How tech opens doors for better wealth management

Analytics and artificial intelligence are becoming more critical in creating personalized services

How tech opens doors for better wealth management

Just a few years ago, financial advisors regarded technology with suspicion as encroaching robo platforms threatened to steal client assets and market share. Fast forward to today, and many in the financial-services industry are recognizing how algorithms and machines can enhance their practice.

That change of heart is plain to see in a new report released by Forbes in partnership with Temenos, a provider of software solutions for banks and financial-services firms. Building on past studies, The Next Generation Wealth Manager draws from a survey of 305 high-level executives at investment banks and private banks, as well as 105 high-net-worth individuals (HNWIs).

“Just three years ago, only a quarter of wealth managers believed digitization was essential for them to do business,” the report said. “Now, almost seven in 10 say that a virtual platform is an essential way to enhance the client experience.”

The executives surveyed also viewed technology as “significant” or “highly significant” in the pursuit of operational efficiency (87%), marketing of products/services (86%), cost reduction (80%), and personalization through product/service innovation (79%).

While efforts at tech-based efficiency have often been framed as moves away from personalization, the report noted that wealth managers are now able to go “phygital” — protecting physical, human interactions by processing administrative duties through digital channels. The onboarding process, which traditionally has been bogged down with large amounts of paperwork, has become more productive thanks to process automation.

That improvement is obvious to 87% of the participating wealth-management executives, who said they were “satisfied” or “highly satisfied” with their ability to personalize their service to high-net-worth clients today. That’s compared to three years ago, when only 69% of the respondents said they could say the same thing.

Playing a crucial role in that capability is analytics, which 67% of executives said is highly important in segmenting and personalizing the service they offer clients; another 25% said it’s important. Among the different benefits that wealth managers have seen from using analytics were:

  • Making sense of massive amounts of real-time data across numerous portfolios (40%);
  • Increased understanding of financial markets and opportunities (40%);
  • Better asset-allocation decisions and tracking (39%);
  • More proactive financial guidance (39%); and
  • Tracking of results and success metrics on an individualized, personalized level (36%)

Artificial intelligence (AI) has also risen in significance. “Less than seven in 10 saw AI as important in data analysis and forecasting in 2018, but now more than 80% see its importance in a range of areas,” the report said. The majority of wealth managers surveyed identified AI as “important” or “highly important” in aspects such as:

  • Data analysis and personalized insights (86%);
  • Forecasting (83%);
  • Overall client experience (82%);
  • Risk management (82%);
  • Operational efficiency (82%); and
  • Client communication (81%)

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