Transformation of Wealth Management: Five Trends

While many Wealth Managers are digitally transforming all aspects of their business into a digital-first environment, Wealth Management overall is still one of the least tech-literate sectors.

  • 68 percent of advisors say learning about and keeping up with new tech is a top challenge
  • 69 percent of High Net Worth Individuals (HNWIs) are now using online/mobile banking but only one-quarter of advisors currently leverage digital channels beyond e-mail

The wealth management industry is still in the early stages of digital transformation, but with increasing urgency, Wealth Managers are rethinking the strategies and business models. What should they consider? 

Refinitiv’s latest research has revealed five key trends that will shape the industry over the next few years:

  1. Customization: The end of the one-size-fits-all approach
  2. Digitalization: Enabling advisors to incorporate digital assets into their service models
  3. Operational Efficiency: Updating existing back-office infrastructure
  4. Data and analytics: Anticipating and addressing client demand, enabling firms to serve clients more holistically i.e. increasing focus on ESG
  5. Client centricity: The role of the advisor is changing, relationships are key

Rapid advancements in technology and digitalization, many of which are targeted directly to consumers calling for shorter innovation cycles, are prompting firms to rethink their business, technology, and client engagement strategies. 

Wealth Management firms that have not yet repositioned their business models and technology architecture need to future-proof their businesses. Changes brought on by Covid-19 have in many ways accelerated this requirement, with Advisors needing more mobile solutions to access information from home. Investors have also changed their demands following recent market turmoil and now looking for a real-time view of their portfolios, rather than an end-of-day or end-of-month view as in the past.

Data is increasingly becoming the lifeblood of Wealth Management firms. While data used to be a by-product of conducting business, it is now moving to center stage. Those firms that take their data seriously and harness its power will be more successful, agile, compliant, and best placed to serve their clients. And when I say data, I’m not only talking about market data but also client data and other internal or external data that is key in this transformation process.

Many Wealth Managers are also developing their offering to environmental, social and governance (ESG)-based investing in anticipation of requests from clients that favor sustainable investments. With Refinitiv, you can easily integrate ESG factors into portfolio analysis, equity research, screening or quantitative analysis. As a result, Wealth Managers can effectively deliver on investment mandates, meet client demands and identify risks across portfolios. Refinitiv delivers transparent ESG data and scores for over 8,000 global companies with data since 2002 and its 400+ ESG data points and 70+ ESG analytics are all standardized so you can easily benchmark companies. 

Lipper, which is owned by Refinitiv, will soon launch ESG fund scores and later a rating system for funds that will be applied to a broad range of funds. We are not repeating what’s already out there, it will be something new and different and extraordinary useful for Wealth Managers.

In addition, Refinitiv’s Machine Readable News leverages Reuters’ extensive global coverage and Natural Language Processing (NLP) to create actionable signals for investment strategies. With our recently launched Refinitiv Workspace for Wealth Advisors, you know what news has affected your client portfolio in real-time, sorted by strength and relevance.

Looking ahead, these trends bear testament to the substantial degree of change that Wealth Management firms are facing. What are your recommendations? 

The industry is moving from a push model where wealth mangers feel they know what their clients want, to a more effective data-based insight pull model where Wealth Managers use data analytics and machine learning to recommend investment solutions based on the behaviors of their clients over a period of time. 

Client needs are constantly evolving, meaning that only those firms that have the ability to invest in change the bank initiatives will be able to remain relevant players in the future. Given this dynamic environment and the many challenges facing Wealth Managers, firms need to develop a clearly defined strategy, supported by the right tools and client-centric data. With the right mix of reliable content, leading-edge technology and trusted human expertise, Wealth Managers will be able to evolve in line with industry trends, remain compliant with tightening regulations and harness the power of digitalization to accelerate growth into the next decade and beyond. 

Data shows that 50 percent of Wealth Managers say providing a more sophisticated digital experience is a challenge for their firm. Why is that? 

Current statistics show that 68 percent of Wealth Advisors say learning about and keeping up with new technology is a top challenge and 69 percent of HNWIs are now using online and mobile banking. However, only 25 percent of Wealth Advisors currently leverage digital channels beyond email. 

