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Archive for the ‘Wealth Management Industry’ Category

Why serving “the millennial client segment” is a myth

Tuesday, March 21st, 2017

Our new report on the millennial generation “Reaching Millennials - the Next Big Opportunity in Digital Wealth Management” reveals why wealth managers who rely on a “one-fits-it-all” strategy will inevitably fail to attract younger prospects. Millennials or members of Generation Y are born roughly between 1981 and 1997 and face a range of prejudices that are fueled by an increasing number of generalizing articles, studies and speeches that gain a lot of attention on social media.

The aim of our report is to show that it is no option to perceive millennials as a homogenous group that can be targeted with a uniform strategy solution. Hence, we conducted sixteen in-depth interviews with very different representatives of this generation to find out if there are common values and opinions. Analyzing the information shared in the interviews, we could group them together into five archetypes that show huge differences in their psychological traits, behavior, attitudes towards wealth and their communication preferences. Based on this, our report works out a comprehensive set of strategies that empowers wealth managers to survive the generational shift.

Why should “millennial strategies” differ from traditional ones?

Many wealth managers probably ask themselves why it should matter at all to think about targeted strategies for younger client segments. There are many reasons which are discussed in our report but the main aspects include:

- They are becoming the major target group. Millennials already outnumbered the huge generation of baby boomers and it is estimated that they will inherit trillions of dollars in the next decades as older generations pass on their wealth to them. This shows that today’s millennial generation is actually the client segment wealth managers need to focus on to ensure future success.

- Expectations are changing in many ways. Digitization, technological development, alternatives on the financial markets, transparency and sustainability, the diversification of communication – there are so many factors disruptively changing consumer needs and expectations across all industries and, thus, the perception of how good a financial service is.

- Financial interest and the importance of transparency raise the bar for wealth management services. Re-building the trust that got lost during the past decade is a challenging task and combined with an increasing demand for transparency and sustainability, the need for an open communication and information provision is rising. Additionally, our interviewees turned out to be interested in financial topics and seek to grow their knowledge – their wealth manager should respond to this interest, as well.

What is the current situation in wealth management?

Many wealth managers and private banks host regular events to which they invite their clients’ children and younger prospects. Some events aim at growing attendees’ financial knowledge. Others focus on family business succession. Whatever the case, most wealth managers lack a digital component that enables participants to access related material such as webinars or further information. However, we are convinced that wealth managers who put strong efforts in supporting young people’s first steps into building their wealth must think much broader than just meeting them and inviting them to interesting events. This is a great start but nothing more. We found six very different examples of wealth managers who excel at attracting millennial clients through a digital component. Our report presents them in detail and works out valuable learning points for their competitors.

 

Predictive analytics: the future of wealth management?

Thursday, January 19th, 2017

One of the biggest trends in digital banking and wealth management in 2017 is personalization. As described in this article (source: Bank Innovation), consumers become increasingly accustomed to personalized digital services thanks to innovation-driving companies such as Netflix or Amazon. The core of this new level of service is to know your customers and to meet their individual needs.

Therefore, we highlight this area in detail in our new report on behind the log-in spaces of wealth management apps and secured online portals. Indeed, we found several good examples how wealth managers make use of the data resulting from their clients’ online and mobile usage to improve user experience, client satisfaction and security.

However, monitoring user behavior to detect suspicious actions is only where the journey starts – soon clients will expect no less than getting a truly contextual feeling when accessing their wealth management app. While the article mentioned above states that clients should have the opportunity to set off certain features they do not want to use, we think that online and mobile tools will be required do this automatically. Digital users will create their own digital finance tools not by changing the settings but by simply using them.

Our report sheds light on various areas of digital tools that benefit substantially from technologies like predictive analytics besides presenting the industry’s state-of-the-art client-only solutions and giving valuable recommendations for creating a winning user experience.

