Wealth Management in the times of COVID 19: How firms are adapting to the new normal

COVID 19 has hit the worldwide economy like a storm and it has had far-reaching implications on every industry. The Wealth Management industry has taken a major hit in the face of massive uncertainty, panic and negative market sentiment.

Wealth management firms face three major challenges in the COVID 19 landscape.

  • High Market Volatility
  • Increased Operational Risk
  • Increased Reliance on Digital Channels

Let’s look at how firms can better help their clients in these times of crisis and build trust when it is at an all-time low.

Adopt digital tools to retain trust and transparency in the face of volatility :

The market sentiment right now is overwhelmingly bearish. Asian markets have seen a 15 -25% dip. India was not spared the carnage as the Sensex and Nifty hit three-year lows closing at 28,896 and 8,468 points respectively. The biggest challenge right now is to keep the trust of investors in the market and prevent panic selling. Digitally enabled firms are in better shape to keep the trust of their investors especially those with customer-facing apps and portals that help increase transparency. Wealth Management firms will need to adopt technology like Wealth Management platforms to adapt to the speed of the market and act quickly. Quick adoption of digital tools is of the essence as physical meeting and paperwork have come to a grinding halt.

Adopt platforms that help reduce operational Risk:

Firms are expected to have business continuity plans in place to be able to shift employees to working remotely and have centralized access to data when requested by clients. They are also expected to provide for the eventuality if key personnel fall ill or need to be quarantined. Relationship managers should be able to address client needs wherever they are working from and digital wealth management platforms help them do just that. If clients are successfully digitally onboarded and all portfolio data is available at one click then RMs who step in as replacements can quickly get a picture of finances and offer the right advice. In the absence of portfolio data being available digitally, collating all the necessary data becomes a nightmare, especially without a detailed handover by the existing Relationship managers.

Switch entire customer service onto digital channels:

Countries across the globe have entered into a lockdown. Government bodies have enforced social distancing to flatten the curve of the pandemic. In such a scenario where physical meetings have been banned, Wealth Management firms will find it increasingly difficult to acquire new customers or event retain existing ones. There is a need for regular engagement with clients to ensure that they do not panic. RMs need to switch to digital channels such as video calling or messaging to keep their clients in the loop. In such a scenario a shared platform or dashboard that can help offer an eagle eye view to both clients and RMs is extremely important. WM firms that have adopted Digital Platforms are able to continue services as RMs are equipped to serve clients efficiently even without the face time.

Upskill RMs to deal with the changes:

Relationship managers can no longer afford to be unsavvy about digital mediums. They need to be able to operate and act on Digital platforms on behalf of their investors. They must have a 360-degree view of portfolios to act quickly and mitigate risk. Wealth management firms must fastrack their training programs and teach their RMs to use the portfolio management tools available at their disposal.

Ensure Client data is not compromised:

In a scenario when everyone is being asked to work from home, client security, especially in sensitive industries such as Wealth Management, becomes an issue. Employees need to be trained in best practices to ensure that client data is protected. The IT departments of Wealth Management firms need to ensure that people are sensitized to cybersecurity risks and provide the necessary tools and infrastructure necessary to ensure that data is not breached and is purely on a need to know basis. Collating information on a centralized server and restricting downloads of sensitive data onto personal systems is necessary to prevent untoward incidents in the long run.

Promote Digital Wealth Management or Roboadvisory:

In the increasingly uncertain scenario, Wealth Management firms are advised to transition in branch operations and sales to Digital platforms. The offerings that require minimal to little human or face to face interaction must be promoted at this time. Robo-advisory or AI-enabled wealth management is all set to boom as Wealth Management firms will suffer a crisis of talent and productivity at this difficult time. The more clients that can be offloaded to entirely digital offerings, the better they can be serviced even with limited staff and resources.

 

7 Key Drivers: Uberized Client Experience in Wealth Management

Ask any investor what the predominant factor is in choosing a wealth management firm, they will be quick to respond with ‘investment performance’. It is undeniable that investment performance is key in the decision whether to continue with a wealth management firm, however, what is often overlooked is that Client Experience comes a close second.

