Hyper-personalisation will be a must-have for advisers

Despite economic uncertainty looming large, equity markets have largely recovered, client demand is high, advice businesses appear stable, private equity money is fuelling opportunities, and healthy industry growth rates look set to deliver year-on-year increases in assets under advice.

However, the fairly rosy outlook should not breed complacency.

Over the coming years, the advice market is likely to experience seismic changes that will create winners and losers. The wealth management companies that will be winners and earn themselves an outsized proportion of future growth will be those that are most acutely aware of and adapting to the key factors that will reshape the advice market.

Chief among the winning drivers is the ability to deliver data-based hyper-personalisation. 

Delivering hyper-personalisation

Tailored and personalised services, underpinned by data, are at the heart of significant evolution happening across several industries, including entertainment.

Digital streaming, which uses customer data to continuously understand preferences and develop recommendations, is now standard. It has revolutionised our entertainment consumption, upended its value proposition and accelerated and amplified customer expectations.

That same focus on personalisation is almost certainly coming to the advice industry and will be a significant factor in establishing the big winners. However, it is important to recognise that hyper-personalisation is multi-faceted and does not simply mean personalised investment portfolios.

Indeed, hyper-personalisation goes beyond the portfolio. It is critical that all aspects of the proposition, including the breadth of services offered, engagement approach, educational content and communications methods, all follow the same philosophy and are curated to meet each client’s needs and preferences.

Developing a Strategy

Considering that hyper-personalisation will be a must-have for advisers, it is imperative that wealth management companies begin working on a strategy to embed it into their business models. As they embark on the process, there are several considerations:

Advice model – Foundational to the strategy is shifting to a hyper-personalised advice model. A crucial first step is to embrace a digitally enabled delivery advice approach focused on holistic individual needs and goals, which will change the nature of the adviser/client relationship to become much better tailored to their respective expectations.

Data – To enable hyper-personalisation, wealth managers will need to leverage data and advanced analytics in every aspect of their business – both client-facing and non-client-facing. Wealth managers will need to adopt a dedicated data strategy and employ the necessary specialty resources to establish the requisite infrastructure and start implementing data science into their businesses.

Technology – While data is critical, equally so is a technology that is able to take the data insights and equip the adviser to deliver hyper-personalisation. This is especially applicable for advisers offering a hybrid advice model, combining situational, face-to-face client management and digital advice options.

Adviser Focus – As hyper-personalised strategies take hold, advisers will gradually shed their roles as investment managers and become integrated wealth coaching consultants, who advise clients on investments, banking, healthcare, taxes, estate planning and financial wellness needs. It is crucial they are prepared for the shift and start to develop the necessary capabilities.

Training – For advisers to make this transition they will require a different set of skills tailored to client needs and suited for their evolution into wealth coaching consultants. Companies will need to establish training programmes that enable their advisers to successfully move from being investment-led to holistic client relationship-led.

Recruitment - The ageing adviser population is likely to be a significant short-term headwind for the industry as a whole, especially when combined with the impending wealth transfer. However, this also presents an opportunity for wealth managers to reimagine their talent development and recruitment strategies to support the technology-enabled hyper-personalised advice paradigm. It is possible that one problem can ultimately help resolve another.

For wealth management companies, digital tools, constant access and automated hyper-personalisation across their advice and engagement model will revolutionise their businesses. Advisers need to embark on the journey now – by establishing a strategy for using data and technology to enable personalised counsel and support. This way, advisers will ensure they are ahead of the curve and firmly established as winners.

Russell Andrews is head of solutions, UK, Europe and Asia, asset management distribution, at SEI Investments