Home Technology Digital tools should be the cornerstone of every wealth manager’s growth strategy
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Digital tools should be the cornerstone of every wealth manager’s growth strategy

by jcp

By Mark Trousdale, Chief Marketing Officer & Head of Business Development EMEA, InvestCloud

Technology has become even more of a lifeline for maintaining advisor-client relationships. Even as human interactions normalise again after two years of tumultuous change, the wealth management industry has shown a broad recognition of the sustaining value of digital communication. Deploying the right digital tools with streamlined data management can create massive operational efficiency, allowing advisers to work more effectively and focus their energies on delivering exceptional service.

Wealth management firms continue to navigate evolving market and industry dynamics. And as the investor ecosystem becomes more complex, it’s imperative to master the fundamentals. Within the wealth space, there are three primary objectives that, with the right approach, digital tools can help firms drive: client retention, client growth, and operational efficiency.

Elevating CX to boost client retention

The retention of existing clients should be at the top of a firm’s to-do list. It is significantly more expensive to acquire a new client than to retain an existing one – in fact, according to the Harvard Business Review it can be 25 times more expensive. There are actionable steps using digital tools, that you can take that will go a long way toward keeping your clients happy and engaged.

McKinsey’s research shows that 70% of the client experience is based on how the client feels they are being treated, which has a lot to do with how they are communicated with. Digital tools can improve the overall experience when deployed correctly. However, even great digital communication misses an X-factor, and that’s what we call the “Hotel California Effect”.

This is about driving loyalty and adding value while making it hard to leave due to switching costs. We achieve this with the right digital tools putting all clients’ assets in one place. That means the clients’ investments managed by you, their financial plan, bank account balances, held-away assets, personal assets, documents, educational materials, personal notes, correspondence and more – a life vault. By providing this utility, you are adding massive value to your client and ultimately creating brand entanglement with your business. When you give clients this level of value and make switching wealth manager undesirable, it creates massive stickiness.

Accelerating client growth through digital referrals

Client growth is fundamental to all businesses. The best way to grow clients in an effective way is through digital referrals. Think about YouTube vs Vimeo, two video hosting platforms with one key difference – the share button. YouTube is still extremely relevant, whereas you may not have heard of Vimeo. The share button (a type of digital referral) is one of several techniques that deploy the behavioural science principle of Community – one of seven dynamics of gaming theory that we use with clients.

This gives clients the sense that they are affiliated with a community of like-minded individuals. It provides a strong sense of belonging. Demonstrating that you understand and share the feelings of your clients also promotes empathy. But beyond this, it mobilises your clients as an extension of your sales force. In terms of business value, Bain & Company report that a net promoter score (between 7 and 10) has a customer lifetime value that is 600%-1,400% higher than a score 0-3. The numbers don’t lie.

Smart technology to increase efficiency

The third major area of focus is operational efficiency. One of the biggest drains on adviser productivity is having to enter the same data into multiple systems, multiple times – the swivel-chair syndrome. It leads to high risk in operations and high cost in operations, impacting margins and risking fines. Not to mention, it contributes to high adviser and employee turnover. The financial industry has become hamstrung by legacy systems that don’t integrate well, and the result is that data is everywhere, and time and energy are being drained by these swivel-chair practices. This is driven by a misconception that the complexity of our industry is unique and unsolvable. But we know technology solves many complex problems at scale.

InvestCloud’s technology helps wealth managers get around this problem with what we call “enter once and only once”. At the core of our technology approach is our Digital Warehouse, which maps and normalises all clients’ financial data in a single location, deploying data science principles to unify data from disparate and complex sources and creating actionable insights for our clients. The Digital Warehouse eliminates the inefficiencies of traditional systems and drives both faster to-market onboarding and further adoption and conversion of clients. It also provides deep analytics on individuals’ actions across our ecosystem of clients, advisers, and asset managers. This means that relationship managers and advisers can spend more time serving their clients instead of rekeying data and worrying about errors. When you combine streamlined data management with powerful apps – like Client Lifecycle Management, CRM, suitability, risk profiling, reporting, and the like – you start to achieve multiples of value from the data entered once and only once.

Deploying the right digital tools linked to core systems will reduce the need for manual intervention, decreasing the risk of human error. Wealth managers should strive to be more data-driven, therefore enriching the decision process and producing smarter insights for clients. Done right, digital tools can be leveraged to enhance and elevate the adviser-client relationship and ultimately improve these three focus areas.


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