Though, when we use a term as broad as Client Experience, it is very easy to get misled. We borrow on Deloitte’s pioneering framework on Client Experience in Wealth Management to power our insights on what the future holds for Wealth Management customers.

7 key drivers of Client Experience: How can Wealth Management firms power advantage?

Reporting and Transparency:

The client must always have a clear picture of their finances. There must be no delay or turnaround in providing accurate information to the customer. Timeliness, accuracy, and accessibility of data are important to all customers. The way firms can drive better reporting and transparency is to onboard customers onto a digital wealth management platform with a customer-facing app or portal. This allows customers to get access to their portfolio data 24X7 at a moment’s notice. Any kind of errors in reporting or even delays in delivering reports can seriously erode the credibility of the firm. It is frustrating if the customer has to go to extraordinary lengths to retrieve their own data. It should be available at the click of a button and completely accurate.

Timeliness and Clarity in Communication:

The client is looking for wealth managers to provide data-driven insights quickly and briskly. There is no space for guesses. Portfolio data and investment strategy must be clear. A wealth management platform gives wealth managers the ability to identify opportunities in a timely fashion and convey it to their clients clearly. They follow the 5 keys to successful investment portfolio management. If the wealth manager is more forthcoming in communicating the exact expectations from the investment, it is less likely that the client feels duped or cheated.

Reducing Friction:

Whether it’s getting a customer on board or the speed and accuracy of data, the client expects customer experience to be top-notch. There is no time for any kind of sluggishness in the processes. Automation of the entire process from KYC to onboarding can prevent the risk of clerical errors/human errors that can hold up the entire process. When it comes to operations, clients don’t want any surprises they just want it to work. The more predictable and automated it is, the better it is viewed to be.

Attentiveness:

It’s all about being quick and right in today’s world. Wealth managers must be available on-demand and proactively share strategies with clients. Any data or information that is requested by the client must be quickly turned around. With the obsession towards exceptional customer service, only the most digitally savvy wealth manager can manage to meet client expectations. The automation of mundane tasks such as portfolio attribution, data integration, reporting, rebalancing and more gives wealth managers the free time to focus on providing a stellar customer experience.

Long Term Approach:

Rather than trying a short-term approach to client relationships, customer preferred a relationship where the wealth manager builds trust over time. An indiscriminate attempt to upsell to customers and strain relationships will not be appreciated by the customer and will breed mistrust. Wealth Management Firms that can identify the right offerings for the investor’s portfolio and back it up with strong data are the ones that retain clients in the long run.

Strong Understanding:

Only the wealth managers that demonstrated a keen understanding of the client’s needs, business, estate, and requirements were retained by HNI clients. Managers must be in tune with the client’s goals for their life, whether it is buying a car, a house, a second farmhouse, saving up for children’s education or funding a vacation in the Bahamas. Nowadays, clients look at goal-based investing and unless this resonates with the investment manager, it’s difficult for the relationship to click. Wealth Management Platforms that allow wealth managers to input client goals and understand the right funds or strategies will help engender trust as there’s a lower risk of mis-spelling the wrong fund.

Partnership Approach:

Clients seek wealth managers that can manage their money but also those that take their inputs seriously. A wealth manager must be able to transfer their own knowledge to the client in the right way and also consider the concerns and ideas of the client. Clients are looking for someone who can work with them as a partner rather than dismiss all their ideas. They are looking for human beings with whom they can build an actual partnership based on shared goals. Wealth managers have technology as their best partner. For Example – AI has helped wealth manager save up to 20% of their time. The wealth manager is expected to use technology to build a custom investment management solution for the client if a suitable one does not exist in the market. Dealing with a manager who does not engage with the customer and offers cookie-cutter solutions can grow tiring very quickly.

Valuefy has been enabling Wealth Managers globally by providing production grade investment technology for an uberized customer experience. Reach out to us!

Active vs Passive Portfolio Management – The Key Differences

If you’re just getting into the world of investing, it can be a daunting task to navigate your way through the many options available. We’ve prepared a quick primer for beginners to explain the key differences in the two major ways of investing, active portfolio management v/s passive portfolio management.

What is active portfolio management?

As the term suggests, when investors engage the help of fund managers or wealth managers to beat the benchmark index it is called active management. In simple terms, it involves a strategy that aims to maximize returns by beating the market and assets are actively traded at a higher frequency. There’s a lot more action and risk in an active portfolio versus a passive one.

