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How technology is changing wealth management

How technology is changing wealth management
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Clients’ attitude to technology is changing, according to the latest research from the CFA Institute. 

The organisation runs an annual survey among clients of professional advisers and wealth managers looking at trust within the industry. It found that a majority of clients now value “access to technology” as being of greater importance than access to a human, for the first time since the question was asked four years ago. 

Rhodri Preece, senior head of industry research at the CFA Institute, said: “We are seeing that clients view technology as increasing transparency, and so it increases trust in the industry as a whole."

While every other sector of the economy and society has been uprooted by the adaption of technology, the wealth management space has been something of a laggard, with processes based on telephone and letter still common.

But Jonathan Warren, head of innovation at consultancy Altus, says the pandemic and also general cost and regulatory pressures have caused companies to embrace technology, something which he says is already impacting both the companies involved and ultimately the clients. 

He says: “The effect of regulation in recent years has been to increase transparency around costs, which has created a price-conscious consumer, and consumers such as those are more likely to switch.

"That has led to wealth firms becoming more conscious of costs, and we are starting to see greater use of robotic process automation to perform simple but repetitive tasks such as taking data out of statements.

"But in addition to the cost efficiencies, there is also an element of improved service to the client, because using machines takes away the element of human error. And ultimately, clients want that first of all, they want the thing they are using to work as it is supposed to.” 


The second area where Warren says technology is having an impact is in terms of “personalisation.”

He says this impacts the client experience in two ways; the first is through the use of client management systems to live chat clients, and also set reminders of events such as client birthdays.

But also, he adds, “to have notes on a client's vulnerabilities and, for example, to have a note that says maybe that a client who is in a high-risk portfolio has a tendency to get worried when markets fall, and to be able to contact the client in real time about their concerns.” 

Preece adds that creating very tailored environmental, social and governance portfolios based on a client's specific interests in the ESG universe is made a lot easier by technology, as has the ability to buy securities that may be quite niche much more quickly and cheaply than has historically been the case, helping to drive the growth in this sector.  

He says this is one of the reasons why his survey found that trust levels in the industry have risen, as clients feel the investments they have now are more in tune with their own priorities.