 

Chatbots for Banking and Wealth Management 2016: Why financial institutions should employ virtual assistants

Thursday, December 15th, 2016

Artificial Intelligence (AI) and chatbots are a very big topic at the moment. Yet, there are a lot of uncertainties related to the emergence of this new mega-trend. Chatbots are software-based agents that can lead an intelligent conversation with users, sometimes based on AI, sometimes based on pre-defined responses. So basically you are chatting with a robot. This trend has already arrived in the financial services industry with FinTechs, Challenger Banks and also established players starting to jump on the bot wagon. These are very interesting times as bots are going to revolutionize the way companies will interact with their clients and we are now seeing the first real examples of bots being launched in the financial services industry. We can definintely say, that the bot trend is something that noone can ignore!

In our new report Chatbots for Banking and Wealth Management: Why financial institutions should emply virtual assistants we investigate the ways chatbots are already used in banking and wealth management and explore how they will revolutionize the future client interaction. For our assessments and recommendations, we screened more than 100 established banks and wealth managers to identify and analyzes the 35 most advanced and innovative chatbots and virtual assistants. In addition the report evaluates state-of-the-art chatbots by 9 FinTechs and challenger banks and as well the offerings of 8 bot developers.The report provides data driven answers to following key questions a financial institutions should ask when using bots of client interaction:

  • What does the current landscape for chatbots in financial services look like and what drives the developments?
  • Which are the most advanced chatbots in the financial services sector, how do they look and what do they offer?
  • How will bots change and enhance the client interaction and communication?
  • How to choose the right bot, platforms and implementation?
  • What do the vendors offer?


 

New Report: Mobile Apps for Wealth Management

Monday, May 30th, 2016

the-question-for-wealth-managers-is-no-longer-if-they-should-have-a-mobile-app-but-how-they-can-develop-a-winning-mobile-app11

The question for wealth managers is no longer if they should have a mobile app, but how they can develop a winning mobile app to provide them with an essential competitive advantage.

Almost eight years ago, in July 2008 the Apple App store was launched and Google Play followed only a few months later. Since then the app market has grown, apps have become an essential part of our lives and the technical possibilities have developed a lot. The wealth management industry is typically not among the first movers when it comes to technical innovations but we have seen that the market of mobile apps for wealth management is slowly but surely catching up. In our latest study Mobile Apps for Wealth Management we have analyzed the mobile apps of 30 of the biggest wealth managers worldwide. We have found that in contrast to the previous years, the number of wealth managers that offer dedicated apps to their wealthy clients has increased (from 63% in 2015 to 82% in our latest 2016 study).

(more…)

 

Hybrid Robos – a close-up look at Schwab Intelligent Institutional Portfolios

Friday, February 19th, 2016

The launch of Charles Schwab’s Intelligent Portfolios and Institutional Intelligent Portfolios last year was undoubtedly the most significant robo-advisor development in the U.S. in 2015. MyPrivateBanking  profiled Schwab Intelligent Portfolios in our Robo-Advisor 2.0 report and in our just published Hybrid Robo report, “Hybrid Robos - How Combining Human and Automated Wealth Advice Delivers Superior Results and Gains Market Share” , we take a closer look at Schwab’s Institutional Intelligent Portfolios (SIIP) as one of the report’s five case studies.

SIIP provides most of the advantages of digital investment management with the opportunity for a wealth manager to customize their own recommended asset allocations from a choice of 450 exchange traded funds that Schwab makes available for the purpose.

One aspect of the Institutional Intelligent Portfolios that took our attention was the way in which different advisory firms can use the Schwab solution to enhance their own offering in different ways. For example, it is perfectly possible for a wealth manager to to make SIIP available as an almost completely separate service with its own website and completely different branding. In effect, a registered independent advisor or financial planning firm that did this would be creating their own ‘pure’ robo-advisor. This limits the danger of cannibalizing the firm’s main client-base but it also restricts the possibilities for the users of the robo service. Longer-term, we believe that the future lies with greater integration of the digital component with a firm’s other services to create a hybrid offering of robo features and tools and personal interaction.

The most obvious kind of integration would be full integration on the wealth manager’s website with the SIIP option standing alongside a wealth management firm’s existing services, whether these are discretionary investment management, retirement planning, tax planning, specialist advice services for alternative investments or the other specialist services that a firm has made into USPS. This kind of transparent approach has much to recommend it and it is already being followed by some firms. For a firm specialising in just financial planning but which wants to provide an investment management component, this policy has clear benefits.