Active funds are managed by experts who keep juggling your money based on the opportunities in the market. There’s a lot of in-depth research and forecasting that goes into the process and hence the team charges a fee for their services. An active fund may give you access to a portfolio management platform and portfolio analytics so that you can get a birds-eye view of what’s happening in your portfolio. The fund managers take into consideration a large number of factors such as politics, economics, global cues and market movement to gauge the right strategy to invest your money. The fees charged by the fund manager in an actively managed portfolio is called the expense ratio of the fund which is a certain percentage of your assets being managed.

What is passive portfolio management?

Passive portfolio management is also known as an Index fund management is a type of fund where the objective is to make the same returns as the index it is benchmarked against. For example, if the Sensex gains 100 points in a year, the fund is designed to mimic the same performance.

Since the idea is to replicate the index, there is no need for a dedicated team of experts to monitor the funds actively. Once the effort is made to purchase the securities, the portfolio will follow the fluctuations of the market and mimic it. There’s no additional juggling or effort on behalf of the fund manager.

As a result of the lower efforts on behalf of the fund managers, there’s little or no fee associated with it. Since these funds replicate the market movements, they are preferred as a low-risk investment and are recommended for conservative investors. These funds fall into 3 categories, unit investment trusts, mutual funds, and exchange-traded funds.

Which is better Active or Passive?

Active Management:

Advantages

  • Since the funds are actively managed by expert investors, there’s a higher chance of generating a market-beating return.
  • They come with great tax benefits as underperforming funds can be sold off quickly.
  • Since the funds are monitored regularly, any opportunities can be leveraged in real-time.

Disadvantages

  • There’s a higher risk associated as the frequency of market juggling is higher.
  • Since they require more effort, the expense ratio is higher and is borne by the investor.
  • Off late, active funds have been disappointing in terms of returns when compared to index funds.

Passive Management:

Advantages

  • Long term approach and does not require active monitoring by an investor or fund manager.
  • There’s higher transparency as it mimics the market movement, there are no surprises.
  • Lower risk and better for small investors as minimal fees are paid to fund managers.

Disadvantages

  • Limited options when it comes to investing.
  • No market-beating returns, no high alpha generated.

What is right for you?

Based on expectations

If you want high returns over a short or medium term, you can opt for an actively managed fund. However, if you are willing to be patient and are satisfied with risk-free long term returns that match the market, passive funds are best.

Based on risk appetite

If you want a high return on your investment and don’t mind a higher risk exposure then an active portfolio is the right bet. However, if you prefer a diversified fund that is lower in terms of concentrated risk exposure then passive funds are a better option

Impact of Technology on Wealth Management over the Last Decade

Over the past decade, we’ve seen technology permeate and define each and every industry and wealth management is no different. As we close in on the decade, let’s recap how technology has affected the Wealth Management industry over the past 10 years, the milestones achieved and the challenges that are yet to be addressed.

Customers are younger

One of the major shifts that have necessitated technology adoption is the fact that the new breed of HNWIs are tech-savvy and favor a ‘high-touch’ experience. This means that firms are exploring the use of Artificial Intelligence to deliver better client experiences that can satisfy demanding HNIs.

Data is the new gold

Organizations are increasingly implementing technologies for storing and managing data. There has been the evolution of wealth management platforms and investment management technologies that can track every data point once a customer has been digitally onboarded.

AI is automating new processes

Other than conventional processes such as KYC and onboarding, AI is increasingly being used to enhance the client experience. Robo-advisory services that automate the entire wealth management process are on the rise. The customer now has the option to opt for a completely digital solution where AI recommends the entire investment strategy for the customer based on their risk appetite and investment horizon.

AI is driving investment insights

Real-time analytics is being used to drive the investment strategy. Nowadays Wealth Management platforms are now able to crunch through terabytes of data to arrive at investment decisions in no time. AI is able to run projections based on several variables in seconds rather than hours.

Front office & back office are melding

Earlier most of the technological innovation happening in the Fintech sector was limited to the back office. Front office wealth managers stayed at odds saying that AI-generated ideas were not meeting the needs of the clients. However, nowadays, the front office is increasingly being involved in the process of innovation. They are being incentivized to collect more and more data so that algorithms become more efficient and drive higher returns for their clients.

