio management and compliance tools, and so on.

Undoubtedly, the best RMs want less re-keying; less duplication of tasks; fewer paper-based processes; fewer logins; more integration between the core systems they use day-to-day; a more intuitive user experience with faster access to the data; insights and solutions they want, and alignment with what their clients have access to inside and outside of the organisation.

What are your cost reduction ambitions over the next two years?

Among CEOs/CIOs and COOs, there is a small but aggressive group, 1% to 10% of respondents, that wants to reduce costs by around 80% over the next two years. CFOs are more cautious, with those in the aggressive cost reduction group looking for between 40% and 50% in cost reduction over the same timeframe.

When it comes to cost transformation, what are the most important levers?

The ambition to transform is one side of the coin. The other comes down to actual execution. For COOs, more so than last year, the focus is on the role of digital and automation. The average weighted response was 6.5 in 2023, up from just over five in 2022. Among peers, CEO/CIOs and CFOs, COOs place the highest value on digital and automation compared to proposition and strategy, workforce optimisation, compliance and control, outsourcing, and location strategy. That emphasis fits with the COO role, certainly, but it is interesting to see CFOs place more value on outsourcing, presumably focusing mostly on the cost-saving element. For the COO, the job internally is, therefore, to win over C-suite colleagues with the idea that not only can further emphasis on ‘digital and automation’ help in the cost-saving element but, perhaps even more importantly, it can truly add to the firm’s ambitions to improve RM productivity, enhance the customer experience, drive efficiency, and enable scalability, as well as all the other upsides - if done well.

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WealthTech Matters - The Adviser - 2023

Scene setter

Client engagement

What are the enhancements you are considering or implementing in order to enhance your firm’s levels of client engagement and grow revenue?

COO respondents place a significant (at 86%) emphasis on developing better client experience powered by technology, followed by 64% looking at a significant focus on investing in technology to better equip advisers. The adviser-client axis remains, therefore, the key for firms when it comes to unlocking value in their technology spending in relation to client engagement. Adding those that see the two categories as moderate in terms of focus, they receive 100% and 86% of all responses, respectively. Combining significant with moderate, the other two main focus areas are enhanced campaign management tools and broadening the investment offering.

What channels will your clients prefer to use in the next three years, and for which purposes?

When asked to consider which channels your clients will prefer to use in the next three years, and for which purposes (across 12 areas of communication), respondents still overwhelmingly focus on face-to-face as the leading 406 of the 1,200 votes, or 33.8%, in its favour. The face-to-face method was the dominant response for providing detailed advice (79%), deepening personal relationships (93%), and building personal relationships (86%).

However, respondents also clearly recognise the importance of making a multi/omni-channel toolset available for clients. One size does not fit all. Markedly, video conference saw 301 of respondents, 25%, accross the 12 areas of communication. Respondents see mechanism as the most relevant to their clients’ preferences for discussing changes to strategies at 62%, defining financial objectives and modifying financial objectives, both at 50%. The third area that respondents believe their clients favour is the website app at 255, or 21% of all responses. This option was most often selected for real-time portfolio monitoring at 86%, presenting investment trends at 36% and marketing at 31%.

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WealthTech Matters - The Adviser - 2023

Scene setter

•

Face-to-face -

•

Video conferencing -

•

Website App -

•

Email -

406/34% 301/25% 255/21%

•

Phone -

115/10%

•

Live chat -

72/6%

•

Webinars -

20/2%

136/11%

Respondents do not see any of the 12 areas of communication as the sole domain of one communication method. Rather, it is a mixed approach in all instances and this model, no doubt, will continue to evolve.

Technology

Where do you see the greatest potential for technology innovation to enable future business opportunities?

The number one preference this year, was in Client Lifecycle Management (CLM) technologies. This, of course, fits well with the theme of client engagement, as well as providing a platform to support advisers in their engagement with clients. CLM was ranked third last year. Second this year, as it was in 2022, was Artificial Intelligence (AI) use of client data to enable contextualised personalisation by the adviser. Ranked third in 2023 is goals-based financial planning and simulation tools, up from sixth in 2022. The theme of the client-adviser relationship and the role of technology to enhance this is, therefore, clearly established.

What percentage of your annual technology spend is focused on the needs of your clients, advisers or other parts of your business?

In line with the clear focus on client and adviser developments, COOs indicated that the rough spend on their annual technology is focused at 35% on their advisers and 48% on clients.

