Maximizing Efficiency and Cost Management in Regulatory Compliance

Wealth management is under intense regulatory scrutiny. The industry is seeing mounting efforts by regulators to improve competition and investor protection, strengthen firm’s governance and accountability, and enhance sustainability reporting and disclosures.

However, regulation can be a significant roadblock for expansion in wealth management. It puts enormous pressure on overhead costs when scaling a business across multiple geographies.

Leveraging technology is the only way to effectively manage the complexity and cost of regulation while maintaining competitive performance.

Regulatory Obligations Proliferate

Regulators continue to strengthen frameworks and requirements related to investor protection and choice, governance and accountability of advisors, and reporting and disclosures related to environmental, social and governance (ESG) investing and company sustainability efforts.

Though jurisdictions are at different stages of implementation, most regulators are focusing their attention on the increasingly digital nature of distribution, the quality of outcomes and value for money for investors, and product governance for the target market of end clients and related distribution strategies. But at the same time, regulators are increasingly promoting their jurisdictions as asset management domiciles. This widens choice for clients, especially sophisticated or semi-professional investors, and creates new opportunities for wealth managers.

Recent years have seen regulators step up accountability arrangements related to the resources, capabilities and expertise of wealth management technology firms. For example, they are implementing mandates for combating financial crime, sanctions compliance, operational and cyber resilience, and achieving diversity and inclusion targets.

There has been a whirlwind of regulation about sustainable finance, some of which is particularly complex. This encompasses a myriad of topics with limited common definitions related to the breadth and depth of disclosures. Additionally, sustainability regulation is not harmonised across jurisdictions. For example, mandatory reporting requirements for climate change in different jurisdictions are progressing along different trajectories, especially with regard to implementation timeframes and the sizes and types of companies impacted. It’s increasingly difficult and costly for wealth managers to gather the data they need regarding their investments for the purposes of their own disclosures.

Wealth Management Technology Solutions for Effective Regulatory Compliance

Staying on top of regulation, and implementing effective compliance processes, can be a significant challenge. Wealth platforms are spending more time than ever on regulatory compliance, as regulatory obligations continue to increase across all jurisdictions.

Advisors must implement effective processes that ensure adherence to regulations for anti-money laundering, know-your-customer and data privacy. This requires staying current with regulatory changes, conducting regular compliance reviews, and implementing robust data security measures.

The solution lies in implementing strong, integrated and scalable operational workflows for regulatory compliance. The workflow must be able to manage quality checks, for both clients and investments, and provide the flexibility to accommodate for changing regulatory agendas and requirements across jurisdictions.

Because regulation touches all parts of wealth management, the solution should be embedded throughout the wealth platform across front, middle and back office operations. It should be built to ensure risk monitoring and compliance management functionality, including customer suitability and investment risk analysis, customisable pre- and post- trade rules, regulatory reporting for different regimes, provision of audit trails, and client classification and risk categorisation.

As regulatory pressures continue to rise, leveraging wealth management technology and digitising workflows is the only way to ensure robust regulatory compliance while managing costs in an appropriate way.

No matter their size, wealth platforms should be implementing wealth management technology solutions to enhance regulatory compliance, improve operational efficiency, and future proof their business.

About Valuefy

Valuefy is a premier investment technology lab with cutting-edge solutions serving leading financial institutions across the globe. Its Wealth Management Solutions has enabled Wealth Managers globally by providing production-grade investment technology solutions for an uberized customer experience.

The New Wealth Management Strategy: How to Serve Evolving Investor Demand

Investor attitudes, behaviours, and expectations dramatically shifted during COVID-19 and transformed the wealth management landscape. But what are the most significant changes for wealth managers to address and how should they respond to ensure the continued success of their business?

Moving Deeper into Digital Wealth Management

Online business has become the norm since COVID-19, and wealth management clients increasingly expect digital engagement. No longer limited to younger investors in the retail market, the digital-first mindset is now commonplace, with older, wealthier investors now increasingly preferring digital engagement for their client onboarding, transaction, and advice needs.