Regulation remains a challenge

In an increasingly digitized environment, the regulation of these newly evolved paradigms is becoming a challenge. Cybersecurity remains one of the biggest concerns with so much sensitive data being collected. Regulators and Wealth management firms need to constantly engage with each other to develop robust security best practices and data privacy policies to protect the customer.

Manipulation is a new threat

Like every other evolving technology, AI is a double-edged sword. In the wrong hands, AI could be used to wreak havoc on the markets. Using bots to manipulate trading trends, malicious elements can influence the market. They may be able to mislead investors into buying or selling a certain stock or asset. However, the silver bullet for AI is AI itself. Advanced pattern recognition using AI can be used to monitor such trends in the market and raise a red flag to regulators.

Humans remain indispensable

Despite the evolution of Robo advisory platforms, Investment Management Solutions, Investment Platforms, and Portfolio Management Platforms, the role of the human advisor is still crucial. While AI takes care of many of the monotonous tasks in wealth management, humans still must devise the algorithms and the logic that better these technologies. Also, despite Robo advisors evolving over time, there’s nothing like the presence of a human advisor to understand a client and put them at ease. While technology is making strides in automation, human advisors remain at the core of the wealth management industry.

For more detailed information please talk to our Experts Contact

Financial Well Being – The 2020 New Year Checklist

Yes, it’s that time of the year again, the time to make those resolutions for the year that we inevitably end up breaking by February if not earlier. Well, this isn’t cynicism speaking its facts, research suggests that 45% of people fail their resolutions by February and less than 20% make it through the entire year. And, what are these ever-elusive goals that we set for ourselves? Invariably the most common resolutions have to do with Physical Health (losing weight, eating healthy, exercising) followed by Financial Health (saving regularly, meeting goals).

Well, the most cited reason for failing at resolutions is lack of willpower, however, this year we’ll try to circumvent failure at least when it comes to our by having a game plan in place and by automating our investments.

Here’s your Financial Fitness plan for 2020, follow it rigorously and you’ll be at a much better place (financially) next year.

Step 1: Budget Better

It’s as simple as creating a monthly shopping list. You know the amount you can afford to spend, you know the essentials and you can even make room for luxuries as long as you can make a saving elsewhere. Writing down your budget with a clear allocation for monthly expenses, rent, savings, goal-based investments can help you be more fiscally responsible. You can use an expense manager such as Walnut or tally up your Bank statements to find out where you’re bleeding money. Whether it’s your morning dose of Starbucks coffee or your cigarette habit, once you see how they add up, you’ll be sure to revaluate your decisions. If you’re looking to get started with a basic budget, don’t overthink it, you can use the popular 50-30-20 rule to get started.

Step 2: Become Debt Free

Debt can be a dark cloud looming over your conscience and can affect your financial behavior greatly. Whether you’re in crippling student loan debt or paying off a mortgage, having a plan in place helps you from getting overwhelmed. If you have multiple sources of debt such as a car loan, bike loan, personal loan and the like, the best way of going about it is striking off these debts one at a time. You can start by paying off smaller debts such as your car loan so that you get some momentum and your confidence starts building up. Slowly move on towards your larger debts so that you can pay them off one at a time.

Step 3: Plan for the Unplanned

Create an emergency fund and get your Health and Life insurance in place. Yes, we know that it feels like a waste of money especially when you’re just starting off in your career but tragedy can strike at any time and it helps to be prepared. Start by creating a rainy day fund that’s at least 6 months of your monthly salary to prepare for emergencies such as layoffs. Also, start your Health insurance as early as possible, the earlier you start the lower the premiums you pay for the rest of your life. You should also invest in a Term life insurance plan as they are cheap to acquire and ensure a financial cushion for your loved ones.

Step 4: Create a Retirement Fund

We know that retirement can seem like a lifetime away, but well so did 2020 at the beginning of the year. Having a clear picture of how much money you need to have saved up for retirement will help modulate your fiscal behavior. Setting your current income as the standard, a retirement calculator will tell you how much of a corpus you’ll maintain your standard of living post-retirement.

