Our interviews and our experience suggest that wealth managers are struggling to rationalize the demands of a constantly-changing environment against the need to maintain a clear vision and momentum.
Our interviews highlight the ongoing challenge managers face as they balance growth ambitions against risk management. While risk considerations must remain front and center – digitalization can help private banks and wealth management organizations reduce regulatory risk and improve overall compliance. For example, our global survey of investment management CEOs shows that more than half (51 percent) are already using predictive analytics to improve their risk management. And a growing number are starting to use audio and electronic surveillance technologies to improve compliance.
“There is a massive shift in capital underway and digital will need to play a role in helping us keep these assets as they shift from one generation to the next,” noted one American executive. “But that is driving significant pressure to quickly deliver new technologies such as robo-investing and adjust our plans as the market changes.”
Our experience indicates that sustainable growth in the sector will require organizations to take a more holistic view of changing client demographics to ensure that their long-term vision for digital is flexible enough to respond to the needs of emerging segments.
According to a global survey of more than 70 investment management CEOs, understanding the demands of Millennials is a clear challenge. In fact, 92 percent say they are concerned or very concerned about their ability to understand this segment and their differing needs.
Many managers face massive challenges overcoming organizational and some admit that cultural inertia – sometimes fear – is slowing digital progress internally. According to CEOs, driving an innovative culture may be one of the most important aspects of encouraging innovation. And more than half (51 percent) say that their success in innovation depends on management’s innovation acumen.
“There are certainly still senior individuals who believe that nothing will change as a result of digital and are resistant to the agenda. So we’re thinking about the broader enablers of digitalization: How will we work in a digital world? How will we differentiate between failure and learning? How will we operate across silos? We need to answer these questions if we want to convince our employees and shift our culture,” suggested one European-based respondent.
No matter what segment of the market you focus on, digital will matter. It is clear that, for those focused on the mass affluent, digital will become a key differentiator and channel. But digital will also matter to high net worth and ultra high net worth segments. In fact, our experience suggests that the wealthy may have significant expectations for mobile and digital access to their assets.
The key will be in understanding what digital offerings, services and products matter to each client segment and then tailoring an approach that delivers on that experience expectation while simultaneously reducing costs, complexity and client pain points.
Wealth managers may want to think carefully about what information they are gathering during their KYC and client onboarding to ensure they have a clear understanding of each client’s needs and expectations.