While clients continue to expect a blend of personal and virtual contact with providers, the use of mobile apps, websites and virtual conferencing is overtaking non-digital channels, such as phone calls and in-person meetings. Mobile in particular has come to the fore with investors seeking a convenient, seamless, personalised – and ‘always-on’ – digital experience. 

As digital transformation accelerates, virtual reality may be the next frontier of digital engagement after mobiles. Firms that fully commit to creating a superior digital experience are better positioned to explore future opportunities for client engagement using virtual reality (VR) and augmented reality (AR).

The Search for Alpha

In their hunt for greater returns, investors are seeking alternative investments, such as hedge funds and private equity, and specialised products, including IPOs, tax-exempt investment, commodities, derivatives, and structured products. In addition, family offices are upping their allocations to direct investment management solutions.

While outsized returns are a focus for investors, so are investment risk mitigation and diversification. This will remain a key objective with persistent geopolitical tensions, continued concerns about climate change and supply chain resilience, ongoing inflationary pressure, growing uncertainty about the efficacy and viability of accommodative monetary policy, and a looming global recession.

Doing Well, and Doing Good

Environmental, Social and Governance (ESG) investing remains firmly on the radar for clients and their advisors. This reflects rising social, business, and investor awareness and activism, a trend that was accelerated by COVID-19.

Investors increasingly consider ESG factors alongside traditional financial metrics to better understand the sustainability risks of their investments. Depending on how closely investors want to align their financial objectives with their values, adopting ESG investing can range from mitigating ESG risks by employing exclusionary frameworks to actively investing in the potential opportunities that ESG can offer. Investors expect providers to be knowledgeable about ESG, incorporate it into their products, provide transparency and metrics to track its performance and embed it in their own wealth management strategy and operations as well.

More with Less

In evaluating their wealth management relationships, clients expect providers to prioritise integrity and ethics and to act in their best interests. This trend intensified during COVID-19 which truly crystallised the importance of enduring, valuable personal relationships with advisors. It’s also being accelerated by regulatory shifts that are driving greater competition and investor protection.

While providers are grappling with the growing expectations for quality in wealth management, they are also facing significant challenges due to price compression. A perfect storm of market and regulatory developments continues to squeeze margins. These developments include the market dislocations of the COVID-19 period – that saw heightened trading and competitive pricing from new entrants – as well as increased account aggregation, greater passive investment, the decline of fee minimums, and continued regulatory efforts to implement fiduciary rules.

With sustained pricing pressure and increasingly demanding clients, wealth managers today are tasked with delivering more with less.

The Future Wealth Manager

As wealth managers confront these new realities, they must assess how well they cater to shifting investor attitudes, behaviours, and expectations. Rising global wealth among affluent individuals and families ensures the sector as a whole is well-positioned for growth. But the success of individual firms depends on how well they serve the changing needs of investors. The most successful providers are reshaping their strategy and operations accordingly and leveraging advanced technology as a key enabler of this transformation. 

By implementing advanced technology, firms can deliver the smooth and intuitive digital wealth management experience that clients demand, provide a wide range of increasingly sophisticated products and services, enhance the efficiency and productivity of their operations, strengthen compliance, integrity and ethics across their organisation, and ultimately deliver better investment ideas with higher returns. 

For example, best-in-class providers are investing in enhanced data management to aggregate and standardise data. This is often across multiple data sets related to custodians, brokers, currencies, and products. They are enhancing the monitoring of portfolio insights for complex portfolios, creating holistic views of assets across these portfolios, and implementing advanced attribution and visualisation capabilities. Increasingly, multiple tasks related to investment policy statements, mandates, model portfolios, and portfolio rebalancing are being automated. Advanced technology is also being leveraged to scale and expand, using open APIs for upward and downward integrations. 