To access the full scene-setter findings, please click here.

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WealthTech Matters - The Adviser - 2023

Roundtable session summaries

Roundtable session summaries 03

15

Roundtable sessions summaries •

Choice matters – enabling advisers by measuring impact

•

Costs and benefits – leveraging technology to transform client-adviser communication

•

Client Lifecycle Management (CLM) – putting it at the heart of the business and the role of Artificial Intelligence (AI)

•

Growth mindset – keeping up with the pace of change

•

Efficiency generation – how can technology make advisers more efficient?

•

Digital space - adapting to evolving assets

WealthTech Matters - The Adviser - 2023

Roundtable session one – Choice matters

Choice matters Enabling advisers by measuring impact In this session, led by Alex Whitson, Managing Director at VouchedFor, participants talked about how to define and measure the value that advisers provide to clients. They looked at the technology needed to deliver real time reporting as well as other insights, and how to implement a process of sustained improvement.

Meeting an expanding and diversified customer base with rising expectations means more choices in the advice journey to deliver a better service.

A carefully constructed combination of digital, hybrid, and traditional advice is therefore key to achieving competitive advantage, thus enabling the wealth manager to extend their client base down the wealth scale and increase overall AUM without a huge rise in cost.

Going beyond compliance, the key question to answer is, what do clients actually want? Most clients are happy and say they would recommend their adviser. Delighted clients make nearly two and a half times as many actual recommendations as everyone else. So, the idea is to spend time understanding what moves clients from being happy to delighted.

Key takeaways

Firms can now use the Consumer Duty to ensure all advisers behave the same way and meet Consumer Duty expectations.

Asking clients to make recommendations was also discussed.

This was thought to double the number of recommendations, on average.

Asking clients to make recommendations and eliciting feedback was also discussed.

1

Value goes beyond the Consumer

2

to recommend their adviser, but for that to happen, they need to be delighted with the service they receive.

3 4

An adviser dashboard is highly valuable.

5 6

16

Duty. The Holy Grail is getting clients

Sentiment analysis also came up in measuring adviser performance.

WealthTech Matters - The Adviser - 2023

Roundtable session one – Choice matters

Communication

Communication is key in the journey from happy to delighted. If communications are clear and open rates, click rates, portal logins, and dwell time are also good, firms will generally be in a much better position to delight clients and better understand engagement, as well as where to make adjustments and improvements.

Clients having complete confidence they are on track to achieve their goals is also a very important factor in satisfaction levels. That, however, relies on clients having defined their goals and knowing how the adviser will help them to meet them.

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WealthTech Matters - The Adviser - 2023

Roundtable session one – Choice matters

Data

To better understand these issues, advisers need to engage with data. An adviser dashboard that shows them the client experience and what they bring, areas where they are doing particularly well or least well, versus the industry, is valuable.

This will be an issue for advisers who have had their business for a long time and are entrenched in the provision of solely returns, rather than overall goal planning.

Client feedback

Another way to evaluate satisfaction was to ask clients for feedback. There were a number of ways to do this, and it was thought that care was needed to not disturb the client-adviser relationship.

Sentiment analysis also came up. Phone calls could be recorded to give a better understanding of whether a client was really engaged and what their attitude was. This was thought to be a good training opportunity too.

“There is a lack of specificity about what value means. Because if it is value in your pocket, that’s easy. But if it is value in terms of the way that your service makes you feel, then that is more subject to opinion.”

Asking for recommendations

Asking clients to make recommendations was also discussed. This was thought to double the number of recommendations, on average.

However, one participant was not keen: “Asking for recommendations feels embarrassing for both adviser and client. The younger ones tend not to be as embarrassed as the ones who have been conditioned over the years to feel like that client relationship is sort of sacrosanct.”

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WealthTech Matters - The Adviser - 2023

Roundtable session two | Cost and benefits

Cost and benefits Leveraging technology to transform client-adviser communications This session, led by Luc Haldimann, Co-Founder and CEO of Unblu, and facilitated by Blaise Cardozo, Director of Sionic, discussed these issues, as well as the importance of choice in communication channels and their significance as a key part of the overall offering.

The main issues participants have are around when it comes to customer experience, adoption, ease of use and connectivity, as well as the ways in which technology is addressing their key challenges around client engagement, recruitment, data tracking and recording, and meeting client expectations. Participants highlighted having issues regarding things like customer experience, adoption, ease of use, and connectivity.

