Can you align experience with expectation? See how your digital strategy can transform how you connect with your clients.
Driving Growth through Digital Transformation
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Wealth management firms have been dealing with a myriad of external and internal challenges including shifting client demographics, more demand for hyper-personalization, expanded competition, operational inefficiency and aging technology.
For many firms, competing priorities and limited resources impeded their ability to adapt to these new challenges. Then the pandemic hit. The challenges got bigger and became more urgent. How do you overcome the challenges you face today to allow you to grow your wealth business for tomorrow?
The American Bankers Association predicts that by 2025, there will be five generations of wealth owners, each with different perceptions about wealth, social matters and money.¹ If you can build relationships with all five generations, then you can capitalize on significant opportunities.
But with each generation having different priorities, meeting their needs is a substantial challenge. It requires a highly personalized and frictionless client experience, which in turn depends on your digital strategy.
Today’s Wealth Managers Must Move Faster and Think Bigger
The American Bankers Association predicts that by 2025, there will be five generations of wealth owners, each with different perceptions about wealth, social matters and money.
What a difference a century makes
But with each generation having different priorities, meeting their needs is a substantial challenge. It requires a highly personalized and frictionless client experience, which in turn depends on your digital strategy.
You can’t service
without
Will COVID-19 be with us for decades but be managed effectively alongside the common flu or evolve in unexpected ways?
Connect With Clients And Make An Impact
Today’s Wealth Managers Must Move Faster and Think Bigger
WHAT’S YOUR DIGITAL FUTURE?
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aren’t pleased when receiving value-added services.¹
Align experience with expectation
Each major market event, whether it’s a standard correction, change in political or economic climate, or the most tumultuous black swan, causes us to rethink how we do business.
The situations where you interact with clients don’t change, of course. But how you engage during these situations continues to evolve – along with your clients’ expectations. Simply reacting will leave you further behind. If you take the opportunity to adjust your transformation strategy, you’ll discover more innovative ways to succeed.
Digitization continues to provide greater access and engagement with all generations of wealth. It has also provided opportunities to increase the effectiveness of the front-office advisor, banker and trust officer.
However, many organizations have had limited success in meeting clients’ changing expectations. Moreover, the move to increased servicing through online channels is exposing weaknesses in existing business models.
But the need for hyper-personalization is real and hard to solve. Many firms have struggled to customize client experience in a scalable manner, and the new reality
of client expectations is making that even more difficult. Your strategy needs to
align your value with the expectations of your clients.
Connect with clients and make an impact
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This corresponds with a reluctance to do more business with a firm. Incumbent wealth management firms continue to be viewed less favorably than non-traditional providers; for example, they lag big tech in consumers’ confidence in the delivery of better service.
Connect with clients and make an impact
Review the resilience of your solvency platform and framework
Continued disruption from technology is changing service delivery models across all generations of wealth. The challenge is the lag of this transformation.
Wealth management mobile apps are updated half as frequently as retail banking apps,³ which is particularly an issue for organizations that also operate as a retail bank or broker dealer and thus have investors with high expectations for data.
This need to digitally transform is not lost on industry leaders, especially considering the impact of the global pandemic.
The new demands for digital
Regulation has traditionally led insurers’ robust approach to solvency, with Solvency II driving stronger governance and control of modeling results. Now, critically, insurers must look deeper and consider all of the aspects of their solvency models that haven’t worked as well.
You must also ask yourself serious questions about the changing nature of the workplace in the pandemic. Will what started off as emergency lockdown measures become a more permanent shift and keep many staff working from home or remotely more often? Should cloud computing and SaaS-based platforms form part of your protection against future challenges to business continuity?
WHAT’S YOUR DIGITAL FUTURE?
Contact us to find out more
LET’S SOLVE DIGITAL WEALTH
When it comes to capital management, you need to know that your reserves can withstand the very worst-case scenarios: extreme, black-swan events that would otherwise cause insolvency.
61% of investors would consider moving to a big tech firm if they offered wealth management.²
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But many of the assumptions that make up risk models
are best estimates.
Investors, markets and organizations will always change. What matters is how you respond. Do you simply make the necessary modifications to deal with the disruption? Or do you implement a flexible infrastructure that lets you stay ahead of the market and easily transform to the next event?