Given a volatile, ambiguous, and cost-constrained business environment, technology platforms can be deployed on the cloud to ensure cost-effectiveness and security, with compliance, built-in for multiple jurisdictions.

This technology-backed, data-driven approach drives differentiation, performance, and success in today’s market. It enables firms to quickly and accurately generate analytics for their key client and stakeholder audiences – including investors, consultants, internal teams, and regulators. Crucially, it delivers improved insights for decision-making to professionals across investment, risk, and relationship management functions. This enhances investment and risk outcomes for clients and competitive advantage and business performance for wealth managers.

Rather than just weathering the storm of change in the industry, ambitious wealth managers can harness it to build a better approach for the future. By leveraging advanced technology, they can deliver better digital client experience, greater operational efficiency and productivity, improved investment decision-making, and superior investment performance.

About Valuefy:

Valuefy is a premier investment technology lab with cutting-edge solutions serving leading financial institutions across the globe. Its Wealth Management Solutions has enabled Wealth Managers globally by providing production-grade investment technology for an uberized customer experience.

Reach out to us today and get a solution that best suits your needs.

The Data Management Advantage for Wealth Managers

Data management is under the spotlight for wealth managers, as clients expect increasingly personalised, digital, and data-driven services. Advisors who master data management can drive value right across their business and achieve a competitive advantage over their rivals. But what are the key challenges in data management and how can wealth managers excel in this area?

Data Management is a Journey in Wealth Management

Wealth management lags behind other sectors, both within financial services and beyond, in its progress along the data management journey.

The journey normally begins when an advisor recognises the essential role of data management in digitising operations and generating insights for organisational and investment decision-making. So the business embarks on a process of improving the value, fidelity, and timeliness of its data.

The process typically progresses from data aggregation and consolidation – where advisors need to connect to data sources, custodians, and other solution providers – to analytics and insights, where they can deliver powerful reporting and investment performance analytics using their data. It culminates when data is fully embedded in business processes and the entire business model is predicated on analytical models.

Challenges Along the Wealth Management Way

Progress along the data management journey can be costly and slow for wealth managers, EAMs, and family offices alike, if not managed correctly. Data used in the investment management solutions must be accurate, complete, and consistent in order to make informed decisions. But complex and fragmented data often straddle a wide range of internal and external sources and span different formats or systems. This can make it difficult to ensure data quality and integrate data into a single, comprehensive view.

Additionally, wealth managers must implement robust data security measures, such as encryption, firewalls, and data backup systems, to protect against cyber-attacks and data breaches and comply with regulations. Data management policies and procedures must be in place to govern who has access to data, how it is stored and used, and how it is protected against theft or misuse. This is essential for maintaining trust and accountability in investment management solutions and ensuring that data is used in an ethical and responsible manner.

Taking the Right Steps

Typically, wealth managers will connect to banks to perform the extract, transform and load (ETL) data integration process – either by connecting directly to the custodian or doing so via a data aggregator. But they need to deploy the right technology and tools to be effective.

At the extract stage, data is gathered from a variety of sources, including internal databases, external providers and client information. This is achieved by using data extraction tools such as APIs or database queries.

Extracted data is then cleaned, formatted, and transformed so it’s consistent and usable for investment analysis and portfolio management. This may involve removing duplicates, dealing with missing or incorrect values, and converting data into a common format. Data transformation tools, including scripting languages, data quality tools, and data mapping tools, can be deployed to accomplish this.

The transformed data is then loaded into a central repository, such as a data warehouse or data lake, for easy access and investment analysis. This part of the process can be managed using data-loading tools like database management systems, cloud-based storage solutions, and data integration platforms.

The end goal is to empower wealth managers to make critical investment and business decisions based on data. It also enables them to reduce time spent on manual tasks, increase client-facing time and improve the overall client experience. In addition, robust data management can help advisors streamline their KYC process, ensure smooth onboarding, and deploy advanced CRM and workplace collaboration tools.