The ways technology addressed key challenges around client engagement, recruitment, data tracking and recording, and meeting client expectations were also concerns.

Client communications have advanced exponentially with new technologies, but there is still the need to provide the human touch. That said, technology is now thought to be a massive USP and something to get excited about. There has been a significant change in mindset. Indeed, adoption levels for communications tools have been staggering. The benefits of greater client engagement following better communication tools were also discussed, starting with onboarding and continuing throughout the client journey, as well as the extent to which a degree of self-service could be introduced as a part of technological innovation. However, some clients are now struggling.

Key takeaways Adoption levels for communication tools have been staggering in the past few years. But as the post-Covid lockdown finished, adoption rates

1

fell slightly as people embraced the

2

face-to-face once more.

A system that integrates into existing channels, core banking, Teams, and other systems is needed for communication tools to work optimally.

Ease of use and clear communication about benefits are both key to optimal adoption levels.

3

The attraction of technology for recruitment

4

and retention is growing. Tracking communications helps the adviser stay on top of things and better serve the client.

It also helps from a compliance point of view if there is a recorded and auditable communications trail.

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WealthTech Matters - The Adviser - 2023

Roundtable session two | Cost and benefits

“If a client gets stuck, their only support is back to their advisers, undermining adoption because advisers have to support clients in getting going – which is time-consuming.

So, while there are some improvements, there are some things that are not quite right from a customer experience point of view.”

Ease of use

With new ways of doing things, ease of use is crucial. For some, the lack of control implied in moving to something new can be a problem too, given moving away from what is familiar to learn and apply it can be a worry.

“We are 90% there with new communications channels, but some of our clients and advisers still think it is easier to have a face-to-face meeting, use snail mail and the like. The challenge is to meet everyone’s needs and preferences.”

Adoption

Advocates within a firm are also a powerful tool when it comes to adoption. If advisers hear good things from their peers, then that is a powerful and encouraging message.

“Technology removes a lot of the friction associated with giving advice, compliance, and general aggravation. But you have to go through the pain barrier of adaptation in the first place to get to that point.”

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WealthTech Matters - The Adviser - 2023

Roundtable session two | Cost and benefits

Recruitment and retention

The next big theme was whether having a robust technological setup impacts recruitment positively. For a potential recruit, it was thought that spending less time on admin and having technology support would be very attractive.

A participant commented: “If we did not have the technology, we would have twice the number of advisers. So, having the technology means that advisers and their partners can spend more time doing stuff that matters: lifestyle, financial planning, and the like, as opposed to model portfolio rebalancing or annual reviews.”

Tracking and recording

Tracking communications should be a part of this support system, and seeing across all channels and creating a visible audit chain further helps the adviser to be on top of things and better service the client. It also benefits from a compliance point of view, particularly in regards the Consumer Duty.

Another Consumer Duty-related advantage is that instead of having a face-to-face review once a year, technology allows for smaller reviews on an ongoing basis where all the information is still captured. This is a series of smaller events as opposed to a single annual meeting.

Client expectations

Indeed, despite adoption and usage levels taking some time to get off the ground, the expectation of having such tools remains high.

It was thought that firms now need to sell on service, and a key part of that is technological innovation. It is about setting expectations and selling the service on the back of that. Indeed, trust and finding a better way to do things - as well as taking the adviser and the client along in that evolution is crucial. It is a step of evolution to be catering to clients as well as changing their way of thinking. Building trust into everything and really investing in that slow burn.

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WealthTech Matters - The Adviser - 2023

Roundtable session three | Client Lifecycle Management (CLM)

Client Lifecycle Management Putting it at the heart of business and the role of Artificial Intelligence (AI) This session, led by Alessandro Tonchia, Head of Strategy at InvestCloud Europe and Asia, and facilitated

by Gilly Green, Managing Partner at FoxRed Insight, discussed the value of having digital tools to collect data from the prospecting stage onwards.

Participants explored the importance of mastering digital and data fundamentals in tandem. The benefits include being able to leverage technology to retail and grow clients, whilst enhancing operational efficiency to capture true scale opportunities. Collecting reliable and consistent data that is relevant and specific, easy to interpret, and that powers the adviser is a challenge across the industry. Many firms are still wrestling with what data they really need and the data collection methodology not being consistent enough.

Key takeaways

Using advanced tooling at the prospecting stage gives an excellent first impresson and an idea of what to expect once onboarded.

