For wealth managers, digital success starts at the back office

Investments in digital front-office applications will fall short if firms don’t consider their enterprise wealthtech platform

For wealth managers, digital success starts at the back office

During the pandemic, some of Canada’s best wealth managers earned the trust of their clients by using technology to provide uninterrupted support during unprecedented times. With the crisis receding, firms across the industry are working to replicate that success by supplying their advisors with a host of new digital tools designed to enhance the value advisors provide and strengthen client relationships. As they invest in these new technologies, wealth managers should keep in mind that front-office applications are only as effective as the back-office, enterprise platform they run on.

There are actually two powerful trends driving the current surge in wealth management IT investments. The first is the pandemic, which forever changed the way consumers and companies communicate and do business. The second is the Great Wealth Transfer, in which Baby Boomers are passing tens of trillions of dollars to Millennials who have adopted digital channels as a basic way of life. These two trends ensure that technology will be a bedrock of relationships between financial advisors and their clients from this point forward. Clients accustomed to seamless service from companies in other industries will expect and demand a similar experience that can only be enabled through technology.

Keeping up with the Pace of Change

However, a recent Broadridge study found that many wealth managers have struggled to keep up with the pace of change. Globally, wealth managers lag peers in financial services and other industries when it comes to the adoption of emerging technologies. Many advisors have yet to develop the technological capabilities they need to compete in the new environment. In response, firms have started investing heavily in digital transformation. They are rushing to provide their advisors with tools that will help them attract and retain younger and more digitally engaged clients.

Wealth managers are providing advisors with an expanding menu of new digital tools, including systems that help segment clients and customize service, applications that automate routine tasks, and access to communication channels like social media and video. By providing access to these new solutions, firms hope to help advisors deliver more targeted and personalized communications, while freeing up time for meaningful conversations with clients.

Despite these potential benefits, there are risks to getting too caught up in the flood of new front-office applications available to advisors. First, new technology can overwhelm advisors. The purpose of good technology is to take work out of the system and make the experience smoother and efficient. Adding a string of new applications to advisor desktops can do the opposite if advisors are forced to spend time figuring out how and when to use the technology or entering data into multiple systems. Second, even the most sophisticated combination of front-office applications will fail to deliver results if it’s not supported by an equally robust enterprise platform. A client who is impressed by an advisor’s personalized videos on financial planning won’t remain happy for long if the firm is not able to execute on its ideas, issue timely and accurate statements and stay on the right side of rules and regulations. Success in those areas requires investment in the foundational parts of the business architecture —a robust core wealth platform with APIs to support digital enablement, channel agnostic straight-through-processing, a robust suite of business configuration capabilities to support personalization and product offers to meet market segment needs.

The age of data analytics and AI

Enterprise systems have always been the backbone of financial service companies. But robust and integrated enterprise platforms are becoming more important than ever in the age of data analytics and artificial intelligence. AI-driven solutions are unlocking vast new opportunities to personalize service and make workflows more efficient. Analytics and AI can help segment clients and understand what services, products and communications techniques to use within each segment and with individual clients. Then AI can help automate workflows, allowing advisors to spend more time interacting personally with clients. Back-office platforms powered by analytics, automation and AI also help firms comply with CFR (client-focused-reforms) regulations and other rules and make compliance processes and documentation easier and more efficient. But those benefits can’t be achieved without timely and reliable data. Creating a source of consistently accurate data requires modernization, simplification and integration of the enterprise platform.

How should wealth managers decide where to spend their investment dollars across all these front-office and back-office options? That’s where business strategy comes in. In my experience working with clients, I’ve seen cases in which firms perceived as being digital leaders are using the same technology platforms as those who struggle. Often, success is not defined by what technology you use, but how you use it and what you’re using it for.

Being a Digital Leader

Digital leaders don’t view any technology application in isolation. Rather, they construct a technology ecosystem designed to support their advisors and their business goals. That ecosystem integrates front-office tools that help advisors understand and communicate with clients, with powerful enterprise technology that executes business functions effectively and cost efficiently. By eliminating work from the system, the platform frees up advisors to deliver a “personal touch” to clients. By equipping the advisors with insights, products and services that are personalized to each client, the platform makes those personal interactions more relevant and impactful. For wealth managers, that’s a winning solution that can result in more satisfied clients, higher retention rates and long-term business growth.  

Karin Yorfido is the general manager for global technology and operations in Canada at Broadridge Financial Solutions.

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