Wealth management in times of change

Even before coro­n­avirus dis­rup­tion, rad­i­cal changes had been afoot in the pri­vate wealth sec­tor for some time. Recov­ery from the glob­al finan­cial cri­sis of 2008 was made more chal­leng­ing by new reg­u­la­tions aimed at pre­vent­ing a repeat and all the while new upstarts from a bur­geon­ing fin­tech sec­tor were able to respond to con­sumers’ dig­i­tal expec­ta­tions faster. The pan­dem­ic then ampli­fied the need for dig­i­tal­i­sa­tion in the pri­vate wealth sec­tor.

Wealth, in itself, has tak­en on new mean­ing, dri­ven by the rise of mass afflu­ent seg­ments in devel­oped economies and a grow­ing mid­dle class in emerg­ing mar­kets. Tra­di­tion­al wealth, as defined by high or ultra high net worth, has also seen major changes through a gen­er­a­tional trans­fer of tril­lions to mil­len­ni­al and post-mil­len­ni­al gen­er­a­tions, who are not only dig­i­tal­ly native, but also have dif­fer­ent views on mon­ey than their pre­de­ces­sors.

Deeper understanding of digital

Dig­i­tal trans­for­ma­tion, albeit much hyped, was pre­vi­ous­ly mis­un­der­stood and incom­plete. The adop­tion of “point solu­tions”, which focused pri­mar­i­ly on the user expe­ri­ence and at the fron­tend, did lit­tle for inte­grat­ed, enter­prise-wide dig­i­tal work­flows and oper­a­tional fab­ric.

True and com­pre­hen­sive dig­i­tal trans­for­ma­tion affects the high­est-lev­el strat­e­gy, process design, oper­a­tions and busi­ness mod­els. It rad­i­cal­ly changes the role of peo­ple in front-to-back oper­a­tions and the way they use tech­nol­o­gy.

Improv­ing user inter­faces or back-office oper­a­tional effi­cien­cy leaves the insti­tu­tions part­ly dig­i­talised, but unable to ben­e­fit due to dis­con­nects between func­tions and busi­ness units in their lev­els of dig­i­tal adop­tion. Only full, cross-func­tion­al, end-to-end dig­i­tal­i­sa­tion can ensure return on invest­ment and pos­i­tive out­comes.

Gain­ing tan­gi­ble val­ue from dig­i­tal change starts by build­ing a reli­able, open and con­sis­tent dig­i­tal busi­ness data lay­er, which empow­ers clients to access their invest­ment infor­ma­tion and pro­vides advis­ers with rel­e­vant, real-time and action­able insights to act on.

Sec­ond­ly, it requires a dig­i­tal cus­tomer expe­ri­ence deliv­ered through the opti­mal chan­nel mix, enhanc­ing time­ly and per­son­alised inter­ac­tions any­time and any­where. Final­ly, dig­i­tal must be a new stan­dard, com­plet­ing the “open wealth” archi­tec­ture with dig­i­tal native busi­ness process­es.

Dig­i­tal trans­for­ma­tion is a jour­ney, not a des­ti­na­tion. There is no end state to the required tech­no­log­i­cal and cul­tur­al changes; it is a con­tin­u­ous process of evolv­ing capa­bil­i­ties to meet evolv­ing needs and mar­kets. This makes long-term plan­ning a crit­i­cal pri­or­i­ty, roadmap­ping phased adop­tions and tran­si­tions, and opti­mis­ing resource allo­ca­tion for max­i­mum out­comes.

Tech ven­dors must play a valu­able col­lab­o­ra­tive role in this process and Object­way, a dig­i­tal wealth and asset man­age­ment tech­nol­o­gy and ser­vices provider, has a track record of assist­ing wealth man­agers’ strate­gic dig­i­tal­i­sa­tion plans.

All about the customer

The wealth man­age­ment sec­tor is redis­cov­er­ing the imper­a­tives of cus­tomer cen­tric­i­ty. Tra­di­tion­al­ly pro­vid­ing tai­lored expe­ri­ences in a rela­tion­ship-based busi­ness, firms are now adapt­ing to new client expec­ta­tions in the dig­i­tal world.

The ear­ly months of the pan­dem­ic were a wake-up call that excel­lent in-per­son ser­vice is no longer enough and even a well-designed web­site does not meet diverse inter­ac­tion require­ments. This real­i­sa­tion trig­gered a catch-up rush to inno­vate cus­tomer engage­ment with dig­i­tal tools and solu­tions.

Onboard­ing new cus­tomers is a crit­i­cal life-cycle event that remains a chal­lenge for most firms and a weak­ness for many. In a recent news release, Object­way report­ed a Gart­ner study in which only 26 per cent of advis­ers said auto­mat­ed client onboard­ing was avail­able at their firm and just 14 per cent were actu­al­ly util­is­ing it.