Differentiation through Data Management

Managing data as an asset is now a crucial aspect of operating strategy for advisors. It enables them to drive global expansion, improve marketing and sales enablement, offer an exceptional digital experience to clients and leverage high-quality data for better investment decision-making. Faced with growing compliance mandates, advisors are also actively seeking ways to improve data transparency for client and regulatory reporting. 

With the right technology and tools for data management, advisors can boost their business performance and competitive advantage in the market and deliver enhanced digital services and superior investment outcomes for clients.

About Valuefy:

Valuefy is a premier investment technology lab with cutting-edge solutions serving leading financial institutions across the globe. Its Wealth Management Solutions has enabled Wealth Managers globally by providing production-grade investment technology for an uberized customer experience.

Simplifying Portfolio Performance Analytics with Investment Management Solutions

Portfolio analytics is a key component in investment management. It helps managers analyze returns and investment risk for their clients and helps them make informed decisions about their investments. But analyzing portfolios is no small task. It involves a lot of processes like attribution, performance benchmarking, risk management, portfolio slice and dice, and more.

To make their job easier, these investment managers need intelligent and reliable technology solutions that not only take the burden off their shoulders but also get the portfolio analytics done faster. These solutions help reduce human error by automating the whole process of analysis and leveraging the ability of artificial intelligence to find in-depth insights for more informed recommendations.

Wealth in a Box is one such Investment Management Software. It is an agile modern architecture which brings together front, middle and back-office wealth technology solutions to reduce costs and increase efficiency of wealth managers.

Designed for the ease of managers and their clients, Wealth in a Box makes portfolio analytics more accessible and comprehensible.

Below are a few other ways Wealth in a Box simplifies portfolio analytics:

Simplified Data Results

It analyzes complex data, both real-time and historical, and presents it to the clients on their user dashboards with enriched visualization and simplified attraction. This makes it easier for investment managers to inform clients about the possible investment risks and returns.

Saves Time

It takes only seconds to analyze data and present recommendations. It takes up to weeks for a human to do that because of the sheer amount of work that it is. It saves time and helps capitalize on the opportunities that open in the market.


With its goal-based approach to the advisory, all recommendations made by Wealth in a Box are customized for the goals set by the clients. Since every individual or entity has their own set of goals to achieve, no two clients have the same recommendations. It is programmed this way to provide highly accurate and relevant recommendations to the clients and support their investment goals.


Wealth in a Box automates complex research, investment planning, and portfolio monitoring to enable investment managers, fund managers, performance analysts, risk analysts, and compliance managers to provide an uberized user experience to their clients. It has different formats of the portfolio for Analysts, Fund Managers, and CXOs with different approaches for each individual.

Always Ready

The Wealth in a Box system is always ready, which helps avoid delays and dependencies.


Flexibility helps Wealth in a Box support different models for asset classes and styles, enabling it to easily handle multi-currency and multi-asset portfolios.

If you are an investment manager looking for a technology solution, you can find out more about Wealth in a Box here: Software for wealth managers.

About Valuefy:

Valuefy is a premier investment technology lab with cutting-edge solutions serving the leading financial institutions across the globe. Its Wealth Management Solutions has enabled Wealth Managers globally by providing production-grade investment technology for an uberized customer experience. Reach out to us today and get a solution that best suits your needs.

Financial Well-Being – The 2023 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 by having a game plan in place and by automating our investments.

Here’s your Financial Fitness plan for 2023, follow it rigorously and you’ll be in 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, and goal-based investments can help you be more fiscally responsible. You can use an expense manager such as Walnut or financial planning software for advisors to 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 re-evaluate 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. Especially when there is an indication of a possible worldwide recession in 2023, according to the World Bank report. 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 2023 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 will 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 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 Wealth In A Box can help make the journey toward 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 cutting-edge Artificial Intelligence and Robo-advisory to your 2023 financial strategy.

