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Archive for the ‘financial advisors’ Category

Tech vendors’ surprising ideas about wealth management digitization

Thursday, May 4th, 2017

In My Private Banking’s latest report, on the digitalization of advisor functions, we interviewed just over 20 people from 13 different wealth management technology providers and various other industry experts.  Our interviewees gave us some fascinating insights into the direction and pace of innovation but had a number of surprises for the My Private Banking analysts.

Small surprises - but nevertheless significant findings - included a general air of confidence among technology providers about the value of their contribution and their assessment of the outlook for their wealth management clients. Initially, we thought that technology vendors might not be so sure that their digitalization message was finding willing listeners in the wealth management industry.

However there were bigger surprises in store for our researchers, firstly in our interviewees’ evaluation of the relative importance of regulatory compliance the remainder of the current decade and, secondly, perhaps most unexpectedly of all, in their estimation of the part that AI and machine learning will play in advisor digitalization in the near-term.  This provides a useful reality check to some of the technology hype that’s currently popular around the topic of AI.

Overall, our analysis of the future of advisor roles and the part likely to be played by robo advisory services was confirmed, giving us a clear picture of advisors and digital tools working in concert as a dominant model of service.

Last of all, we were a little surprised at the relatively minor attention given to the way in which advisors and relationship managers will experience the change to their roles and work styles through digital enabling.

Our report provides detailed coverage of the difference digitalization will make to compliance, advisor-client interactions (and hence client ratios and overall efficiency) and in which technologies and functions we can expect change soonest.  In addition, we have analyzed the impact of advisor digitilization on communication channels and client journeys.  Our researchers have endeavored to convey the feel of our conversations with technology providers through plentiful quotations and the report sums up My Private Banking’s findings with a number of clear recommendations for wealth management firms and private banks.

 

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.

 

Chat and Voice Wealth Advisory Client Interfaces @ Finovate Europe 2017

Wednesday, February 8th, 2017

(by Francis Groves, Senior Analyst)

A number of presenters at Finovate Europe 2017 gave ample demonstrations of the way in which chat and voice are fast becoming as impacting to wealth clients as the wealth manager or robo-advisory website. The first to attract our attention was the presentation of Munnypot, a new UK robo-advisory service using the Five Degrees ‘Matrix’ platform. Munnypot’s major innovation is to achieve the entire client acquisition, portfolio assignment and onboarding process via chat powered by AI. We were also very impressed with the co-browsing functionality from SaleMove with an excellent demonstration of how this can work in a wealth management context. With SaleMove, advisors can track clients’ use of their interface in real-time and AI is used to offer (naturally and sensitively) immediate assistance via live chat or video chat/call. We understand that major players in the U.S. are already making use of this and it’s easy to understand how the technology will be a great improvement on advice offered via the telephone and will improve advisor efficiency at the same time.

There were also two interesting presentations demonstrating the potential for AI at the stage of portfolio reporting and market updates, both of which were voice-based. Poland’s Comarch presented an interesting ‘conversation with your broker’ taking place while on the road. Myra, the virtual broker, not only gave you a portfolio update but suggested changes and took your instructions to execute them. In the case of AIXIGO, partner in Luxembourg robo, Investify, we were shown portfolio reporting being provided through Amazon’s Alexa.

 

New FinTech deal: Goldman Sachs buys Honest Dollar

Tuesday, March 15th, 2016

The FinTech market is becoming increasingly complex as new startups emerge and financial institutions come up with own innovations or collaborations with FinTech companies. Yesterday, I came across the latest deal – Goldman Sachs just bought retirement-saving company Honest Dollar that claims to enable employers to sign up in just 90 seconds while offering retirement benefit plans for competitive prices. The process is quick and easy - after having responded to some questions, employees are recommended one of six different portfolios consisting of Vanguard ETFs. Goldman Sachs aim to serve more people with more efficient retirement planning services by partnering with Honest Dollar and, hence, adding to their growing digital offerings. Currently, the finance giant claims, 45 million Americans are not offered retirement plans by their employers, which is mainly due to the high costs.