One more subtle alternative approach might be to have, say, a client rewards programme that is shared by a firm’s SIIP users and by its full service clients. Perhaps even more effective would be to allow SIIP users to make use of a finance management dashboard like eMoney that your full service clients are already benefiting from. Allowing the users of a firm’s digital offering to participate in behind the log-in features like these signals a much clearer welcome to smaller accounts (which will hopefully become full service accounts in time) than a standalone robo-advisory website can achieve on its own.

 

Discovering the world behind the walls of wealth management

Friday, December 4th, 2015

As digital wealth management is one of the hot topics at the moment in the financial industry, MyPrivateBanking’s analysts have embarked on a journey to evaluate remarkable and innovative features of secured websites and mobile apps for wealth management.

The forthcoming focus-style study ‘Behind the Login – Helping the Wealthy to Connect and Transact’ sets itself apart from the previous benchmarking reports by analyzing exclusively the behind the login content and capabilities of digital offerings for wealthy clients. Based on comprehensive interviews with representatives of leading wealth management firms and intensive analysis, the report explores the current and potential digital wealth capabilities, it shows how the digital strategy for wealth/private banking is defined and provides strategic recommendations and suggestions like the ‘10 essential capabilities for Digital Wealth Management in 2016’.

Don’t miss out this report on the secure site and app offerings for HNWIs! This report will be published soon – please check our website.

 

The self-driving car is here - but what about self-driving wealth management?

Wednesday, June 3rd, 2015

Today I read that Audi will offer the new version of its A8 flagship model in 2016 with „piloted driving features”. Essentially the car will drive itself under certain circumstances, namely in traffic congestions on the highway. Google Cars have driven more than 1 million kilometers on public roads so far (with only a few minor accidents). It will be only a matter of time until auto-piloted cars will be available on the roads for everyday use. The industry is heavily pushing for a change of traffic laws and it seems that legislators will open up the roads in the near future. The benefits of self-driving cars are clear: fewer accidents, freeing up the driver to attend to other things while riding with her car and overall much smoother traffic and fewer traffic jams due to intelligent routing.

It appears to me that the wealth management industry is today at a similar junction and could push for the auto-piloted investor. But the industry leaders are more skeptical and not quite open to change - just the opposite of the car industry. The products are here - just think ETFs and passive, index-based investing. The technology has been developed: robo-advisors stand ready to help consumers get their investments right. The benefits are clear: Computers are much better investors than human beings.  Passive investing beats active investing in more than 80% of the cases. Algorithms have a much better appreciation of risk and return in financial markets than most private investors (and - I have to add - many professional wealth advisors, too).

But yet we see little enthusiasm in the global banking industry for automated, self-driving investments. The overwhelming majority of global banks leaves it to start-ups like WealthFront or Betterment to bring automated investing to the masses. A notable exception is the brokerage firm Schwab with its Intelligent Portfolio offer and a few online brokers.

It may be the case that banks and wealth managers are fearing that robo-advisors will put pressure on the fees for advisory services. But it should be clear to every industry participant that just as sure as self-driving cars will soon become a mass market, automated investing will be a success story in the financial industry. Why leave it to the start-ups and technology companies?

 

Sneak peek: Wealth managers’ mobile solutions are growing up

Monday, May 4th, 2015

In June, we will again publish a new edition of our report on Mobile Apps for Wealth Management 2015 (see last edition here). At this early stage of evaluation, we are truly impressed by the efforts of the most innovative wealth managers and private banks over the course of last year.

Here are only a few areas, where some wealth managers already show great performance:

Apps for smartwatches. With the launch of the Apple Watch, a new era of wearable devices has heralded and, actually, there are some early birds adopting this trend.

Personalization. We see a great movement towards an individualized user experience thanks to customizable dashboards, schemes, and other user preferences.

App presentation. Demo accounts or videos, great and interactive websites, interactive tours and user guides – several wealth managers fully exploit marketing potentials for presenting their mobile app offerings.

