Wealth management is ripe with opportunity, but only for those that provide a truly connected digital experience right from onboarding.
The way forward—and through digital transformation—is with data connectivity. It is especially true for transforming a client’s first impression of wealth management firms and platforms: the onboarding process.
The opportunity: Meeting digital expectations of the young and (soon-to-be) wealthy
According to CEB TowerGroup’s 2016 Wealth Management Leadership Council Agenda Poll, 84% of senior IT executives in wealth management say that improving the onboarding process is their top priority. It’s no wonder.
Onboarding new clients is the first and potentially most lasting experience with a wealth management firm or platform.
It sets the tone and expectations for how the relationship will evolve and showcases the tools, data and systems that will be used throughout.
The opportunity in wealth management is definitely motivation enough to create an outstanding first impression.
In a recent Broadridge report, the Roubini ThoughtLab forecasted that household assets would rise $89 trillion (to $296 trillion) in the 25 top world markets by 2021. Likewise, younger generations in the US have already begun to inherit some of the massive $30 trillion wealth transfer from their parents that will happen over the next decades.
To meet changing client expectations—especially those of tech-savvy Millennials and Gen-Xers—now demands a higher degree of digital expertise. Many Millennials, for example, have adopted a plethora of new applications to manage their money, pay their purchases, or get loans.They have come to expect picking up a new financial service will be fast and easy across all sectors, including wealth management.
The challenge: From legacy systems and info silos to connected experiences
This is not currently the case, however. When it comes to onboarding,irms still use the same age-old pen-and-paper processes, and perhaps have made the “upgrade” to PDF forms or CRM tools.
Industry research has shown that investors complain the client onboarding experience consists of numerous, cumbersome and dated forms with repetitive questions, signatures and too much back-and-forth on documents.
Clients whose assets are spread across multiple institutions face additional steps if they want to transfer them, or even provide a degree of visibility to their advisors.
Likewise, advisors find that the data entry process is manually slow, highly repetitive, disconnected, and siloed within firms.
Wealth management organizations see the immense opportunity on the horizon, and understand the tools they use to collect and handle the information they need from their clients won’t cut it. However, there has yet to be a clear way forward through the (generally) uncharted terrain of digitization. The sector hasn’t seen many success stories to raise the bar and follow.
Luckily, there is a new and exciting way to unblock digital transformation.
A practical way forward: Unblocking digital transformation with data connectivity
Financial data connectivity allows consumers to direct the information held by a financial institution to a third party of their choosing, through a simple connection to their account.
Many financial organizations in Canada and the US, including banks, have successfully digitized their services using data connectivity. In fact, 64% of consumers worldwide have used one or more fintech platforms in 2020—a 33% increase from 2017.
Millions of consumers use financial wellness applications, for instance, to manage their income, spending and savings. All of those consumers opted-in to connecting their financial data and information with fintechs in order to simplify access and control over their finances.Data connectivity helped make this possible in retail banking, and now the same can be true for wealth management.
Data connectivity and onboarding in wealth management
When onboarding clients, they simply have to connect their accounts from other retail banking and wealth management institutions in order to share the information their advisors need to verify their identity and assets. The whole process can be done in minutes.
Asset transfers, which typically require much information gathering in order to fill out authorization forms, can also be streamlined.
Clients never have to provide new financial information, since connected accounts continuously return up-to-date information on their assets.
Firms and platforms stand to gain a more complete picture of a client and their financial situation in real-time. This allows advisors to provide valuable advice right from the start and at every step in the relationship.
Two strategies to consider: Digitally-supported and data-powered models
Understandably, not all wealth management providers will approach the digital transformation of onboarding the same way. Advisory firms, portfolio management platforms and robo-advisory apps diverge in the kind of relationship they wish to establish with their clients.
A key feature of financial data connectivity is its flexibility. It can power a large range of experiences
Digitally-supported wealth management
The digitally supported model is for those businesses that consider personal advisory to be a key differentiator, and do not want to go fully digital with a decentralized, self-service experience.
Many advisors already use CRMs to partially digitize their services with online forms and access to portfolio management dashboards. Here, data connectivity will help power existing systems and free up more time to focus on individual relationships and provide personalized service—as well as servicing more clients.
Once an account is connected, data is automatically retrieved and can be linked to an existing CRM. Because Flinks standardizes data across all institutions, analyzing and organizing it is more efficient.
[H3] Data-powered digital wealth management platforms
Data-powered digital platforms, on the other hand, offer users the ability to self-serve or self-direct their portfolio with digital tools. This requires robust, user-friendly, valuable and personalized processes at scale, starting with a quick and simple onboarding experience.
Connecting to retail banking accounts enables platforms to automatically collect KYC information needed to identify users and fulfill compliance obligations. Data connectivity can also be used in fraud reduction. In this case, data from banks can be used to assess the legitimacy of a user by checking account activity and history, for example.
In this same way, firms have full visibility over assets in other institutions that connect to investment accounts. What’s different, however, is that data-powered platforms can turn data into insights through analytics. This allows them to make better, more timely recommendations and prompt asset transfers.
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