The Expert View: Powering client-centric growth in wealth management

The wealth industry has seen a significant shift in recent times, with clients having more options than ever for where to invest their wealth, along with higher expectations of wealth management providers, said Aarti Kulkarni, Financial Services Industry Lead at frog, part of Capgemini Invent, opening a Business Reporter breakfast briefing at the Goring Hotel in London.

 

She told attendees, all senior wealth management executives, that technology was increasingly making services more convenient for clients, potentially shaking up the industry’s old face-to-face model. What does this mean for wealth management firms and what are the key drivers and enablers to a truly client-centric organisation in the wealth management industry?

 

Target market

Client-centricity begins by determining why people choose you and who your target market is, participants said. It is easy to fall into the trap of matching what your competitors offer but that doesn’t make sense if it doesn’t meet your customers’ needs.

 

As a younger generation accumulates wealth they bring their expectations into the marketplace. They are used to fast-moving, on-demand services like Netflix and TikTok, so they expect their wealth management company to be equally accessible. In contrast, many older clients don’t want a digital relationship at all. Companies that want to stay relevant will have to continue pleasing older clients while welcoming younger ones.

 

Not everything splits by age, of course. One banking executive said that many of his customers just want their wealth manager to get on with looking after their money. They aren’t excited by banking and investment; they have other priorities.

 

Personal service

Unlike wealth managers, retail banks have never had much of a personal relationship with their customers. That might be an advantage when it comes to personalisation: almost anything a retail bank delivers is an improvement on what they had before. However, wealth managers are used to having a close relationship with clients through in-person meetings and phone calls. It isn’t easy to replicate that personal touch with digital tools.

 

Similarly, challenger banks are going beyond running a bank account and moving into managing their customers’ financial lives by collating all their accounts in one app, for example, or offering to monitor credit ratings. This is another area where wealth managers haven’t kept up, according to those at the briefing.

One reason it is difficult is that, like a lot of organisations, wealth managers are siloed. People within the business feel ownership of their clients, for example, and want to manage them in their own way. That can be difficult when connecting digital experiences.

 

Generative AI

Inevitably, those experiences will eventually involve generative artificial intelligence (AI), which almost everyone at the briefing said their company was experimenting with. So far, it shows more promise for collating reports than communicating with clients. It still needs human input, attendees said, but can gather the information an advisor needs in minutes, rather than half a day.

 

It can be a powerful assistant, then. “Everyone wants a sous chef so they can be a chef,” as one delegate said. But truly transformative use cases require connected data and a comprehensive overarching meta. Siloes can be an obstacle here too, sometimes because systems don’t talk to each other and, at other times, because staff are unwilling to surrender control of their data. Businesses are likely to get better traction and make more progress if the generative AI teams and initiatives sit within the business.

 

Kieran Smith, Senior Digital Strategist at Adobe, said problems like that had left a lot of companies stuck in the playground with generative AI. They have promising pilot projects but can’t manage to get them to the next stage.

 

Customer communication

Those at the briefing were optimistic that generative AI would at some point handle client communication but, in the meantime, many are relying on less sophisticated chatbots. They don’t offer the level of client-centricity that companies want and are mostly for customers who could have found their answer on the website’s Frequently Asked Questions.

 

In wealth management, voice calls still dominate. Clients are reassured by being able to speak to a person, with even younger clients saying they appreciate being able to get someone on the phone when necessary. This can help reinforce what one executive described as the difference between service and hospitality. The former is giving clients what they want, while the latter is about making them feel welcome. It’s hospitality that really builds relationships.

 

For now, those at the briefing felt that their clients would probably say wealth managers are not client-centric enough, but attendees did feel like they understand what needs to be done. Traditional operating models are changing, with firms finding it difficult to adopt agile development methodologies but making some progress. Change management is an important function for driving the operational shift, such as through initiatives like putting cross-functional teams together with design, product and engineering sitting together and supported by a business sponsor for better alignment of incentives.

 

Culture is crucial too. Digitisation can remove processes that involved lots of customer contact, which can have a negative effect on customer centricity. Organisations should deal with this, attendees suggested, by ensuring that a customer-first culture is embedded in the organisation, and teams should improve customer awareness so they better understand evolving customer needs.

 

Summarising the briefing, Chandramouli Venkatesan, Head of Digital Front Office Transformation Portfolio at Capgemini, gave the example of the Disney MagicBand. Designed to solve long theme park queues, the bands have become an integrated experience that makes visitors feel special throughout their visit. Wealth managers need to use technology to drive a similar shift from a service mindset to a hospitality one.

 

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To learn more, please visit: www.capgemini.com and www.adobe.com