How important is it for people that they can sign in to such tools quickly and easily? Do they think their financial advisor can make faster and better decisions when using such tools? This and a lot more questions covering affluent people’s attitudes towards robo-advisory services are being answered by our upcoming panel study. Stay tuned! http://bit.ly/1pGGYQt

 

Vendors and Wealth Managers Agree: Digital Transformation Only Way to Success

Thursday, September 3rd, 2015

MASTERING THE DIGITAL TRANSFORMATION – this was the slogan of this year’s Avaloq Community Conference. Besides presenting their impressing roadmap, clients and partners had the chance to attend live demos of exciting new tools and technological developments. Furthermore, there were several highly interesting presentations and panel discussions from Avaloq representatives, partners, and wealth management companies focusing on the digital transformation in banking and wealth management.

The main insights were:

Continuous experience across all channels are key. Continuous experience across all channels beats self-service/virtual branches (2nd) and collaboration tools on digital channels (3rd) in the race for banks’ digital strategy’s top priority according to the conference attendees’ voting.

Robo technology is no nice-to-have but the prerequisite for successful advisory. According to Thibaut Jaquet-Lagreze, Head of Marketing & Sales at Avaloq, the biggest costs are no longer caused by the back-end but by the front. The use of automated services (financial health checks, real-time market information, proposal generation, etc.) is the only way for financial advisors to serve a large number of clients and, thus, to generate margins securing their jobs.

Growing critical factors are agility and flexibility. Financial institutions and their clients are becoming increasingly demanding when it comes to flexibility regarding the digital services. Here, Avaloq is a clear industry leader thanks to their unique Banklet™ technology. Barclays, whose wealth arm is relying on the Avaloq system, enable their clients to pick products and services from the Features Store to their accounts to allow for tailored solutions meeting clients’ individual needs (learn more in our upcoming report on Mobile Apps for Banking 2015 by end of September).

Vendors and banks are awaiting Generation Y. One common aspect of banks’ digital strategies was that Generation Y is just about to enter their client environment and that this leads to completely new challenges. Grown up with iPad, smartphones, and social media, young people expect their bank to offer them an integrated experience across all these channels to foster a personalized relationship and tailored wealth management services.

FinTechs’ influence is skyrocketing - crowdfunding and –lending are the hot trends. Total loans in crowdlending added up to $8bn in 2013 and are estimated to grow to $40bn in 2016 and to reach $1trn in 2025. Keep an eye on this trend and its effects on the banking industry and watch out for our new report on crowdfunding coming out this month!

Slim and integrated user interfaces are what banks should strive for. Integrated digitalization layers should serve all channels and all customers for building a common basis for internal and external customers, which significantly enhances communication. Moreover, to say it in CEO Francisco Fernandez’ words: the aim should be to “hide complexity, making it sexy to use”.

 

How technology is getting wealthy clients involved with their investments

Thursday, March 26th, 2015

One major finding of our report on Digital and Mobile Solutions for Financial Advisors 2015 is that vendors are increasingly targeting the end customer. For instance, while only half of the vendors we covered in the 2014 report offered apps that could be used simultaneously by advisors and end clients, this rate has increased to 88% in 2015. While, for example, eMoney Advisor’s client tool is actually a mobile compatible website, it offers interactive workshops to HNW clients for self-education, an electronic vault to store multimedia content, and screen sharing capabilities to enhance client-advisor communication.

The implication is that the market leaders have recognized that high-net-worth clients are becoming increasingly self-directed and demanding when it comes to tools for handling their financial matters. We are convinced that such tools will be an obligatory part of wealth managers’ digital offerings in the near future and, according to our latest findings, the leading solutions already excel today through extraordinary features like elaborate document management or screen sharing capabilities to collaborate with their financial advisors.

 

Arming Advisors with their New Digital Weapons

Friday, March 6th, 2015

MyPrivateBanking Research released a new report on ‘Digital and Mobile Solutions for Financial Advisors 2015‘ this week. Unlike the first two editions, which focused exclusively on mobile apps for financial advisors offered by technology vendors like Avaloq or Temenos, the new edition has a much broader perspective. Besides evaluating the developments the established vendors implemented in their mobile apps over the course of 2014, in-depth research has taken place in the fields of communication solutions (particularly video tools), recommendation and analytical solutions, as well as social media management tools.

In addition to the interviews our analysts conducted with the technology vendors themselves, they did several interviews with representatives of the leading wealth management companies, private banks and bank consultants in order to derive a deeper understanding of the actual level of digitization in wealth advisory business.