Each time you choose to adapt versus transform, you create a lost opportunity and add complexity – which will make it more difficult to change direction in the future.
Look at the stresses and combinations of stresses that you are running on your models. How did any pandemic modeling you carried out compare to actual COVID-19 results and would it have protected you in previous pandemics? Or should the stresses be higher and more explicitly targeted?
In terms of solvency, it’s important to gauge how well your stochastic and stress tests on models actually protected your company. What’s more, could you have survived any additional shocks after the initial market falls in March? By focusing on reverse stress testing, you can uncover any hidden risks and vulnerabilities that may also cause insolvency.
Assess stress testing
Consider layering on several mortality scenarios, but be prudent and make sure you underestimate for annuitant mortality and overestimate for life assurance mortality.
Some basic assumptions should also be made in the stresses about the pattern of mortality either worsening due to increased deaths from COVID-19 or the impact of long-COVID improving because of improved public health, hygiene and resistance to future viruses or flus.
However, remember that at this stage there is still a danger of over-modeling, overthinking and spurious accuracy, with not enough data or knowledge to support more complex models.
Rethink mortality assumptions
Tying back to your solvency platform and framework, actuaries need to be able to answer senior managers’ most fundamental questions, fast. At the start of the pandemic, C-suite executives were desperate to know what could happen next, the impact on their solvency ratio and whether risk teams could model all this remotely.
To consistently provide a rapid response in these circumstances, you need a risk platform that is well governed, scalable and accessible in the cloud, with the flexibility to model changes quickly.
Deliver timely information
Solvency modernization is now a reality for insurers around the world, with many countries echoing the spirit and format of Solvency II and the upcoming Insurance Capital Standard.
Beyond compliance, these supervisory guidelines are helping create a stronger insurance sector and improving protection for policyholders and the overall management of insurance companies. What better reasons to modernize solvency through both your technology and your risk modeling framework?
Push ahead to meet new solvency requirements
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The New Demands For Digital
Solvency modernization is now a reality for insurers around the world, with many countries echoing the spirit and format of Solvency II and the upcoming Insurance Capital Standard.
Beyond compliance, these supervisory guidelines are helping create a stronger insurance sector and improving protection for policyholders and the overall management of insurance companies. What better reasons to modernize solvency through both your technology and your risk modeling framework?
Push ahead to meet new solvency requirements
Tying back to your solvency platform and framework, actuaries need to be able to answer senior managers’ most fundamental questions, fast. At the start of the pandemic, C-suite executives were desperate to know what could happen next, the impact on their solvency ratio and whether risk teams could model all this remotely.
To consistently provide a rapid response in these circumstances, you need a risk platform that is well governed, scalable and accessible in the cloud, with the flexibility to model changes quickly.
Deliver timely information
Legacy processes, evolving regulations and aging infrastructures have left many firms with inefficient processes that often transfer their problem to their client, impacting client satisfaction. This leads to a question: If I was the client, would I be happy with the process?
Performing activities such as opening an account or requesting cash allow you to evaluate the experience as if you were your own client. It also identifies processes that are inefficient or creating friction, allowing you to map processes and identify where an emerging technology, workflow, data-led solution – or all of the above – could help.
Look at yourself as the client
Many organizations treat their value proposition as static rather than dynamic. This can create a disconnect with your clients because they’re constantly evolving. Sales and client retention act as clear short-term indicators on the alignment of your value proposition. But you need to take a longer-term consideration of the market to truly determine if the way in which you deliver value is still aligned with customer expectations.
The pandemic has altered how you interact with your clients. Firms who based their value on service have made the necessary changes to maintain a high service level. However, were these changes done to support a short-term need or for a long-term transformation? Investor preferences will continue to change. You need to be ahead of disruption and review how you need to alter the delivery of value to avoid a disconnect with your base.
Review your value proposition
Does your technology and data strategy support your business strategy? Nobody has unlimited resources. Whether you build, buy or partner, your investment is wasted if it doesn’t support your business strategy.
Consider the long-term impact of your investment. And when you’re evaluating internal development, assess the level of openness of the architecture, maintenance costs and the useful life of the enhancement, as well as how it will be replaced.