1

Gathering as much data as possible early on improves service throughout

2 Care should be taken to ensure clients are comfortable with wealth managers seeking data from third parties such as social media.

Verifying such data is also key.

the client’s lifecycle. Wealth managers should ideally triangulate all data sources to arrive at the most informed position possible.

3

All participants felt strongly that

4

the personal touch is still the most important thing in the client relationship, be that in the prospecting, onboarding, and ongoing client lifecycle management stages.

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WealthTech Matters - The Adviser - 2023

Roundtable session three | Client Lifecycle Management (CLM)

Client engagement

Indeed, client engagement and satisfaction rely on the wealth manager making a positive impact from an informed position. In turn, that informed position depends on the wealth manager having as much information as possible about the client.

Onboarding is where this all starts to take place and the area where technology can have the most impact for several reasons. Firstly, onboarding has historically been manual, time-consuming, and repetitive, where clients had to fill in seemingly endless forms and provide the same data multiple times. However, the market is now seeing a change in this regard, with some best practices emerging due to leveraging digital technologies to provide more accessible communications and automation.

“Looking at onboarding as a single digital journey that goes from lead to an established and hopefully satisfied client is very high on the priority list.”

In many cases, information gathering actually needs to start at the prospecting stage. Having a single digital journey is important so that at the time of onboarding, the adviser already has a lot of information and insight that can be used within the ongoing client lifecycle.

The Consumer Duty Act

Something that has also brought the collection of data and digital communications to the fore is Consumer Duty.

Indeed, technology-based solutions, information, and processes mean that the adviser can consistently ask the right questions and effectively document the replies to ensure that clients understand the proposition, thus providing the best outcome, as mandated.

The good news is that much information is also available within a firm or directly from the prospect and externally.

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Roundtable session three | Client Lifecycle Management (CLM)

Artificial Intelligence

AI tools can also keep information fresh. Indeed, there are AI tools that look at client behaviour and make recommendations and insights based on that. It then pushes the right content to the right people at the right time, deepening the relationship and engagement.

“You can triangulate the data sources and be comfortable with what you have achieved without having to get all the different underlying documentation to get to the same point. It can make somebody’s journey a lot more seamless and less complicated.”

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Roundtable session three | Client Lifecycle Management (CLM)

Client choice

But how far can this go? GDPR certainly puts a hold on what data can and cannot be used for.

It was also acknowledged that some clients might find information mining intrusive. Others might welcome it as a means to get a better service tailored to individual needs, though a waiver and some basic etiquette must be implemented.

“Some people just don’t like the idea of an automated fact find, and we need to respect that. But when we look at who our client in the future is and the way that they will want to do business, we need to prepare for that.”

Indeed, the way wealth managers position how data is captured and used, and whether they try to validate it, is important. Participants said the ethos behind doing this and the extent to which analytics are put on top are crucial.

This is more so with the ongoing experience, particularly when things are not really changing year-on-year but still need to be checked and kept up to date.

To that end, it was thought that recording conversations and extracting unstructured and structured information from there could be an interesting route to explore. It was something that participants thought was evolving and improving rapidly.

Ultimately, all participants favoured using technological tools available to collect and analyse data, and improve the client experience. However, they all were keen to point out that in doing so, the personal touch should not be lost and is still the most important thing in the client relationship during the prospecting, onboarding, and ongoing client lifecycle management.

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Roundtable session four | Growth mindset

Growth mindset Keeping up with the pace of change This session, led by Alistair Venables, UK Lead at additiv, and facilitated by James Goad, Managing Director of Owen James Events, discussed the need to prepare for the needs and expectations of the next generation of wealth holders, while also responding to today’s priorities.

There is a growing segment of newly wealthy people with substantial assets coming to the fore, which is opening up new opportunities. This trend will escalate even further when Generation Z inherits the wealth of their parents.

“The next generation will likely hold wealth in different ways to their parents; they will look for different solutions and will not follow the parent’s structure binarily.”

Indeed, many firms are looking at a technology roadmap that improves things for existing clients as well as appealing to newly-wealthy clients.

Key takeaways Wealth managers are well aware of the need to plan for the ‘Great Wealth Transfer’, but have

1

Current technology roadmaps do

to prioritise today’s issues.

2 Wealth managers are all too aware of the need to build a relationship before the wealth

have some cross-over with the next generation. Focusing on front digital tools, such as quality mobile apps and easy to use and function-rich client portals, will pay dividends today and

3

into the future.

passes down to maximise retention.

