The traditional adviser and client-servicing model has served the wealth management industry well for decades. But that tried-and-tested approach to client interactions – largely face-to-face and one-size-fits-all – is now starting to evolve into something very different.
What’s driving this evolution? The initial impetus came from technology, with the advent of fintech-developed ‘robo-adviser’ tools aimed at reaching underserved affluent segments, and was accelerated by the Covid-19 pandemic, as advisers adopted remote digital interactions to stay connected with clients across all segments.
But the drivers now go far beyond technology. The client base is shifting too, as intergenerational wealth transfers heighten the flow of money to a younger and increasingly female population of investors, with different expectations and investment preferences. These include environmental, social and governance (ESG) investments, private assets, digital assets, and moving beyond financial advice into areas such as health.
Mind the gap
For today’s wealth management firms, all of this brings major implications around skills and culture. The skills challenge? To find new talent that can replace retiring advisers, involving people well-versed both in existing wealth management skills and also in emerging areas like sustainable investment, lifestyle, intergenerational wealth transfer and impact investing.
There is no doubt that younger advisers can be brought in to fill the gap. But many of them want to work at firms that have dynamic cultures, with values and a corporate purpose that resonate with them. If the established wealth firms do not offer these attributes, then their potential new recruits could simply opt to become independent financial advisers.
What is more, time is short. The current adviser workforce is greying, with many approaching retirement age. As a recent Accenture survey of European wealth managers highlights, up to 100,000 of Europe’s 700,000 financial advisers and intermediaries could soon retire. Meanwhile, intensifying industry competition is making it ever harder to both retain and attract talent.
The effect? We’re entering an era where, to achieve future growth and value, wealth managers must reinvent their client and adviser experience.
Living on the front line
Fortunately, wealth firms can get ahead of this through careful reinvention at multiple levels of their business. At the C-level, demonstrating the firm’s responsible values and positive culture become more important. At the front line, the adviser model needs to evolve depending on segments being served, with changes to advisers’ behaviours, skills and capabilities.
These changes will include increasing the use of automation – leveraging technology to enable all advisers, both younger and more established, to gain client insights to help curate relevant content and communities to meet changing client needs. Hybrid adviser and technology-enabled servicing models are now extending up from the affluent segment to HNW and UNHW areas. As wealth managers approach this reinvention, they should bear some design principles in mind, even though these are not necessarily easy to follow.
Embedding a purpose-driven culture underpinned by a more diverse adviser workforce is key to these changes
Embedding a purpose-driven culture underpinned by a more diverse adviser workforce is key to these changes. Now is the time to focus on bringing in more women, minority groups and younger demographics into the industry
Wealth firms must also adopt new approaches to adviser reskilling or upskilling. This might include setting up in-house wealth academies providing a mix of e-learning, in-person classroom and on-the-job training to accelerate knowledge transfer to newly recruited advisers.
It is important to deploy the right technology and tools, including data-driven wealth insights engines and dashboards, to free up advisers’ time from manual tasks, increasing their client-facing time and improving the overall client experience. Other opportunities include streamlined KYC, enhanced cyber security, smoother onboarding, and advanced CRM and workplace collaboration tools. These tools use data and the cloud for faster, more personalised and secure client responses.
And crucially, now is the time to explore new frontiers by using the metaverse to onboard advisers: Bank of America employees can train in virtual reality and we at Accenture now use the Metaverse to onboard our own recruits.
We’re only human after all
The reinvention I’m proposing raises many challenges, including around retaining existing advisers and recruiting new ones, and providing them with a relevant blend of high-tech, high-touch client experience and content curating tools to drive more engagement while growing productivity. But these can be addressed with the right blend of human skills and technology.
Early movers are pursuing reinvention through a combination of organic investments, acquisitions, and ecosystem collaborations to accelerate additional capability building.
But whatever the ultimate ambition, a structured and sequenced approach is key. This would typically start with shaping the right mix of priorities, then identifying the key capabilities and right mix of technology enablers, all supported by a broader value case covering both financial and non-financial metrics. Also useful is a ‘stepping-stone’ roadmap that allows for starting small and scaling fast, perhaps using selected advisers and clients to test and refine early use cases. Throughout, progress can be accelerated through partnerships and ecosystems.
Through this approach, firms can gain experience in how the new adviser models create value, with automation and technology not competing with advisers, but providing opportunities for shared success, to the benefit of advisers, clients and firms alike. And the time to start the reinvention? Today. The starting-gun has fired – and the race is on.
Ian Woodhouse is wealth management transformation lead for Accenture in Europe.