Wealth Managers’ New Technology Wish List

Covid-19 forced wealth managers to make urgent changes. Here’s what they say will be “required” for the future.

(Carla Gottgens/Bloomberg)

(Carla Gottgens/Bloomberg)

The wealth management industry has acclimated well to doing business during the Covid-19 pandemic. Financial advisors took to video conferencing and found that tending to their clients, and even winning new ones, was accomplishable while working from home. But global wealth managers say their technology requires more improvements to be competitive in the future.

Wealth managers found ways to get by through the rapid spread of the virus and market downturn this spring. However, the pandemic has likely forever changed how they interact with clients and prospects, forcing them to consider changes to their technology, according to a new report by Aite Group, a research and consulting firm focused on financial services.

Aite conducted a quantitative survey of 31 global wealth management firms across North America, Europe, and the Asia-Pacific in April and May and found that all but 7% of firms were satisfied with “client receptivity” to digital offerings since the pandemic began. That was a good result because clients wanted those offerings more than ever this spring. Over half of firms saw a “major increase” in the demand for digital capabilities compared to the same period a year ago.

But improvements to vital software are still “required” in the eyes of wealth management companies.

The overwhelming majority of companies surveyed said changes to their client reporting, client relationship management (CRM), analytics, and other software, are either “required urgently” or there is a “required” but non-urgent need for changes. Even financial planning software, which advisors learn, become accustomed to and skilled in — and generally buck changing — requires non-urgent consideration, according to 61% of respondents.

“It is apparent that technology initiatives will be keeping the industry busy for the foreseeable future. Urgent areas of change include the all-important digital engagement platform, on which almost a quarter of all respondents globally need to make urgent changes, and an additional two-thirds of respondents are building a list of required changes to be tackled in the future,” the report says.

Aite also expects a “surge of marketing automation is on the horizon,” which is powered by analytics, explaining why 76% of firms have designated that analytics software as a future focus. The long implementation process of good analytics is why only 3% of firms said they plan to make immediate changes in that area, according to the report. “One can assume that these are the firms that already have some analytics capabilities in place, which they can then tweak or work with a vendor to add analytics in a seamless manner,” the report said about that 3% making immediate changes.

Goals are nice but pointless if companies can’t pay for their ambitions and budgets could slow the progress of technology at some companies. Aite found 57% of firms globally feel there are sufficient budgets to make a positive impact on their business performance. Most of the North American firms surveyed were confident that budget constraints will not hinder their business performance. Meanwhile, half of Asian firms felt budget constraints would impact business performance in a very negative way. “This could explain why Asian firms have been in a much worse position to respond to the pandemic compared to their North American and European peers,” the Aite report said.

North America could be a little ahead of the curve when it comes to the software improvements. Wealth managers here were once concerned that creating in-house digital tools and solutions for clients would be perceived as competing with their own financial advisors. The validity of that concern might still be debated, but it’s not one the companies seem to have.

The core of every client relationship is trust and “in-person meetings will continue to be a vital tool for advisors,” according to Aite. But the pandemic has fast-tracked technology’s progress and elevated clients’ expectations.

“With client receptivity for digital engagement being not an obstacle any longer, the race is on for wealth management firms to not only meet the minimum client requirements but to also delight clients with an outstanding digital experience. Firms that have already or that will rapidly put their best people and ideas to work on digital engagement will see a direct impact on their business performance, as early results have shown already.”

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