4 Finding the balance between in person, digital, self service, and being flexible is the key to adding value.

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Instead of discussing price sensitivity, value sensitivity might be a more appropriate term for the next generation.

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Roundtable session four | Growth mindset

The intention is to be the wealth manager for the whole family and provide value, servicing both ends of the curve, starting clients young, and then building on financial literacy and engagement over time. It was felt that getting that right, as well as the service proposition and digital experience, was crucial in maintaining it over the long term.

Indeed, ultimately, retaining the next generation means engaging with them now.

“If you want to retain the clients at the point that parents are going to pass away, you have to build a relationship first.”

Creating revenue

The next generation will likely weigh up the service charge and see if it represents value for money. The best way is to have a robust, high-quality technology architecture with digital enablement. This will reduce the cost to serve and appeal to the next generation.

“You can’t penetrate a market if you do not have the right service proposition for it.”

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Roundtable session four | Growth mindset

The role of technology

Interaction was deemed crucial. One said their firm has gone out to encourage clients to interact, ask questions and seek advice to provide added value through coaching. The idea was to have a two-way interaction rather than a portal where the client could simply see information and data but not connect with an adviser to have any sort of exchange around that.

“We should start to leverage technology and learn from other industries that are exposing different client experiences to various segments and be able to change in between segments relatively easily.”

However, it is important to remember that the aim is not to become fully digital, but to serve everyone over the channel of their preference and to find the balance between in person, digital, self service, or serviced.

Being flexible in this respect was considered key to future success and meeting the varying needs and preferences of the next generation.

Ultimately, wealth managers know that they need to consider how to meet and exceed expectations when it comes to the next generation but seem bogged down in today’s issues and are further held back by dealing with a number of known unknowns. What is known, however, is that without building relationships early on and having a proposition that meets the next generation where they are now, retention is unlikely, much less attracting new clients.

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Roundtable session five | Efficiency generation

Efficiency generation What the future of work looks like for the adviser This session, led by Chris Thorne, Senior Solution Consultant at SS&C Blue Prism, and facilitated by Gilly Green, Managing Partner at FoxRed Insight, focused on how automation in the middle and back office will allow advisers to take on more clients, whilst still providing that one-to-one balance and personal service.

High-Net-Worth Individuals (HNWIs) expect their wealth management firms to use technology to provide faster response times and enhance operational efficiency. Indeed, the vast majority think technology should and could positively affect client relationships. But it is also known that around two-thirds of a wealth manager’s time is spent on non-client interactions.

Key takeaways

The industry spends too much time on administrative tasks and not enough on building the client relationship and

1

improving their experience.

Providing a different experience,

2 Efficiency is fast moving from a ‘nice to have’ to a ‘need to have’ if the wealth manager is going to provide value.

to determine what the technology can and cannot do. And to see where the limitations reside and whether the

other tools, helps to streamline processes and unify operations to provide a whole end-to-end journey.

3 4

A deconstruction exercise is needed

whether through online portals or

The industry is generally at the early stages of technology adoption.

5

solution is tactical, having a short burst of activity to resolve something once and for all. Or whether to go down the strategic line of managing something on an ongoing basis.

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Roundtable session five | Efficiency generation

Technological efficiencies Robotic Process Automation (RPA) is essential to embed within a business to power automation and efficiency – particularly in a very manual industry. Thus, identifying areas for automation and looking at the art of the possible is needed to maximise efficiencies and automation, provide structure, monitoring, and continuous improvement over time.

This is rapidly moving beyond a nice to have and more of a must have because unless a business can get past being bogged down by administrative tasks, they cannot provide value to clients and within wealth management, value is everything.

Third-party data One of the biggest efficiency challenges is that, within wealth management, many processes rely on thirdparty data. The issue is that if the quality or timeliness of that data is substandard, then that impacts the efficiency of any downstream processes.

“We had a process that was heavily reliant on third-party data, and the amount of chasing and verifying that we had to do made the whole automation process so much harder to the extent that we had to question whether it was a worthwhile process to go through in the first place.”

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Roundtable session five | Efficiency generation

Drivers

Thus, RPA can provide process automation and drive efficiency, leading to operational efficiency and better service levels to customers. But can it ever be used to replace humans?

“We want to get rid of all these agents in this call centre because we think robots can do it better. And over time, technology starts to grow and become a bit more intelligent, albeit we still need recourse to human beings for the more complex stuff.”

