Supersonic Digital Masterclass - How did your company fare?

Wealth Management and Private Banking

10 September 2020

climate changeCOVIDDataDigitalGeopoliticsMarket TrendsWealth Management and Private BankingWealth Management and Private Banking

This session gave some perspectives on the impact of recent events on how the wealth management industry are addressing digital challenges based upon the insight on Accenture’s clients’ experiences and a survey of around 50 European and Asian Private Banks and wealth managers. The discussion was split into three areas: 1. Impact of recent events 2. Evolution into this new world – “Post” Covid 3. Potential winning moves to 2025

Expert: Ian Woodhouse, Orbium
Facilitator: Gilly Green, Sionic 

State of Play

This session gave some perspectives on the impact of recent events on how the wealth management industry are addressing digital challenges based upon the insight on Accenture’s clients’ experiences and a survey of around 50 European and Asian Private Banks and wealth managers.

The discussion was split into three areas:

  1. Impact of recent events
  2. Evolution into this new world – “Post” Covid
  3. Potential winning moves to 2025 

1) Impact of Recent Events:

Covid has probably presented the most challenging moment to date for leaders – predominantly due to the speed of the spread, the suddenness of the lockdown and the subsequent impact of events. The fact that it was a non-financial induced crisis, also made it different though it had a financial impact.

How did firms fare?  This varied wildly according to:

  • Leadership
  • Firm’s model from the perspective of target client base ( UHNW, HNW, Mass Affluent) and proposition (banking, investment, advice-led, self-directed)

Initially markets slid during March, but then we saw some early responders – those taking “a punt” on low market values – resulting in a phenomenal spike in trading volumes (100-250% rises in trade numbers). 

Firms that were resilient in handling volumes fared well and some were able to balance trade revenues against loss of management/advice fees.  In fact, most coped - there were no disaster stories.

The second challenge was that of engaging clients remotely.  Firms that did best:

  • Had good client data and had an ability to manage it - Those who had fragmented data found it more difficult to leverage technology quickly to provide online access to clients and intermediaries.
  • Advisers - Timing actually helped being close to the end of the tax year regarding uptake of digital – clients needed to access information and advice.
  • Banks – from a lending perspective, demand increased from business owners

Outcomes and actions taken, apart from accelerated implementation of online access, included a large rise in security improvement, implementation of digital signatures and solutions to avoid fraud.

Other major social issues were adding to the challenges of the C-Suite at the same time:

  • Diversity
  • Climate change
  • Geopolitics

The focus on these affected clients’ views of where and how assets should be held.  This in turn led to higher demand for views and advice from their investment managers and advisers.

Advisers, not just clients were affected on a personal level regarding technology and access – there were two categories – those who were comfortable using technology and those who weren’t (monitoring by MS Workspace software showed that some employees eased into it but others had major challenges).

Latest figures for firms “doing well” are showing net new money of 2% - typically this has been 6%+ in the past.  In the current climate it has become easier to get new money from existing clients and harder to get brand new clients.  Cross-border/offshore businesses have found this even harder

Expect more consolidation in the industry – UK is behind US, Asia and Switzerland in the progression towards digital.  In the US’s case it has been driven by larger players needing to scale. 

2) evolution to a new world

Digital interaction has advanced more in last few months than in previous years – advanced by 2 years in 6 months.

This is not purely a technology story – it is also about an increasing ability of advisers to create an adaptable relationship with their clients - all about adviser and client interaction

Clients have become more socially aware and conscious of sustainability – they are also more conscious of risk.  They want access to up-to-the-minute information and ideas aligned to these themes.

Observations on clients focus changing regarding their investment

  • Re positioning assets away from certain locations, e.g. China and Vietnam and away from certain currencies
  • Looking for resilience – greater proportion of cash in the portfolio
  • Longer term opportunities
  • Climate change and societal trends 

3) potential winning moves

To be successful in future, firms must move away from traditional model to new ways of doing business.

COVID has driven change faster, but this is a genuine game-changer for advice.  It requires a choice of right services models and right digital solutions.

All firms are on a journey but at different stages of this cycle:

  1. Foundations and initial response with some basic digital tools – having good data is key to being able to do this
  2. Products and new solutions – this means education (internally and clients) and product and services that lend themselves to new ways of working
  3. Automation of repeatable tasks – more on enabling advisers
  4. Advanced client data analytics – being insight driven
  5. Leading – super advisers with high degree of expertise – “Data centre on legs” – proactive contact of clients with advice

Most firms in UK are at stage 2 possibly 3, some are at 4, but none at 5 – there are few of these in the world.