Step 5: Diversify, Diversify and Diversify

Never put your eggs in one basket, the stock market can be a calamitous place and to weather the ups and downs of the marketplace you need to have a diversified investment portfolio. Whether it’s mutual funds, stocks, bonds, real estate or bitcoin, you need to have a sufficient “debt v/s equity” ratio to ensure that your boat is steady when the waters get choppy. It helps to have a wealth manager or a wealth management firm in place that can manage your investments for you and tell you how exactly your assets must be drawn up with respect to your financial goals.

Step 6: Automate everything

Wealth Management platforms or investment management platforms such as Wealthfy can help make the journey towards financial health a lot easier. Trusted by the Top Wealth Managers in India such as Aditya Birla and Kotak Asset Management, it’s been voted the top wealth management platform in India. With dedicated apps for Wealth Managers and Clients, it promises a high level of transparency and brings the cutting edge of Artificial Intelligence and Robo-advisory to your 2020 financial strategy.

For more details ask your Wealth Management firm about Wealthfy today

Why Your Friend Shouldn’t be Your Financial Adviser ?

In our times of need, we always turn to our friends for advice, whether it’s life, relationships, careers or anything that’s on our mind. Well, why should finances be any different, right? Well, when it comes to finances it gets slightly more complicated. In this blog, we cover why taking financial advice from your friend might be a recipe for disaster.

You Lose Objectivity

When you’re with your financial adviser, you need to ask some hard questions. There may be disagreements over how you want your money to be invested. In fact, your advisor might even give you an earful over your frivolous spending habits. They will not take into account any personal problems that may have led you to act that way, the best advisors are quantitative and analytical. However, if your friend is your advisor, you may pull back on the punches, not ask the hard questions and not hold them accountable for their bad advice as you value the relationship. This is bad news as you aren’t able to take an objective view of your finances, neither is your friend able to maintain their objectivity as they know your problems and have a stake in them.

Your Friend isn’t the Expert

Qualifications and experience mean everything when it comes to being a financial adviser. While your friend may have made a lucky investment and made a great fortune for themselves, it doesn’t mean they will be able to replicate the success for you. While looking for a financial adviser always look at their past track record, years of experience and their college education. If they’ve concentrated on acquiring a degree related to financial services, it’s clear that they were focussed and dedicated to Financial Management as a career and didn’t drift into it. This level of intent and commitment means they are passionate about being a financial expert and are likely to be up to date and current with their strategies. While choosing a financial adviser always look at the number of clients managed, assets under management, a record of performance, and data with regulatory bodies (To check for fraud). This will ensure that all your bases are covered and you’re taking financial advice from the best in the business.

Depth & Breadth of Knowledge

Your friend might be an expert player in the stock market or in mutual funds. Or he may help you with the right tips when it comes to saving taxes. However, does he understand the exact needs of you and your family? Does he know the kind of insurance cover you need to maintain your standard of living? Can he do succession planning in such a way that your family is well taken care of after your death? Unless your friend is a financial planner, most likely they may be good at one or two of these financial aspects but rarely all of them. Hence it’s necessary to invest a little time and money, in the beginning, to avoid disappointment and missteps due to bad financial advice.

Tools they have access to

Would you trust a chef that has access to the finest sharpest steak knives on the market to carve up your premium ribeye steak, or would you do it yourself with a 3-year-old blunted knife? Well, the answer seems commonsensical, similarly, financial advice is no different. Expert financial advisers have at their disposal a number of tools that make wealth management easier and more efficient. Wealth Management platforms such as Wealthfy are used by top advisors around the world to make financial decisions. These platforms have Artificial Intelligence-powered Robo Advisers to drive their decisionmaking for them and also crunch terabytes of data in seconds. These investment management platforms can make it easy to perform complex financial tasks such as portfolio monitoring, performance attribution, rebalancing and give you 100% transparency into each and every financial decision. No matter how good your friend is at financial decision making, it’s hard to beat a professional financial adviser with all these cutting edge tools at their disposal. Hence, it’s essential to consult a financial adviser when it comes to improving your financial health in the long run.

Ask your financial adviser about Wealthfy to get access to 24X7 access to your portfolio health contact us

What to Expect from Wealth Management Platform in 2020?