It was thought that the obvious examples of where RPA could help include the fact-finding process or the client-reporting process. Indeed, if the firm can find specific processes to use automation to drive efficiency, it can identify the value the RPA provides in delivering the client experience backed by the assistant.

“Firms should not automate just because it is possible to do so. Instead, the need is to think carefully about what to automate and make it a value decision based on both cost saving and growth.”

Steps in the process

The key is to understand what the end objective is and what feeds into that end objective; that is the point to work back from. Taking client onboarding as an example, the various steps involved in getting a new client into the system are lengthy and cumbersome. For example, some clients still use paper documents, but could the system accept scanned signed letters or is a digital signature software required? Could email boxes be managed automatically, and documents retrieved and sent to the onboarding team? The end point is clearly better and swifter onboarding, but there are numerous facets to that overall process, and so is the granular view of what needs to change and why.

“Suppose you automate your core processes as much as possible. In that case, it gives you a foundation for execution that you can then build and scale out because everything you do at the core is done efficiently, and you can focus on everything else.”

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Roundtable session five | Efficiency generation

Monitoring is also important to further drive business processes forward with the aim of having continual improvement to initial implementations. This could include identifying where bottlenecks are now appearing and applying further automation to that particular part of a process.

In this way, the adviser is freed up to deliver on the relationship and provide value. However, there was also discussion on whether a tipping point would come where the clients are happy and comfortable with all the technologies that are currently coming to the fore, and whether this would render the adviser extinct.

“In the not-too-distant future, the client will start to trust the technology and rely on the AI for the advice and the expert knowledge, and the role of the adviser will need to change and evolve if they are to survive.”

Returning to the initial point, the participants agreed that while RPA is undoubtedly useful, not everything that can be automated should be.

Indeed, to try and identify the end objectives, the steps to be taken in achieving that, and the difficulty of measuring and monitoring along the way to ensure those objectives are achieved is considered key. This is even more important given the industry’s rapid evolution. But the role of the adviser is also evolving, as are the range of technologies now available to support in the quest to provide enhanced customer experience.

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Roundtable session six | Digital space

Digital space Adapting to evolving assets This session, led by Bruce Keith, CEO of Bridgeweave, and facilitated by Stephen Wall, Co-founder and Head of Marketplace and Content at The Wealth Mosaic, focused on how advisers need to adapt, including their business models to meet the evolving needs of clients in the digital asset space, while ensuring compliance with regulatory requirements.

The digital asset space, while still evolving, offers increased accessibility, liquidity, and investment opportunities, which include cryptocurrencies such as Bitcoin, Ethereum, Litecoin, digital tokens, digital securities, digital currencies issued by central banks (CBDCs), and other digital representations of value, all of which rely on Blockchain technology or other decentralised systems for their creation, ownership, and transfer.

Key takeaways

Key to the digital assets space is understanding its component parts, how they work together, and for

1

what purpose.

2

The massive (85%) drop in crypto’s

4

Participants thought that tokenised

Because crypto is owned by the community rather than an institution, the regulator will need to impose rules and guidelines on the businesses that

crypto as an investment, and at this point in time, the investment case is

part of a diversified portfolio.

3

deal with crypto, instead of crypto itself.

The industry is at the early stages of

value recently makes it a hard sell as

assets were far from being a concept that is widely understood.

5

more akin to a gold rush.

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Roundtable session six | Digital space

While this empowers investors with greater access to investment opportunities, enhancing their ability to make informed decisions, manage risks, and achieve their financial goals. Key to the digital assets space is understanding its component parts, how they work together, and for what purpose. Only then can an informed decision be made about how, why, and whether this is relevant to the wealth management space.

Nowhere is this more important than with cryptocurrencies. Much maligned, the key thing to remember is that crypto is a part of something bigger that includes Blockchain.

“If you can accept that a public Blockchain is better than a private because everyone can use it, then the next logical step is that you need a cryptocurrency as the oil that keeps the system going.”

“But you can’t talk about Blockchain and crypto without discussing Web 3, which is much more about being tokenised for the individual. So, you start owning data and thinking about how to monetise it – which links back to the Blockchain and crypto.”

Moving all that one step along, the question is more about crypto’s value proposition and whether there is a business use case. Following that, as a wealth manager, a decision on whether this is an investment proposition, or not, can be taken. This is a very different conversation from those that say everyone needs to invest in crypto as it is the next big thing, only for it to see catastrophic drops.

