The future is how

Past focus in wealth man­age­ment has been on invest­ment per­for­mance and tac­tile client ser­vice. Reg­u­la­tion was rel­a­tive­ly light and the need for trans­paren­cy at best lim­it­ed.

In the last decade, how­ev­er, reg­u­la­tion has become heav­ier, with the intro­duc­tion of regimes such as the Retail Dis­tri­b­u­tion Review and revised mar­kets in finan­cial instru­ments direc­tive, or MiFID II, which have required wealth man­agers to become more trans­par­ent.

Con­cur­rent­ly, more sophis­ti­cat­ed and finan­cial­ly savvy clients are demand­ing greater val­ue for mon­ey. While ten years ago there was lim­it­ed sen­si­tiv­i­ty to cost, clients are now active­ly look­ing for low­er charges. They have more options, for exam­ple exchange-trad­ed funds, pas­sive funds, and access to robo-advi­so­ry ser­vices and DIY invest­ment plat­forms.

Also wealth man­age­ment is no longer about invest­ment per­for­mance at all costs. Social and envi­ron­men­tal con­scious­ness is becom­ing increas­ing­ly impor­tant. It is now about mak­ing sure invest­ment per­for­mance comes from the right place, both in the tar­get invest­ments and the way wealth man­agers con­duct them­selves. Envi­ron­men­tal, social and gov­er­nance con­cerns are no longer a fad, but an under­ly­ing shift that wealth man­agers must con­sid­er with­in their core strate­gies.

Increased data vol­umes, economies of stor­age and cur­rent-day com­put­ing pow­er are game-chang­ers for wealth man­age­ment. While they sup­port supe­ri­or analy­sis, the ubiq­ui­ty of much of the data makes it a com­mod­i­ty. To win, wealth man­agers must put this data to max­i­mum use.

They need to knit data strate­gies into the fab­ric of the organ­i­sa­tion, then har­ness it effi­cient­ly to pro­vide deep­er and com­pet­i­tive insights. Arti­fi­cial intel­li­gence and machine-learn­ing are also rev­o­lu­tion­is­ing wealth man­age­ment and it is only a mat­ter of time before FANGs (Face­book, Ama­zon, Net­flix and Google) turn their data and tech­no­log­i­cal fire­pow­er towards invest­ment man­age­ment.

Cloud com­put­ing, how­ev­er, comes with a health warn­ing. While it enables man­age­ment and crunch­ing of giga­bytes eco­nom­i­cal­ly, the data requires rig­or­ous cyber­se­cu­ri­ty beyond any­thing cur­rent­ly in place. Ongo­ing invest­ment and man­age­ment focus­es on secur­ing the company’s data, not only for Gen­er­al Data Pro­tec­tion Reg­u­la­tion, but to avoid the dev­as­tat­ing rep­u­ta­tion­al dam­age that could result from a breach; beware.

Dig­i­tal trans­for­ma­tion has been hap­pen­ing for many years, but it is accel­er­at­ing. Chief exec­u­tives and oth­er senior C‑suite exec­u­tives in wealth man­age­ment firms must under­stand how to har­ness the next gen­er­a­tion of tech­nol­o­gy for their strate­gic plans and not sim­ply leave this to their chief tech­nol­o­gy offi­cer. They must plan their dig­i­tal trans­for­ma­tion and put it front and cen­tre. They should not do this incre­men­tal­ly, but run it along­side lega­cy sys­tems while dep­re­cat­ing the lat­ter rapid­ly.

Increased data vol­umes, economies of stor­age and cur­rent day com­put­ing pow­er are game chang­ers for wealth man­age­ment

Data has become the lifeblood of wealth man­age­ment. To dri­ve insight, com­pa­nies should inte­grate invest­ment data with new strate­gies involv­ing the broad­est set of client data. This involves sourc­ing and man­ag­ing data in a way beyond any­thing done before. The conun­drum will be whether to man­age this cor­po­rate asset in-house or out­source to a spe­cial­ist.

Con­sid­er smart co-oper­a­tion to lever­age inno­va­tions swift­ly. Work­ing with experts will make inno­va­tion and poten­tial new avenues more acces­si­ble, both in terms of time and effort. These part­ner­ships pro­vide the oppor­tu­ni­ty to gain com­pet­i­tive advan­tage beyond the lev­el of invest­ment afford­able.

Wealth man­agers now, more than ever, need to be cus­tomer cen­tric. The demo­graph­ics of the client base have shift­ed. Clients are younger, self-made, cul­tur­al­ly diverse and more informed. They have dif­fer­ent expec­ta­tions. Wealth man­agers will need to base diver­gent client-ser­vic­ing strate­gies on insights from data and tech­nol­o­gy to pro­vide a high­ly cus­tomised ser­vice from a sin­gle oper­at­ing mod­el.

Wealth man­age­ment will remain fun­da­men­tal­ly focused on peo­ple, their emo­tions and trust. Firms must be com­pet­i­tive against dis­rup­tion, yet remain prof­itable while invest­ing in inno­va­tion. Suc­cess will not just be about what you do, but how you do it.

With rela­tion­ships with over 700 asset man­agers, Fund­sLi­brary can sup­port wealth man­agers with their data man­age­ment needs. We pro­vide con­sis­tent and time­ly data for fund selec­tion and analy­sis for mul­ti-man­ag­er funds, and can lever­age this data to deliv­er on-demand, dynam­ic, inter­ac­tive fact­sheets, research cen­tres and ana­lyt­i­cal tools for wealth por­tals.