2020 promises to be a year of fundamental shifts for the Wealth and Asset management industry. The evolving technology landscape and digital transformation of the industry will lead to a number of significant changes in the way that wealth managers operate. Here are some of our predictions for the coming year.

Costs to stay in Business will remain high, Platforms will find new Efficiency.

The costs of complying with regulations in the wealth management space will remain high. The growing cost of doing business will put continued pressure on firms to drive up profits. However, competition pressures will lead to lowered fees and cannibalization of the market. In this scenario, wealth management firms will have to invest in technology such as wealth management platform and data to maximize alpha for customers and justify higher management fees.

Passives will become core Investment Channel, Platforms will help Wealth Managers compete.

It is predicted that by 2020 close to 35% of assets under management will be pooled into passive investment products such as index funds. ETFs and Mutual Funds will also see steady growth. As investors increasingly invest in passive products, actively managed funds will be under pressure to show a higher alpha. This higher alpha can only be generated if investment decisions are made on hard data that helps wealth managers make quick and reliable judgment calls that can beat the market. The power of terabytes of historical data can be leveraged by wealth managers that use Robo-advisors. These Robo-advisors can give recommendations in real-time and can raise red flags when portfolios are not performing. This will help de-risk investment strategy and help increase the chances of creating value for clients.

Platforms will help Wealth Management Firms improve transparency and gain Client Trust.

Clients of today expect transparency in investment decisions. They are no longer happy to rely on Wealth Manager’s decisions alone and need hard data backing up any investment strategy. Wealth Management platform gives wealth managers all the data they need at their fingertips. This means that the chances of making decisions purely on instinct are greatly reduced, this fosters greater trust in the clients. Clients can also use Wealth Management platform to check their portfolio performance at any time 24X7 and ask the Wealth Manager questions proactively instead of waiting for a monthly call or meeting.

Platforms will help meet higher expectations of On-demand Customer Service.

Clients who have grown familiar with an ‘app economy’ expect service to be available to them 24X7. In such a scenario, wealth management platform that helps customers get visibility into their portfolio data will give an edge to ‘digitally enabled’ wealth management firms. These platforms also help in automating mundane front office and back-office tasks helping free up manager time to focus on strategy and servicing their customers. This is especially crucial in a climate where over 87% of HNI clients confirm that they switch wealth management firms for lack of satisfactory customer service experience.

Mobile Apps and Customer Portals will become par for the course.

Clients of today are increasingly tech-savvy and need access to their portfolio data on their fingertips. Wealth management platform can no longer be solely facing the wealth manager, they need to have a customer-facing presence both as a portal and as an app. These mobile apps must have key functionalities such as rebalancing, portfolio monitoring, withdrawals, etc so that customers are empowered to make their own decisions. Investing in online platforms and mobile apps should be a top priority for Wealth Management firms as less than 50% of HNWI reported being satisfied with their current online and mobile financial platforms

How AI is Changing the Face of Portfolio Management

Over the past decade, the Wealth Management industry has undergone a sea change. There has been an exodus of customers with actively managed portfolios moving into passive funds and investment options. Wealth Management houses that charge a premium for active portfolio management suddenly felt immense pressure to justify their premium fees.

In the midst of this change in investor attitudes, technology has also taken the investing world by storm. Artificial Intelligence, Data, Analytics and more have given the industry an opportunity to create efficient solutions for investors and improve the efficiency of their wealth managers.  In a rush to contain costs to stem bleeding bottom lines, only the firms that adopt tech and undergo a digital transformation will emerge winners.

How does AI help in Portfolio Management?

Mode data more accuracy:

Earlier investing decisions were made purely on the basis of speculation on past performance. However, efficiently crunching the data and arriving at the right decision required hours of poring over company records. Now analyzing the fiscal health of a company can be done in minutes, wealth managers can create complex algorithms and weigh in a multitude of variables to support their investment thesis. From past performance, filing, financial reports, industry reports, press releases, social media buzz and more can all be factored in while making an investment decision, vastly improving the accuracy of the decision.

AI has also allowed a wide range of unstructured data to be accounted for in the investment thesis. Data such as digital footprints, credit card data, cookies, store circulation data and a range of other factors can now be quantified and added to investment models to predict the investment outcomes.