A second sticking point is that the industry’s infrastructure is not yet at the point where people are comfortable with it. Thus, there is hesitancy around this whole area.

Hesitancy is not the same thing as interest, however. Participants noted healthy levels of interest from younger clients in particular; whether that translates into actual investment in the future remains to be seen.

There is definitely a younger crowd who are interested. But at the moment, everyone seems to be listening and learning, and not actively engaged in anything.”

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Roundtable session six | Digital space

Regulation

Another hindrance is the regulatory environment and a lack of coherence. It was thought that, as a rule, regulators are trying to approach crypto like anything else, albeit in a piecemeal fashion.

But the US, in particular, is seen to be clamping down on crypto, and that is partially because crypto is decentralised and thus owned by many people, not one single organisation.

Indeed, this means that the regulator will need to impose rules and guidelines on the businesses that deal with crypto, as opposed to crypto itself.

Going forward

Going forward, participants thought that having a big institutional name behind crypto would help. One talked about a crypto ETF: “I think a big thing would be an established ETF in this country, a BlackRock type ETF coming in. We could then start slipping that into our discretionary portfolios as and when clients requested or asked us to look into it.”

But it is not mainstream yet, so if an adviser wants to go and find how to get money on or off the Blockchain into someone’s bank account, that is a bit of a mission.

Tokenised assets

As for tokenised assets, the participants thought that this becoming mainstream was far from even being a concept that is widely understood.

This is something that has been worked on in places, notably the Swiss Digital Exchange (SDX). One said that the tokenisation of things like artworks could be an obvious revenue opportunity for wealth managers and asset managers of different formats.

All participants agreed that the crypto industry is at the early stages of investment and that, at this point in time, the investment case is more akin to a gold rush. In the infrastructure sense, however, the case is clearer and easier to understand as the oil can move assets around on a Blockchain.

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Roundtable session six | Digital space

“Everything is a confidence game at the end of the day. Where are equity markets going to be this time in 12 months? Nobody actually knows, but with crypto, there is the additional fear that the bottom might drop out of it at any given moment.”

And the one thing that the wealth manager wants to avoid is a massive drop; indeed, their job is to preserve wealth. Thus, unless that client is in the Ultra-High-Net-Worth (UHNW) category and able to invest over the long term, then crypto is going to be deemed too risky at this point.

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About WealthTech Matters

About

WealthTech Matters Owen James and The Wealth Mosaic have collaborated to create a series of triannual events for key decision makers from the private wealth industry.

Technology is core to the future wealth management model, but in an increasingly specialist technology environment, wealth managers must engage with a deeper knowledge and understanding of what technology is available and can deliver across the three main areas of their business: their clients, their advisers and staff and their business processes.

WealthTech Matters focuses on these three themes to help delegates discover and discuss the technology solutions that will solve the key challenges facing their business.

You can read more about the WealthTech matters event series here.

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Boilerplates

About Owen James and The Wealth Mosaic

Owen James seeks to provide a platform for strategic engagement: an opportunity for key individuals to discuss and understand the business and investment issues which are affecting the whole of their industry.

The end game is to enable firms to do better business - commercially, intelligently, and ethically.

Find out more at www.owenjamesevents.com

The Wealth Mosaic (TWM) is the definitive information and knowledge resource for the global wealth management industry. It is founded on a curated, online solution provider directory to close the knowledge gap between wealth management businesses worldwide, the growing technology marketplace, and related solution providers.

For wealth managers, the buy side of our marketplace, TWM is designed to enable discovery of key solutions, solution providers, and knowledge resources by specific business needs.

For solution providers (vendors), the sell side of our marketplace, TWM exists to support the positioning, exposure and business development needs of these firms in a more complex and demanding market. There is also a growing range of quality supporting content and thought leadership that firmly positions TWM as a market leader at the forefront of community trends and developments.

Find out more at www.thewealthmosaic.com

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Publisher The Wealth Mosaic Limited

For more information about The Wealth Mosaic please visit: www.thewealthmosaic.com

Contact office@thewealthmosaic.com rebeccaleitch@owenjamesgroup.com This publication constitutes marketing material and is the result of independent research. The information and opinions expressed in this publication were produced by The Wealth Mosaic Limited., as of the date of writing and are subject to change without notice.

Copyright © The Wealth Mosaic. 2023. All rights reserved.