Personalized service requires personalized technology choices. That’s a lesson wealth management firms are quickly learning as they work to adapt to an increasingly competitive marketplace at a time when investors have more options than ever.
But for many firms, efforts to create this type of service as a means of connecting with and retaining clients are being slowed by legacy IT infrastructure that makes it difficult to experiment with the new technologies enabling the current wave of personalization.
Onboarding technology is a complex process for any financial services organization. In addition to the technical challenges that are part of any IT implementation, financial services firms must clear a host of regulatory, compliance and security hurdles before approving and ultimately installing technology for use. As a result, wealth managers historically have taken a careful and, candidly, slow approach when it comes to adopting new technology.
This conservative approach makes complete sense for organizations responsible for managing other people’s money. But as a result, IT infrastructure for many wealth management organizations remains highly centralized, standardized and bureaucratized.
The slow pace of innovation is creating challenges for individual investors and advisors alike, as it leaves little room for individual advisors to experiment with new applications that could help them elevate their services by personalizing client-facing functions and to become more efficient at business-growing activities like prospecting. Instead, advisors are trying to meet heightened client expectations with a set of rigid and predetermined tools.
This lack of flexibility can take a toll on advisor performance. In fact, a recent Broadridge study found that 77% of the advisors said they had lost business as a result of not having the appropriate technology tools to interact with clients.
In the meantime, clients of and investors in high-performing companies like Apple and Amazon have become accustomed to tech-enabled, timely and personalized service. Why would they expect anything less from their wealth advisors?
Indeed, some of the most flexible third-party wealth management platforms are analogous to the App Store on your iPhone. In wealth management, this has traditionally remained elusive due to the number of disconnected, disparate systems and the compliance and privacy concerns associated with data interoperability.
The vision: in a single dashboard, an advisor sees a menu of applications. These applications have been vetted by the wealth management firm for security, compliance and functionality and have been approved for use. They have also been implemented into the organization’s tech and operations platforms, meaning the apps will automatically integrate with the CRM and other tools used by advisors.
Despite the technological innovation that has occurred over the past 18 months, the wealth management industry is one that is still rife with paper and manual processes. A recent Broadridge study found that wealth managers rank the lowest on the firm’s ABCD scoring system, which measures application of emerging technologies such as AI, blockchain, the cloud and digital, demonstrating the industry still has a long way to go.
Other new tools are aimed directly at personalization. Wealth management firms can bolster their core front office capabilities by using technology solutions that help identify relevant and engaging content for individual prospects and clients to provide the right content, at the right time, on the right platform.
Firms can also deepen their relationships with clients by using technology to segment clients based on their unique financial goals and build hyper-personalized portfolios that meet their needs at the time — such as saving for a college fund or retirement.
Advisors with easy access to applications like these can transform the way they engage with clients and deepen client relationships. But wealth management organizations will only achieve this level of personalized service by first personalizing the technology tools available to their advisors.
