The industry is more professional but has further to go

Maarten Heukshorst

Wealth managers and advisers often think that the solution for implementing regulatory change or to react to client demand means technology updates.

This is a very reactive way to responding to regulatory changes and technology can be more than just a compliance tool.

The cost of doing business is consistently increasing, driven by a wave of issues ranging from ongoing regulation, to changing demographics and consumer demands, and downwards pressure on fees.

Those who embrace technology as part of a company-wide strategy rather than a silver bullet to solve these pressures, will deliver a more professional service for clients. 

Technology has professionalised the industry significantly over the past decade and has been an important enabler for companies trying to stay relevant to and for their clients.

Keeping costs low is crucial to the survival of these businesses in an industry consumed by an increasing scrutiny of fees.

In this environment, technology is either a burden or a key advantage to maintain cost-efficient business.

The upcoming GDPR directive has brought to the fore some of the downfalls of how legacy systems in advisory and wealth management businesses are handling customer data.

Historically, it was common to store customer data across multiple databases, which is both cost and time ineffective for the adviser and their client. 

Regulation is changing the rules. Using the example of data, businesses can either leave it to become a huge burden, or act now and turn it into their USP.

At current levels, it is more likely to be a burden for businesses who did not have a strategy in place soon enough. 

The ability to retain data in a single location – particularly for businesses growing organically – can help to advance engagement with clients or prospective clients.

Multiple documents and spreadsheets for each client are being replaced by systems using CRM tools, as businesses are increasingly recognising that they cannot afford not having an overview of customer data in one place. 

Another example would be the new required audit trails that forms need to maintain.

When looking at new front-end solutions, wealth managers and advisers should not only look at user features but also question if these capabilities will help them be compliant.

As an example, front-end solutions allowing audit trails such as live written or video chats can enable better communication with clients, helping to deliver an improved customer experience while also facilitating regulatory compliance. 

One barrier is that technology can be costly to implement, particularly for smaller businesses without the scale of their larger competitors.

However, there are some historical systems which require a gradual evolution to better meet the needs of clients, which should be the starting point for businesses wanting to stay relevant.