Poll1 – 73% were in strong agreement Covid will accelerate digitalisation in Wealth Management, none disagreed outright

Poll2 – majority of participants strongly agreed that WMs need to invest in modern tech platforms to take advantage of post Covid changes – 10% disagreed, but none strongly. 

The audience views:

On digital implementation:

It has been much easier to get things approved by the Compliance department, such as digital signatures – risk assessments caused delays, but different priorities have meant that things such as digital signatures are risk accepted as they are now key to implement
Video certification, is now standard operating procedure.
All agree that the speed of change has advanced us by a couple of years in first couple of months – amazed that could get people working from home very quickly and then people applied themselves to how to do “physical” tasks remotely
Regulator has also become more open in allowing these things and smoothing them out – digital signatures now more widely accepted – though noted that different jurisdictions still have different rules…..
All very well – we have gone faster but we still face the challenges of high costs to implement.
On a positive note, COVID has meant a significant uptake of digital technology by investors – this has not been driven necessarily by relationship/portfolio managers, but clients needing to be digital – in one case this was exponential, in another it drove 2 years of change in 1 month as a result.
One participant remarked that we are a bizarre industry, where we have an internal obsession about knowing what clients want and this need to change – often we build things for the adviser (or what the adviser tells us to build).
Some firms shared their successful engagement in asking clients what they want through roundtables and the benefit of having those who will actually build the solutions also in the room to hear this from the clients themselves. 

On the challenges of working digitally:

Concerns on the effect on the employees themselves – seeing the same four walls every day can be tedious with no colleague contact – how do we inspire them? Whilst on the other hand some are comfortable and may not want to come back at all.
Agree that this adds to the most difficult time for executives – mentoring, staff performance management, are all key areas that are a challenge.
Other challenges come with “data leakage” – one firm has paid significant attention to this, given employees are able to access sensitive information and print it at home.
One other participant commented that they had employees printing things in a country where the firm hadn’t been aware they were working from.
The whole issue of GDPR training and the GDPR register requires a significant re-think.
Fraud was mentioned, and though attempts may have been seen, there was also a positive outcome where clients are in unexpected places and requests have looked unusual (so would normally have been rejected) validation was able to be done through video calls.

On the long-term changes to proposition:

On the long-term changes to proposition:Changing role of the adviser – clients used to want us to be in the office, but that has changed – is the drive for more skilled advisers as per Ian’s comment of the “data-centre on legs”?• Static data• Dynamic data we obtain from the client during the engagement• External reference dataSome interactions don’t actually generate that much data – banking and managing an investment portfolio.  We don’t all have lots of contact points – how do we generate more dynamic data during the lifecycle of a client?  One participant mentioned that the inclusion of open-banking onto its platform has opened up access to more insights through external reference data.Shift towards wanting advice – in the round -   has meant that one firm has evolved its portal into a “whole of wealth” view for its clients.  In practice, this started with advisers inputting data about their clients, but then became a self-serve for clients (e.g. adding date points for life events and needs like school fees).  By tracking what clients add (and therefore find of interest) they have done further developments and have enabled their advisers to become more proactive in their engagement with the client. 


US and Asia are ahead of UK in these developments and it’s useful to look at US, in particular, for examples.

US went through a stage of early consolidation, resulting in bigger players - as brokerage became more commoditised this including investment banks stepping into the frame for wealth management and advice in the Affluent sector.  Morgan Stanley’s acquisition of the Citibank book and UBS with Paine Webber are good examples.

Scale has, of course, driven a need to automate and technology focus has been across:

  • CRM – with popular choices being MS Dynamics-based systems and Salesforce
  • Advanced Financial Planning tools, in particular linking into portfolio management systems – this has mean that the advisers can demonstrate outcomes to clients and measure the success of advice give – outcomes being across both risk and return.
  • Efficient and lean back offices – continuous improvement for automation and large-scale replacement being on trend.
  • Cloud – moving to cloud has been seen as a n advantage for flexibility and to move the IT cost model to variable from a fixed cost.

Key themes have been for the advice proposition to look at the customer life journey even beyond the lifetime of the client - into succession planning and retention of wealth into the next generation.  This means enabling “super-knowledgeable advisers” who are able to leverage technology and data to be pro-active.

A key measure for the winners has been a move from an average EBITDA of 10% to one of 20-25% by leverage these new models.

A positive outcome for us all to look forward to….