Founder and CEO of Wealthscope reflects on catalyzing impact of COVID, and where firms and advisors can take their next steps
While the COVID-19 pandemic’s negative impacts continue to reverberate and echo throughout the world, it’s also led to some positive unintended consequences, such as the accelerated adoption of technology in the wealth space. And according to one fintech platform leader, that positive momentum can be carried over into a number of crucial directions.
“If you think back to the last 5 to 7 years, a lot of firms and financial services have been talking about their digital strategies and digital transformation. So that talk had been there for a while,” said Pauline Shum Nolan, founder and CEO of Wealthscope. “But the advent of COVID-19 had really propelled a movement towards really acting on their digital strategy.”
Prior to the pandemic, Shum Nolan noted how most wealth management firms didn’t have the technology to accommodate what would now be considered must-haves for clients. That left many firms scrambling during Covid lockdowns to have digital account opening and onboarding, identity verification, and even Docusign capabilities, which had already been widely embraced in many other professional industries.
“I think that wealth management firms are kind of beginning to catch up, and they need to continue on that trajectory in the post COVID-19 world. Consumer expectations have changed; that’s not just millennials, even older generations are very comfortable with digital interactions now,” she says. “I think everyone's becoming a digital immigrant, so technology like ours to raise productivity, and have all the data analysis available with respect to their portfolios is crucial.”
Firms’ efforts at digital adoption shouldn’t stop at investing in new technology. Shum Nolan notes that for those innovations to truly take root, usability and education must be prioritized as well. Beyond providing clients and advisors with access to technology, she says firms should ensure a smooth user experience through training and optimization, which will ultimately help clients get the most of all the materials and resources they receive.
Looking at the edges of the wealth space, she says there’s a lot of ongoing conversation about applying machine learning to reveal crucial insights from clients’ data. But beyond that, she believes machine learning can also be adopted in portfolio construction as well, especially given the academic literature that’s been developed around those applications.
“At Wealthscope, we recently launched a portfolio construction tool using machine learning,” Shum Nolan says. “It's very simple and easy to use, and it provides an alternative way to look at how we build portfolios.”
One area that’s ripe for innovation stems from advisors’ efforts to improve their value add to clients through the use of private alternative funds. Because the data for those private funds are not publicly available like mutual fund or ETF performance data, she sees a glaring gap in firms’ ability to provide a complete picture of portfolio performance and risk for their clients. To address the situation, she says, would require the cooperation of the providers of those alternative funds.
“Wealthscope would love to be a hub for these products, as both as a data center as well as a provider of the analysis,” Shum Nolan says. “I think that's an area that needs to catch up.
“And in general, I think clients want digital tools, they want to play around with different things. And it's just that trajectory that we are beginning to see emerge,” she adds. “It's been encouraging that despite what COVID has brought on the downside, it has really accelerated the need to go digital for a lot of services in the wealth space.”