Automation of cumbersome Middle & Back office tasks:

Artificial intelligence although touted as the enemy of the workforce is far from it, in fact, AI will help complement Middle and Back office workers and help automate ‘minimal value add’ and process-intensive tasks such as trend analysis, report generation, writing macros and more. Tasks such as Customer KYC, background verifications and more can also be easily automated helping the workforce focus more on strategy and research to generate alpha for their clients.

Minimizes risks:

AI acts as a defense against fraud as it’s able to monitor transactions and cross-checks it against historical data in real-time. Algorithms can be set up to flag suspicious behaviors based on each Wealth Management firm’s standard operating procedures. Even if there are millions of transactions taking place on a day, AI will easily be able to sift through and flag the ones that need to be inspected.

Improves customer service:

Earlier if any client had to receive a report about their portfolio, this would require hours of manual work to compile and gain insights. Today’s advances in Natural Language Processing and pattern analysis means that reports and portfolio management commentary about investor portfolios can be down within seconds and mailed to the client. The best part is that there’s little to no waiting time and the investor can check the status of their investment in minutes.

On-demand support:

Customers of today are used to an on-demand economy. In the app-enabled world, everything that the savvy customer of today wants is within reach at the click of a button. This expectation of instantaneous service has seeped over into the wealth management space. However, human wealth managers who are already burdened with long work hours cannot be expected to be available to global clients 24X7. The next best thing, however, is AI, Machine Learning enabled chatbots are now able to respond to common investor queries and handle basic requests such as generating reporting or providing status updates. These chatbots can also be configured to collect as much information is necessary via support chat and email it to the wealth manager’s so that they can take an informed decision and not spend additional time trying to gather the facts from the investors

For More Enquiry Talk to Our Experts

5 Keys To Successful Investment Portfolio Management

1. Make your bets on companies whose business model you understand

It’s always essential to completely understand what you’ve invested in rather than invest in every shiny opportunity that presents itself. There may be a lot of noise and cry in the market about the next big thing, one day it may be Bitcoin, while the next it may be Ripple or even weed stocks. However, it is essential that you keep your wits about you while investing. Look at strong metrics such as per capita product consumption, past returns, future projections, input costs and margins before making any kind of investment. You must be confident enough to forecast different projections for the firm based on your understanding and confidence level in the market. When you ignore this basic tenet and invest in companies or channels that you don’t understand, you stand a high possibility of watching your investment go bust. Avoid being seduced by the new opportunity in the block, the ‘boring’ groundwork and research is where the real gold (scope for building wealth in the long term) lies. The top billionaires in the investment space, such as Warren Buffet, advocate this philosophy. It’s all about being sure about what you know and betting on that.

2. Always hedge your bets

There’s always an endowment bias when it comes to investment decisions. Investors often make the habit of making predictions about stock performance without considering all the kinds of risk factors. Hence, we are often overly optimistic about our prospects which may backfire in our face. It’s important to be conservative about the prospects of an investment. It helps if you have data and analytics helping you hedge your bets rather than relying on pure instinct. All speculation must have a strong backing in data and an appropriate distribution of asset allocation must be maintained between high exposure investments like stocks and low-risk debt funds.

3. Minimize Costs, Expenses, and Fees

Professionally managed firms and family offices may charge high fees for management and advisory fees. This can either be in the form of a percentage of assets or in the form of a flat fee/retainer. It’s even more dangerous if they earn income through commissions as their financial interests may be at odds with yours. This fee can heavily eat into your long term corpus generation in various ways due to the interest lost on the amount that would have otherwise compounded. Hence it’s better to go for a Robo Advisor or a wealth management firm that subsidises is management fee by providing Robo Advisory services rather than using a Human advisor for all client interaction. The cost-saving by the Wealth Management firm is transferred to the benefit of the investor.

4. Maintain your portfolio boundaries

Be very clear on what level of exposure you are comfortable with in terms of risk and what profits you will be happy with. If you have data and analytics driving your decisions, you can set up a flagging mechanism to raise a red flag whenever a trade hits an upper or a lower limit. Setting boundaries for your portfolio help you minimize the probability of a loss. It’s important to be opportunistic, but it’s also essential that you aren’t too greedy. A very diverse portfolio with an appropriate mix of funds from across industries will help you create a portfolio that performs well in a bull or bear market.