Today, investors have access to an unprecedented flow of data from thousands of sources across global markets. However, the opportunity this access provides can be compromised by the challenges it creates. The world is witnessing tectonic shifts in wealth; from established to emerging economies; from West to East; and from the creation and passing of wealth from clients who remember the pre-computer age to digital natives. To stay competitive and meet new client expectations, successful Wealth Managers must develop strategies to engage with a client base defined by this digital divide.

Digitalization can open the way for more automation and personalization as well as for an understanding of client needs. In an ideal world, it would also allow managers to spend more time coaching clients on what matters most in their financial life. One thing is clear from the data, advisors expect much more from their firm’s technology. They want to see automation of day-to-day tasks, better digital tools for providing investment advice, and an elegant, intuitive, cognitive and intelligent interface for every application. For advisors, the ultimate goal of any technology investment is to give them more time to engage with clients.

To recap, the five trends are: 

  1. Customization: The end of the one-size-fits-all approach
  2. Digitalization: Enabling advisors to incorporate digital assets into their service models
  3. Operational Efficiency: Updating existing back-office infrastructure
  4. Data and analytics: Anticipating and addressing client demand, enabling firms to serve clients more holistically i.e. increasing focus on ESG
  5. Client centricity: The role of the advisor is changing, relationships are key

What are the Refinitiv digital solutions for Wealth Management firms? 

Banks cannot afford to build everything themselves, but if they partner too much they fail to differentiate. Refinitiv offers an omnichannel model that helps our clients to lower the total cost of ownership (TCO), allows for faster time-to-market and enables firms to personalize and differentiate their offering.

We recently launched Refinitiv Workspace for Wealth Advisors, our new flagship workflow solution with HTML-5 open framework technology, designed to improve the productivity of our clients. It's a client-centric platform offering a better customer experience. It includes Portfolio Analytics in real-time, a content management system that connects the Advisory to the Front Office, a one-stop-shop for research, model portfolios, conviction lists, investment ideas, all centralized in one place.

Refinitiv Workspace for Wealth Advisors is powered by NLP search functions, A.I. enhanced contextual news and content and third-party platform interoperability capabilities. We will soon launch our Practice Management, a 360-degree view of the Advisors’ business combining relevant news, financial planning, CRM, allocation plans, proposal status, firm proprietary content, new account opening in the context of the clients, and automatic surfacing opportunities and issues that should be addressed to the Advisor. 

The Client-360 enables the analysis of the client’s portfolio by consolidating information from CRM, financial planning, back office, financial markets and intelligent news. This combines to quickly and efficiently enable the next best actions across the Advisors Workflow.

It creates customer engagement by connecting the Advisor with the Investor via document sharing, content publishing and interactive communication. The Asset-360 combines existing instrument overview information with firm proprietary content and customer information, providing insight into how an instrument is performing while detailing out all customers, positions and order status across the Advisors business. As you can see, we are moving from a desktop solution to a business workflow solution. 

In highly competitive and rapidly changing markets, wealth advisors are under pressure to find new ways to attract, engage and retain clients. Designed to meet these challenges head-on, Refinitiv Workspace for Wealth Advisors helps provides more personalized advice and saves time in engaging with clients and managing their investments more efficiently. Refinitiv Workspace is built on an open platform, so innovative apps and content can all come together for a best-of-breed advisor experience.

Oliver T. Ernst has 20 years of experience in different financial institutions, amongst them Lloyds TSB Private Banking as a Relationship Manager for the External Asset Managers Department and as a Vice-President for the External Asset Managers Department at Société Générale Private Banking. In 2019, he joined Refinitiv as Proposition Sales Manager for Wealth Management in Switzerland and Liechtenstein. He holds an MBA from Business School Lausanne. 

Refinitiv Wealth Management solutions empower clients with the content, technology and expertise to accelerate growth. Our front, middle and back-office solutions help Wealth Management firms improve decision-making, deepen client engagement and optimize business performance. Refinitiv serves over 40,000 institutions in approximately 190 countries. It provides leading data and insights, trading platforms, and open data and technology platforms that connect a thriving global financial markets community - driving performance in trading, investment, Wealth Management, regulatory compliance, market data management, enterprise risk and fighting financial crime.