Despite the low adop­tion, 87 per cent of advis­ers using the tech­nol­o­gy ranked it as effec­tive. Best-prac­tice solu­tions include process-ori­ent­ed client life-cycle man­age­ment with advanced dig­i­tal onboard­ing, com­bined with opti-chan­nel and omni-device por­tals and native apps for supe­ri­or user expe­ri­ences.

Managing wealth remains at the core

While the fun­da­men­tal objec­tives of wealth man­age­ment are unchanged – wealth preser­va­tion and growth – the require­ments are shift­ing and increas­ing­ly com­plex. Dimin­ish­ing returns from tra­di­tion­al invest­ments have increased inter­est in new and alter­na­tive asset class­es: from real estate and pri­vate equi­ty to cryp­tocur­ren­cies and tokenised assets.

Sus­tain­abil­i­ty, mean­while, is no longer a fringe con­cept. Client inter­est has placed envi­ron­men­tal, social and gov­er­nance (ESG) invest­ing cen­tre stage, though wealth man­agers are yet to ful­ly embrace it.

A recent Object­way sur­vey found that only 39 per cent of firms have imple­ment­ed an ESG pol­i­cy, anoth­er 39 per cent are devel­op­ing one and 22 per cent have none at all. Near­ly 90 per cent of firms said they do not have a risk-aware, ver­ti­cal­ly inte­grat­ed plat­form to man­age ESG invest­ments.

A com­plete solu­tion requires ex-ante analy­sis of risk and sus­tain­abil­i­ty, val­i­dat­ed by ex-post mon­i­tor­ing and relied-on process­es that take into account the risk tol­er­ance and char­ac­ter­is­tics of the end-cus­tomer while respect­ing the sus­tain­abil­i­ty cri­te­ria.

Object­way helps wealth man­agers to achieve high­er returns from ESG inte­gra­tion through its end-to-end, risk-aware invest­ment man­age­ment solu­tion Risk­Tech.
Wealth and invest­ment man­age­ment firms are also seek­ing to move away from decou­pled and inde­pen­dent IT sys­tems, and towards a ful­ly inte­grat­ed wealth ecosys­tem that han­dles all busi­ness oper­a­tions.

Such a plat­form must lever­age a total port­fo­lio approach to gen­er­ate alpha in terms of stronger returns and high­er qual­i­ty of invest­ments. That would typ­i­cal­ly require a front-to-back open and mod­u­lar suite pro­vid­ing a dig­i­tal inte­grat­ed expe­ri­ence to both wealth man­age­ment pro­fes­sion­als and cus­tomers, with a client expe­ri­ence por­tal, client life-cycle man­age­ment, arti­fi­cial intel­li­gence-based port­fo­lio and risk man­age­ment, and secu­ri­ties account­ing.

Objectway’s WealthTech Suite won the XCe­lent award for Breadth of Func­tion­al­i­ty and for Client Base. Research and con­sult­ing firm Celent also com­mend­ed Objectway’s port­fo­lio man­age­ment and advi­so­ry solu­tion, advis­er and investor por­tal and mobile apps, as well as its client life-cycle man­age­ment and onboard­ing solu­tions, say­ing they are “rich with capa­bil­i­ties that ulti­mate­ly aug­ment adviser–client inter­ac­tion, drilled-down auto­mat­ed report­ing, advis­er effi­cien­cy and com­pre­hen­sive key per­for­mance indi­ca­tors”.

Living and operating in ecosystems

Today’s inter­con­nect­ed world is made up of ful­ly inte­grat­ed tech­nol­o­gy ecosys­tems and archi­tec­tures with flex­i­ble mod­u­lar struc­ture and advanced, broad appli­ca­tion pro­gram­ming inter­face (API) capa­bil­i­ties, which enable and enhance oper­at­ing mod­els like soft­ware as a ser­vice and busi­ness process as a ser­vice. The cloud, pub­lic, pri­vate or hybrid, is the ulti­mate ecosys­tem, with Object­way already sup­port­ing more than 100 clients with over €1 tril­lion of assets under man­age­ment.

On the busi­ness side, part­ner and oth­er stake­hold­er ecosys­tems enable col­lab­o­ra­tive engage­ment with oth­er solu­tion providers to max­imise the val­ue to client firms and their cus­tomers. Tech ven­dors can act as trust­ed part­ners of their clients in dig­i­tal trans­for­ma­tion and the deliv­ery of evolv­ing capa­bil­i­ties. This is one Object­way phi­los­o­phy and strat­e­gy, test­ed in long-term rela­tion­ships with some of the most suc­cess­ful play­ers in the indus­try.

For more infor­ma­tion please vis­it objectway.com

Pro­mot­ed by Object­way