The three most disruptive trends according to our analysis are:

Remote meetings increasingly gain importance. Contributing to an omni-channel client experience, advisors are shifting more and more towards alternative digital channels like video conferencing and screen sharing tools.

Advisors are under great pressure. Shrinking margins force wealth managers to serve more clients per advisor who therefore need to be more efficient to operate feasibly. Solutions, which partly automate certain processes as well as social media management tools, are the response to these needs for an increasing number of advisors.

Clients are becoming more self-directed. With the booming app supply for retail banking clients, the high-net-worth clientele are demanding digital tools for their financial matters, as well. Hence, matching client tools empowering them to do their financial planning or even trading and portfolio rebalancing by themselves, are already standard. What has yet to be covered more extensively is the provision of advisor contacting options. Many advisory apps still lack basic communication features like video and text chat.

The report combines all the thought-provoking findings from these interviews, detailed company profiles of the vendors included with thorough descriptions of the solutions and products, and comprehensive conclusions on all these results.

 

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.

 

What Can We Tell from Fidelity/eMoney Advisor Deal?

Wednesday, February 4th, 2015

/by Francis Groves, Senior Analyst/

Yesterday there was news of two major acquisitions of fintech companies in the United States with the takeover of Advent Black Diamond by SS&C in a deal worth $2.3bn and the purchase of eMoney Advisor, the financial planning software company.

The eMoney Advisor deal is reported to have cost Fidelity Investments just $250 million and reflects the fact that although financial planning software can bring great advantages to financial advisors and eMoney Advisor seems to be highly regarded in its field, the software itself seems surprisingly cheap. A license for eMoney Advisor’s emX PRO product currently costs less than $4,000 a year. Other financial planning products in the U.S. are even cheaper.

In fact eMoney Advisor offers more than financial planning software with marketing tools (advisor branded media such as videos and presentations), account aggregation, vault solutions and, perhaps most importantly, its client portal. The eMoney Advisor personal financial management (PFM) tool (they call it a client site) is seen as possibly the most attractive of the company’s products in the eyes of Fidelity. MyPrivateBanking’s view is that Fidelity’s purchase should probably not be seen as a cherry picking opportunity and that they have plans for the whole product range. That said services like MINT.com or Personal Capital’s financial software are showing that personal finance portals have plenty of potential in the retail segment.

Just what those plans may be is unclear at this stage but the eMoney Advisor purchase has raised concerns among financial advisors that use its products even though Fidelity has promised not to interfere with emX’s integration on the platforms of other custodians such as Charles Schwab and TD Ameritrade. Concerns have also been expressed at the possibility of Fidelity making use of big data on HNWIs’ portfolios available on the eMoney Advisor platform but this raises such serious questions about who really owns that data that we think Fidelity Investments would see this as a highly dangerous strategy.

Although we shall have to wait to see how Fidelity plans to build on its eMoney Advisor acquisition, it is clear that the company is fully aware of the need to accelerate the speed with which it engages with digital technologies to provide more help to investors. MyPrivateBanking believes that, in particular, the new collaborations between Fidelity Institutional and Betterment Institutional, and with LearnVest may be a sign that Fidelity’s focus on providing advice and planning services to the mass affluent and the young via technology is increasing.

The eMoney Advisor deal also sheds an interesting light on the volume of investment going into fintech from venture capital funds. Fidelity is paying a lot more than start up’s funding but it is getting an established revenue stream of at least $30 million a year as well as a well qualified team of 250 people. It seems likely that they have interesting plans for that team as a team but that they will respect what eMoney Advisor has already achieved since it started 15 years ago.

 

Robots forcing wealth managers into new roles

Monday, February 2nd, 2015

I read an interesting article about the fear AI (Artificial Intelligence) development causes due to an assumed threat of destroying jobs. However, the conclusion Andrew Ng, the famous AI researcher, makes, hits the nail on its head: the true challenge is not the robots but the retraining of the employees.

What does this imply for wealth managers? As robo-advisors gain ground, don’t waste your time but think about ways how to obtain benefits from this development. Define your new competitive advantage and exploit the psychological lead a human advisor (still) has over a robot.

Watch out for our upcoming report in March 2015 on digital interfaces for financial advisors to learn how.

 
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