For more details ask your Wealth Management firm about Wealth In A Box

Step 7: Plan Your Tax

Planning the tax in advance will avoid the hassle we make at the last moment. It will help us file the tax returns before the deadline, without letting us pay higher tax liabilities due to lack of time. Prepare all your documents, and consult a tax professional (if need be) to know all the tax benefits you are eligible for.

About Valuefy:

Valuefy is a premier investment technology lab with cutting-edge solutions serving the leading financial institutions across the globe. It has been enabling Wealth Managers globally by providing production-grade investment technology for an uberized customer experience. Reach out to us!

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 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. Private wealth management software 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.


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, customers 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. Private Wealth Management Software that allows 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 managers 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.

About Valuefy:

Valuefy is a premier investment technology lab with cutting-edge solutions serving the leading financial institutions across the globe. Its Private Wealth Management Software has been enabling Wealth Managers globally by providing productiongrade investment technology for an uberized customer experience. Reach out to us!

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.

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

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How analytics makes wealth management unbiased?

Investment managers of today are out chasing the alpha. They are expected now, more than ever, to justify their management fees by giving a superior return on investment. This is especially the case when there are so many free and cheap passive investment avenues out there for investors to invest in. Only a market-beating return will satisfy customers of today and investors are looking at analytics aided improvements to achieve these performance improvements especially through the debiasing of investments.

Through advanced analytics, investment managers are able to rely less on instinct and more on data, thereby reducing the chances of making sub-optimal trading decisions. The ‘debiasing’ effect that analytics is playing can help bring about a lot of positive change, in the highly competitive and sometimes opaque industry.

Analytics increasingly becomes popular as wealth managers are recognizing the risk of relying purely on instinct for their decision making. It has come to the fore that human beings are incapable of being purely rational. Behavioral economics has proved that biases and irrational considerations based on our lived experience affect all of our decisions including those such as investments. Hence it is essential for us to rely on ‘Artificial intelligence’ that is sophisticated and data-driven as a way to counteract bias.

How does bias affect decision making?

In a study conducted by McKinsey, it was observed that traders were overcommitted to the positions they held and tended to hold on to them even when contrary evidence was presented. This was due to endowment effects and confirmation bias. The ‘endowment effect’ referred to the cases in which owners of a certain asset held on to it, despite any change in conditions and ‘confirmation bias’ refers to how our stereotypes lead us to discount beliefs that go contrary to our own.

How can Analytics help?

Using a digitized wealth management platform with Robo advisory and actionable analytics, that uses pure data to drive conclusions, can help temper the bias in investment management. Machine learning algorithms that learn from swathes of historical data and investment patterns help decision-makers get better and more scientific. The consistent biases and the emotions that made investment managers hold on to bad investments and stay away from certain industries due to ‘lived experiences’ could be neutralized by the power of Analytics and Robo/AI based investing.

What gives investment managers using analytics an edge?

When investment managers are using a digitized wealth management platform, they benefit from the huge data sets and patterns that the AI has been able to analyze over time. Big data is compiled about the investment performances and patterns of millions of users over millions of trades. This factors into the recommendations that the AI-driven Robo advisor makes.

It also factors in a number of variables such as the investment horizon, risk tolerance, preferred investment types and more to help arrive at the perfect investment strategy for you. Biases such as overconfidence, loss aversion, endowment effect are all erased as the AI relies purely on performance data collected from thousands of variables.

Looking ahead

Analytics will definitely impact the decision making of wealth managers for the better. This will help wealth managers make more profitable decisions for their clients and increase the value of their portfolios. A study conducted by Mckinsey revealed that debiasing using analytics helped fund managers gain potential improvements between 100 and 300 basis points.

Wealth management firms that leverage this cutting-edge technology will consistently outperform others in the market. They will create a lot of value for their investors and will fare much better than traditional firms without the analytics edge. It has become evident that only the firms that are willing to change with the times and adopt technology will capture the major share of the market, especially the tech-savvy and millennial one.

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