The challenges of both partnering and buying have some similarities. Understanding the underlying technologies of a vendor partner reveals if they are forward-thinking. Evaluating the level of openness of the architecture provides insight into the cost of the integration. Reviewing their long-term plan provides the data you need to evaluate their strategy. All of these factors determine if you are transforming or adopting.
Validate strategic alignment
Investor expectations of their wealth provider are being set through other interactions in their daily life. These are driving the demand for hyper-personalization and real-time, relevant content and product information.
But many firms are failing to meet this need.
• Deliver self-service through an online or mobile experience
• Provide your client-facing teams with tools to be more efficient
• Determine how to personalize at scale
• Identify ways to monetize data
This corresponds with a reluctance to do more business with a firm. Incumbent wealth management firms continue to be viewed less favorably than non-traditional providers; for example, they lag big tech in consumers’ confidence in the delivery of better service.
Focus on aligning your
value proposition with
four key areas for a
significant long-term impact:
75%
The focus of change in a digital strategy used to be solely
on identifying additional
client initiatives.
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previous
Solvency modernization is now a reality for insurers around the world, with many countries echoing the spirit and format of Solvency II and the upcoming Insurance Capital Standard.
Beyond compliance, these supervisory guidelines are helping create a stronger insurance sector and improving protection for policyholders and the overall management of insurance companies. What better reasons to modernize solvency through both your technology and your risk modeling framework?
Push ahead to meet new solvency requirements
Tying back to your solvency platform and framework, actuaries need to be able to answer senior managers’ most fundamental questions, fast. At the start of the pandemic, C-suite executives were desperate to know what could happen next, the impact on their solvency ratio and whether risk teams could model all this remotely.
To consistently provide a rapid response in these circumstances, you need a risk platform that is well governed, scalable and accessible in the cloud, with the flexibility to model changes quickly.
Deliver timely information
Consider layering on several mortality scenarios, but be prudent and make sure you underestimate for annuitant mortality and overestimate for life assurance mortality.
Some basic assumptions should also be made in the stresses about the pattern of mortality either worsening due to increased deaths from COVID-19 or the impact of long-COVID improving because of improved public health, hygiene and resistance to future viruses or flus.
However, remember that at this stage there is still a danger of over-modeling, overthinking and spurious accuracy, with not enough data or knowledge to support more complex models.
Rethink mortality assumptions
Look at the stresses and combinations of stresses that you are running on your models. How did any pandemic modeling you carried out compare to actual COVID-19 results and would it have protected you in previous pandemics? Or should the stresses be higher and more explicitly targeted?
In terms of solvency, it’s important to gauge how well your stochastic and stress tests on models actually protected your company. What’s more, could you have survived any additional shocks after the initial market falls in March? By focusing on reverse stress testing, you can uncover any hidden risks and vulnerabilities that may also cause insolvency.
Assess stress testing
Regulation has traditionally led insurers’ robust approach to solvency, with Solvency II driving stronger governance and control of modeling results. Now, critically, insurers must look deeper and consider all of the aspects of their solvency models that haven’t worked as well.
You must also ask yourself serious questions about the changing nature of the workplace in the pandemic. Will what started off as emergency lockdown measures become a more permanent shift and keep many staff working from home or remotely more often? Should cloud computing and SaaS-based platforms form part of your protection against future challenges to business continuity?
Review the resilience of your solvency platform and framework
When it comes to capital management, you need to know that your reserves can withstand the very worst-case scenarios: extreme, black-swan events that would otherwise cause insolvency.
But many of the assumptions that make up risk models
are best estimates.
INCREASED COMPETITION IS A GIVEN. THE CHALLENGE IS TO INCREASE VALUE AT LOWER FEE LEVELS.
This starts with transforming the advisor. Needing to address the next best action for the investor is not a new problem. What firms have lacked is the development of automation beyond the typical dashboards – overdraft, uninvested cash and compliance warnings.
Advanced analytics and the monitoring of real-time data can deliver information that is actionable and add value. You can also leverage advanced data analytics to understand upcoming liquidity needs based on past spending patterns and determine a client’s true risk profile based on their demographics, holdings and investment objective.
The new demands for digital
Meanwhile, both external and internal users increasingly expect a seamless experience. Making a good impression during the first business interaction is particularly critical. Removing friction and making it easier to do business with you are the most important attributes to a positive onboarding experience.
