Using Technology and Organizational Redesign to Scale High Quality Service
Mike Tropeano, CFA, AIF – Senior Vice President, Fi-Tek
Service is the primary way in which wealth managers look to differentiate themselves. Delivering high quality service has become more difficult and costly. Client relationships have increased in complexity and the number of touch points. Adding to the challenge is a lack of integration between disparate business solutions, legacy technology with antiquated processing models and organizational structures which inhibit scale. This leads to delays in servicing clients and an inability to resolve a request at ‘first touch’ creating frustration for the investor and increasing costs for the wealth manager.
We look at the ‘next generation’ as the sole recipients of the transfer of wealth at a massive scale. The reality is, just about everyone one of your clients will participate in a transfer of wealth either through the movement of assets from a 401K to Rollover IRA, divorce, death of a spouse or inheritance from a previous generation. If you struggle to deliver on service for their current relationship, are they going to trust you with more – especially when it may involve transfer of assets from complex estates? Does your service model support the evolving segments of wealth? An Accenture survey found that 91% of wealth management clients rank “an advisor who ‘gets’ them as a person” as the most important quality in the advisor-client relationship. How would your client answer this question when thinking about their relationship with your firm?
The modern wealth experience requires firms to maintain the right balance between human interaction and technology, deciding where you want a human involved and when it is a value add.
How can we ‘really’ differentiate ourselves?
The ‘go to’ differentiator had been a firm’s approach to investment management. The narrowing of differences in returns and expansion of indexing has limited the ability for this to be primary driver to your value proposition. Clients today are more focused on financial planning and the client experience, which is more about your ability to meet all their needs versus your online and mobile capabilities to deliver information on real time basis. Solving an inquiry or request for service on the first touch is a better experience and a has a lower cost to your organization, improving scale. The experience is even better if you can anticipate the need, which is becoming easier with the use of emerging technologies.
The end objective is to more effectively manage relationships beginning with moving from knowing the client to understanding what they need from you. The barrier is no longer a lack of data. It is removing the blockers to the ‘right’ data needed to determine relevant touch points and deliver relevant content at the right time.
What can we do to define the path forward?
People, Process and Platform (technology) are the keys to any transformation. Initiatives that address one, or even two, are merely a change to a process. Using a transformation mindset that knows the client’s objectives will help in defining your firms’ roadmap which should include these projects.
Leverage available technology
Your transformational journey starts by identifying where you can remove friction from client interactions and developing a platform to proactively reach out and anticipate a client’s needs. Successful firms use digital technologies to help humans make decisions quicker with higher quality. Artificial Intelligence (AI) can be used to analyze large data sets and determine the next best action. Predictive and Advanced Analytics are commonly used to deliver actionable insights and create deeper client intelligence. This creates the foundation of a positive client experience and the expansion of trust.
Once you develop a framework and base, you can move to intelligent automation to create additional scale. Agentic AI should be an objective, not a pipedream. However, you cannot skip the first step of intelligent automation, including advanced logic or machine learning into the processing. A more efficient and optimal operating model is to have your teams act in an oversight role, managing exceptions versus manually working through the processing of transactions.
AI and predictive analytics is not replacing the relationship with the client, it is about enhancing the experience and delivering high value activities through a better model.
Redefine the middle office
Where do you want a human involved? When should that person be in the front office? The answer is simpler than you may think. Allow the front office to focus on higher value activities for the client and for your business. Financial planning, questions on asset allocation and addressing concerns on the market allowing you to differentiate.
A strong middle office will go beyond handling data entry for the front office. This team should be client facing and support the completion of less strategic tasks including address changes, answering simple inquiries and initiating client requested transactions. Having the front office interact with the client for these functions is inherently inefficient. Touching a transaction twice can double the time and cost. The industry is facing an advisor shortage; it is critical that we use their time more effectively.
Improve the quality of your data
All roads to transformation lead to the reliability of your data. It is the fuel for AI and Predictive Analytics. It can also impact your ability to scale. All client related data is key to move from ‘Knowing Your Client’ to ‘Understanding Your Client’.
The wealth management ecosystem generates data at a feverous pitch. How confident are you in your ability to leverage it in the support of your clients? Is your ecosystem integrated so you are not worried about obtaining different answers to the same question? If you are not confident in your ability to address both issues, there is work to do. Proactive client engagement is about accessing the right data at the right time. Storing data is easy, making it actionable requires work.
Completeness and Quality are the key attributes to an effective data infrastructure. Leading firms start with a strong governance structure. This is an understanding of where the ‘gold copy’ is for the subject area, what controls exist to ensure data hygiene and if there are any needs for reconciliation. A fully integrated platform will make this easier, however, a well-defined data lake which can receive near real time data has proven to be a solid foundation. This will place more emphasis on the strength of the APIs from your platform providers and the extensibility of the database technology.
Bringing it all together
Delivering high-quality service is hard, doing it at scale is harder. Engaging the next generation of wealth requires a different approach. If you are going to meet their requirements, you must evaluate your entire organization. The means transforming people (organization), process and platform (technology) to make a difference. A redesigned operating model utilizing some of the newer technologies like artificial intelligence and predictive analytics provides the foundation to get there. The market is transforming. Will you keep up and be a leader or turn into a laggard? Many organizations – especially the smaller ones – may not have the necessary knowledge internally. They should consider seeking specialized help to acquire these skills to enhance overall organization improvements to differentiate themselves.
