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How CTOs Should Frame the Digital Conversation with Advisors

Technology and Tips

By Philipp Zerhusen  |  June 20, 2019

When it comes to digital innovation, the private banking and wealth management sector—by its own admission —is lagging other industries. 

On the technology side, Chief Technology Officers (CTOs) fret over the costly and mammoth task of overhauling legacy information systems to centralize client data and satisfy appetites for instant insights. On the people side, advisory teams are torn between time-intensive activities, such as identifying new clients, and continuing to develop relationships and assets with existing ones.

These age-old challenges—to drive down costs, grow client assets and scale business operations—continue to preoccupy C-suite strategists. But instead of cost-cutting or letting go of talent that has not kept pace with workplace requirements, forward-thinking executives are investing in digital tools, insight, and innovation to further empower staff to engage with high net worth (HNW) clients.

Understanding where investment can most effectively accelerate transformation is critical. But kickstarting cultural change and encouraging the embrace of technology company-wide is even more important in ensuring that those whom digital is intended to assist benefit most. As well as investing in technology, CTOs should therefore also reconsider how digital is positioned, especially when it comes to conversations with advisors and other frontline staff.

Reducing the Advisor Workload, Even as Regulatory Requirements Increase

The challenge in introducing new technology and a new way of thinking into a wealth management firm is the wider environment within which the firm operates. Many advisors, for example, perceive digitization and personal wealth management to be on opposing sides of the high-touch proposition they offer clients. From the client’s perspective, however, the two are usually inexorably linked—enabling instant access to research ideas, investment information, and expertise.

Overall, HNW clients feel that advisors have the necessary tools and resources at their disposal to perform their role well. Those in the UK and Switzerland, however, are more reticent and feel that their primary contact’s wider team needs support, particularly on the administrative and product or service expertise sides (Figure 1). Technology should therefore be positioned as an investment deployed to help advisors with their administrative burden, as this is where clients perceive the pain points to be. An example could be the on-boarding process, where the pain of administering the KYC (Know Your Client) requirement is often felt more acutely by advisors than by clients.

Making Advisor Support More Effective

Personalizing Wealth Management Communications, At Scale

Digital solutions help advisory teams service an increasingly global client base, in real time and at scale. These solutions can reduce the time it takes to research and construct customized portfolios for clients. They can also assist with more sophisticated tasks like running complex analytics, suggesting asset class allocation reviews, and even producing personalized client-ready collateral—all at the click of a button.

Given today’s ongoing global uncertainty and market volatility, the need for timely, digestible, and actionable information is more pressing than ever. CTOs can therefore offer advisors technology that allows them to work more closely with their clients, even when there are more of them to service.

FactSet’s 2017 research revealed that wealth managers must move outside of their comfort zone to make resources more engaging, concise, and dynamic for clients. HNW clients want to see a range of improvements reflected in the communication materials they receive from their wealth managers; this wide range of preferences would be challenging and time-consuming to produce and personalize without technology (Figure 2). 

Improving Investor Information to Be More Actionable

Embedding a Digital Culture to Deliver Real Progress

In addition to identifying relevant and truly beneficial technology, CTOs must consider how to create a digitally-supported information culture. This will encourage advisors and their wider teams to experiment with new tools, share experiences, and learn from each other. It will also help progress the digital vision from the C-suite to the mainstream, embedding digital into the firm’s DNA.

Successful implementation will be contingent on effective internal communication throughout the organization, developing people by equipping them with relevant tools, and giving them greater impetus for change. Wealth managers who do it well tend to secure employee buy-in to digital transformation through ongoing consultations with targeted user groups and regular communication of its intended advantages.

While challenging by their nature, digital transformations will continue to revolutionize every aspect of the wealth management relationship. CTOs can therefore pre-empt frictions by addressing advisors’ key concerns head on and promoting the behaviors that will make the biggest impact with HNW clients.

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Philipp Zerhusen

Director of Market Development

Based in Frankfurt, Philipp has worked in the financial industry for 25 years. Before his current role he held various international management and senior enterprise solutions roles across EMEA at Thomson Reuters, founded a number of start-ups, and worked for several years in Asset and Wealth Management at Sal. Oppenheim. Philipp holds an MBA from the University of Cologne, a professional banking diploma, and certifications in bond trading, project management and CRM.

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