Many firms have made progress by implementing e-signature technology and client self-service. Where they still struggle is with duplicate entry of demographic data, manual approval processes, utilizing email for tracking and using aged lists to onboard assets. Addressing these inefficiencies through application programming interface (API) integration, workflow and data aggregation improves the client experience and reduces the time to revenue.
of wealth managers are re-evaluating or changing their approach to digital transformation.⁴
five generations
of wealth
Your clients deal with big tech each day. These firms know your clients and have their demographic information. They could be the next threat to your business. How you course-correct and how quickly you deploy innovative solutions will drive your future success.
With advanced digital capabilities, you can deliver the products, services and experiences that suit each individual investor. Your advisors can work more efficiently, providing a better service and taking a proactive approach to clients’ investment needs with improved outcomes on their investment strategy.
A digitally enabled, data-driven wealth platform allows you to redirect your attention to strategic goals, focus on attracting the next generation of investors and spend time on growing your business.
How do you support a transformational strategy?
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live in a particular city and also have a home equity loan through your bank – without relying on somebody with a technical background.
The potential impact of artificial intelligence (AI) is significant. Beyond providing additional insights, there is a clear opportunity to improve efficiency, timeliness and accuracy. But many firms still have to better understand the use-cases.
Leverage the value of AI
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Advanced analytics and data analysis tools and APIs are top investments for 2021.⁵
The amount of data you have access to grows daily. As an industry, we still struggle to make good use of it. More is not always better. You need to have a plan to dissect information into usable pieces, ensuring the result set is clear, simple and actionable.
Organizations recognize that having a plan and making a direct investment is important.
The urgency is real. The challenge is formalizing the strategy and ensuring it evolves over time to becoming a data-led organization.
Every firm has a data strategy; even those that choose not to have a stated strategy have an approach. No matter how mature their strategy, firms fall short in their understanding that a data strategy needs to evolve based on shifts in the market and advances in clients’ technology. Constantly reviewing your approach and surveying external factors allows you to better optimize your business outcomes.
Put your data to work
Natural language generation (NLG) automatically transforms data into plain-English content and analyzes your data to tell a story. This technology can improve efficiency in the front office by drafting a client presentation on performance for you. This doesn’t just lessen the efforts required by your team; it could yield insights not easily identifiable to a human.
Natural language search (NLS) uses everyday language to query data rather than developing SQL to obtain results. It’s like executing a Google search of your proprietary data.
Predictive analytics allows you to analyze data to determine the likelihood of a future event. While it’s engrained in our minds that past performance is not indicative of future results, clients do signal their needs and intentions by their actions. This is more important when wealth managers expect to lose, on average, one-third of their clients’ wealth at the point of succession.⁶ You can easily make gross assumptions based on an investor’s demographics. It’s more difficult to understand the individual.
Leveraging data to identify behavioral analytics or what your clients want will help determine what you can do to help them achieve their goals, as well as what they need from you as their advisor.
For example, clients who have made significant charitable donations may be interested in an ESG product. Users who have significantly reduced their activity in your online portal may be signaling a lack of interest in your services and looking for another provider. A review of past business losses may show common factors with clients who have left your firm – and knowing which current clients have those traits means you can reach out before they leave.
Put Your Data To Work
Leverage The Value Of AI
The Changing Face of Wealth Management; American Bankers Association, 2019
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1
The Changing Face of Wealth Management; American Bankers Association, 2019
1
1
World Wealth Report 2020, Capgemini, 2020
2
2
After the Storm, Morgan Stanley, Oliver Wyman, 2020
3
4
How COVID-19 is Impacting the Client Engagement Approach for Wealth Managers, EY, 2020
4
3
The Top Wealth Management Technology Investments In 2021, Forrester
5
5
Further, market volatility has increased transaction volumes, which have left firms with little more than anecdotal information on operational scalability. Understanding market-driven impact must move from determining how much overtime there was to the impact on client delivery. Mining workflow data to develop meaningful dashboards allows you to move towards data-lead decisions.
Survive and Thrive to 2025, Accenture/Wealth Management C-Level Survey 2020, Orbium and Accenture
6
6
of high-net-worth investors are not satisfied with the personalization around recommended products.
60%
64%
digital
Now you need to
evaluate every aspect
of the client experience.
A front-office user can identify all clients who are over the age of 50 with a net worth greater than $750,000,