5.Leverage Technology

Nowadays, wealth management paradigm has shifted and investment managers are using technology to back their decision making. Wealth management software and platforms have emerged which use a combination of AI and Analytics to de-risk investments. Robo advisory services are now part and parcel of every Wealth Management firm’s offering. These services help firms crunch the numbers and make data-driven decisions about investing. Robo-advisors provide the right kind of recommendations and give a wealth of analytics and historical data to help guide investment choices. These technologies also take care of monotonous tasks such as asset reallocation, portfolio attribution, KYC, onboarding amongst others and provide great transparency to investors. This helps Wealth Managers free up a large portion of their time and dedicate it to providing excellent customer servicing.

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5 Things To Look For In An Effective Wealth Management Software

Over the past decade, wealth management as we know it has undergone a digital transformation. Wealth Management firms, family offices are increasingly recognizing that in the digital now, the legacy systems of the past just cannot keep pace with customer demands and expectations. Clients are now looking for complete transparency on how their money is being invested, they also want to access this data at all times. They also expect their wealth managers to give their hard proof and data backing every single financial decision. It is no longer a ‘seller’s market’ and investors are asking for maximum bang for their buck, especially when they are going for professional wealth management services.

In this challenging environment, wealth management software has come to the aide of wealth managers. The firms that are embracing innovation are increasingly looking to the tech industry to build solutions that help them scale and meet customer expectations. Undergoing a digital transformation is one of the most critical business decisions that a wealth management firm will ever make in its course of business, hence it’s essential to evaluate the platforms comprehensively to every minute feature before adopting it.

We’ve developed this guide as a quick primer of what to look for when on the market for a Wealth Management platform. This checklist will help guide your search and help you zero in on exactly the kind of features and tech capabilities that your firm needs.

  1. Is it Mobile friendly with anywhere, anytime access?

This is one of the most crucial considerations for both your wealth management clients and your time-pressed advisors. The platform should have a client-facing and advisor facing app or mobile presence that allows both advisors and clients to access and control their portfolio from a mobile phone. This unfettered access can be a key variable in whether tech-savvy millennial investors choose to invest with your firm.

  1. Does it help the synergy between the front office and back office?

The system you adopt must be able to integrate with all the disparate tools your wealth management team uses in front and back-office operations. The advisor must be able to quickly source the data that he wants from the system in seconds and show the client their real-time account data. It should also allow for a full API system that allows third-party applications to function seamlessly on the platform.

  1. Does it save your advisor’s time?

The number one reason why wealth management firms are going for digital transformation is that advisors are increasingly under pressure. As a single advisor caters to 10s, the 20s or even 100 clients, every second of the advisor becomes valuable. If the advisor has to spend hours reconciling portfolio data, the investor will lose patience and the advisor will be unable to leverage their bandwidth for customer servicing. Wealth management software or platform helps advisors automate mundane tasks and carry out others efficiently such as Client Onboarding, portfolio attribution,  rebalancing, compliance, reporting, document management and more.

  1. Is the system cloud-based?

Legacy systems are cumbersome to maintain and update, it can take months of time to upgrade to the latest technology and can also incur significant costs. A cloud-based SaaS platform, on the other hand, receives regular updates and can be updated in a matter of minutes. Also, as all of the upgrades are done at the Service company end, there are no additional costs involved in hiring talent to make sure the systems are up to date, secure, and running optimally. Cloud-based systems also allow users to access the data from anywhere and with any kind of device, removing the dependence on company owner hardware.

  1. Is the user experience easy to navigate?

Often, the senior talent at Wealth Management firms may not be very tech-savvy and may prefer to work on their excels and workbooks if they find the technology difficult to adopt. Just rolling out the platform is not sufficient, the advisors must be convinced of the benefit and they must be comfortable with the interface. Otherwise, the platform becomes a liability and leads to parallel processes running within the organization. The UX of the platform must be intuitive and consumer-grade, the advisors must also receive comprehensive training and support in the adoption phase to ensure a smooth transition and avoid costly mistakes.