Utility tools. Contributing to wealthy clients’ demand for convenience, some apps already excel thanks to sophisticated utility tools. Besides commonly known currency converters, elaborate financial planning tools are entering the space.

Check out our website for the latest research in the digital world of wealth management and private banking.

 

Will Artificial Intelligence be the key for wealth managers to stay competitive?

Thursday, February 19th, 2015

Exploring the digital world of financial advice for our upcoming report, we had to take a deeper look at cognitive computing, analysing the role of tools like IBM Watson and others. The technology certainly sounds promising: enabling advisors to make better and faster recommendations to serve a higher number of wealthy clients with higher quality recommendations through cognitive computing. This way, IBM Watson is likely to play a substantial role in easing the pressure for wealth managers, which results from shrinking margins as well as from rapid digitization in private banking.

While the use of Watson in financial advice is still in an early phase, the technology shows already promising results in healthcare. Moreover, IBM Watson plans to launch their first intelligent toy for children this year – CogniToys are supposed to develop with the children side by side, learning together with them through continuous interaction.

The need to educate Watson prior to using it effectively is the critical step for wealth managers who consider implementing the technology. Although there are some use cases already, for example at Singapore-based DBS, most banks are not yet rolling out AI platforms – such as Watson – as they are waiting for a clear proof their economic viability and ability to deliver RoI.

It is out of question that intelligent, learning software platforms with cognitive abilities will find their way into the wealth management industry. Early adopters may face some uncertainties but will certainly gain a competitive advantage being a step ahead of the pack.

 

Wealth Management Solutions at FinovateEurope 2015

Tuesday, February 17th, 2015

/by Francis Groves , Senior Analyst/

I saw numerous presentations at FinovateEurope that have implications for wealth management, especially in the wide variety of security features and applications designed to help people with their financial goals were demonstrated. However, there were just three presentations that looked at supporting the work of wealth managers/client relationship managers specifically.

The first of these presentations was from Crealogix, the digital banking software providers based in Zurich, whose CLX.AdviceManager financial advisory mobile app we covered in MyPrivateBanking’s ‘Mobile Apps for Financial Advisors 2014′report. Now Crealogix are adding a new product to their overall offering for financial advisors called ‘BankClip’. This an easy to use video clip assembly module that enables the advisor to create a customized video including components such as an update on the client’s portfolio, excerpts from the latest market commentary by the private bank’s analysts together with, for example, the advisor themselves making the argument in favour of a change to the client’s portfolio. It’s a good way to make service more personalized and more immediate and it really was straightforward to implement.

The next item that was specifically relevant to wealth management was by newcomer Mydesq, also based in Zurich. The company’s CEO, Milan Vora, demonstrated their just launched advisor application. The most impressive aspect of Mydesq is how much the application assists advisors with its continuously updated compliance content. This not only enables advisors to keep up-to-date with regulations in multiple jurisdictions but it seamlessly introduces all necessary compliance-related changes to the advisor’s work processes. As an advisor application, Mydesq includes features to support account and portfolio analysis and portfolio recommendations to the client. A client app is planned for Q2, 2015.

Lastly, Vienna-based CPB Software introduce some of the features of its PROFOS software, launched in September 2014. The three aspects of PROFOS that particularly stand out are presentation in relation to risk, the financial crises feature and the client profiling. PROFOS has introduced an extra degree of flexibility in portraying investment risk so that in addition to text explanations or charts projecting risk, the advisor can employ other graphical tools to explain risk in relation to the client’s portfolio. The financial crises feature of PROFOS allows the advisor to demonstrate how the client’s portfolio would have performed during specific crisis events such as the Russian default in 1998, the dotcom bust or the collapse of Lehman Brothers. Lastly, PROFOS allows the advisor to create a (confidential ) profile of each client on the basis of client meetings that will enable them to prepare for future meetings in the most effective way. The client profile focuses on the client’s negotiating style and communication style in particular and gives the advisor extra resources for achieving mutually satisfactory outcomes from client meetings.

 
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