Innovation in wealth management

The wealth management and investment sector continues to embrace digital – but different organisations move at different paces. We’ve collaborated with financial journalist Sam Shaw, to explore some of the challenges that companies are facing and how they’re making progress. 

As lockdown measures forced companies across all sectors to adopt digital, remote and quick-fix approaches to day-to-day operations practically overnight, certain frustrating aspects of financial services continue to demand manual human interaction. 

Businesses from across the sector have said that the only reason one or two staff were forced to travel into their offices since March, was to deal with paper-based activity – either printing or post. 

Financial services may sit among the UK’s most vital industry sectors, but from mandatory wet signatures on application forms, to a lack of comprehensive integration between technology providers, it remains a laggard when it comes to digital adoption. 

As the pandemic shines a light on that shortcoming, perhaps it’s time the ‘quick-fix’ approach was applied more widely.

Great expectations

One consultant to the wealth management space described how one client took an 18-month timeline for building a web portal and reduced its implementation phase to just 12 weeks.

“Of course, they aren’t delivering the same outcome as they would have in 18 months, but they are delivering something that is functional and good enough to use, to start from, and to build upon over time.”

Of the particular hurdles to greater digital adoption by this sector, regulation is the most commonly cited; the data held is of such a sensitive nature, therefore the need for its secure storage is paramount. 

Further, achieving two-way integration between the multiple underlying platforms and systems of the front, middle and back office presents a tougher challenge. Throw into the mix the need for wordy product explainers, investment objectives and compliance caveats while ensuring all communication is “clear, fair, and not misleading” as per the regulator’s requirement, and businesses have a lot to consider.

As Alex Rees, Head of Digital at direct-to-consumer investment platform Willis Owen, put it: “One of the challenges from a digital perspective, especially as you move across devices, is to make sure you’re giving people enough information to make informed decisions, but in a way that’s easy to digest.”

With hefty levels of investment and the need for buy-in from multiple stakeholders (many of whom may not have ‘grown up’ with digital), the allocation of resource and  the assumed success rate on something that’s not yet built, might present extra barriers. 

“The consequences of getting anything wrong are much larger for us”

Levels of trust in financial services have not entirely returned since the global financial crisis – and, dealing not in consumer goods or leisure but people’s finances, the stakes are higher. 

Rees added: “We’re often dealing with large sums of money and very sensitive aspects of people’s lives, so the consequences of getting anything wrong are much larger for us than, say, a big retailer.”

Admittedly one of those slower to embrace its digital potential, he acknowledges the sector’s direction of travel is heading towards mobile, especially as simplicity and efficiency reign. 

“The coolest thing you can do is make things more straightforward for people.” This, he said, presented a clear opportunity for apps, which can maintain security while removing the need for multiple passwords, instead using biometric identification for accessing account information.

Providing fund broking services since 1983, Chelsea Financial Services is constantly reviewing how digital options might be further adopted. Currently used for the information, research and selection tools on its website, communication across social media and direct to customers, and transactional capability through Aegon (the institutional platform underpinning its service), Head of IT Stuart McDermott said being able to inform at speed while filtering the many professional tools on offer are the key benefits tech brings.

He said tech simplifies the daunting task of choosing funds from the many thousands available, while also enabling many transactions, providing up-to-date valuations “wherever and whenever they need”, all of which make their customers’ lives so much easier.

McDermott added: “One technology we periodically discuss, as an option to help increase our digital availability, is whether we should develop a mobile application. We try to weigh the perceived benefits – making our services available to clients ‘on the go’, versus the negatives – the development and ongoing costs, to decide if there is a strong enough business case to proceed. 

“It’s fair to say that the recent situation, where a huge percentage of the UK population has been confined to their homes, has not strengthened the business case to proceed in this direction currently.”

Building on a legacy

One of the prevalent trends across the sector is the digitalisation of client experience. Whether companies are investing in complete digital transformation, or using technology to communicate at certain points of the process, hybrid solutions are expected to become more common, with digital enhancing traditionally manual processes.

By overhauling its technology onto one system (Iress Xplan), financial planning and investment management group Tilney now has a more scalable business model that will help it grow organically and through acquisition, according to Chief Transformation Officer Dan Belshaw. From that foundation, the group subsequently built digital portal MyTilney, which will integrate with the core platform to enable a fully digital workflow. 

Moving from a series of lengthy paper-based processes to one portal not only ensures a slicker client experience, but improves efficiencies and sees higher levels of adviser productivity, while giving the group a genuine competitive edge, he said.

Having that API-enabled core platform has allowed Tilney to “bolt on new technology and deliver strategic changes quickly, rather than tactically implement new technology alongside legacy systems and processes.”

Organisations operating on legacy systems – as is the case with many across wealth management – might find their agility in delivering big, lengthy strategic projects hindered. Belshaw added: “Firms without that solid foundation might have to just focus on the tactical. I can imagine they might mothball the more strategic projects for now to focus on the next six months, getting the right tools in place in the short term.”

One could argue that – irrespective of your point in the digital journey – as uncertainty overshadows so much for the foreseeable future, large strategic plans may well remain intact, but they will be increasingly broken down into smaller, more immediate projects to deliver against more bite-sized objectives. 

If you want to find out how we’re working within the wealth management and financial services sector to bring innovation to businesses, get in touch.

 

Sam Shaw has been a financial journalist for 15 years, holding senior editorial positions across the B2B press, including editor of Financial Times Business’s flagship investment title.

She now works as a freelance writer, editor, content producer and presenter, across trade and consumer media.