The Future Direction of Private Wealth is Here. What is Holding You Back?

There’s growing acceptance that the future of the private wealth industry will involve servicing each and every client on a more personalised basis, adjusting investment portfolios not only to the firm’s investment thesis but to the preferences and constraints of clients. The days of ‘one size fit all’ in terms of private wealth investment propositions appear to be over.

An essential part of this will be technology that can personalise portfolio services with efficiency and scale. Technology that is designed with the client’s specific mandates at the centre of workflow processes, as opposed to ‘exception based’ workflows that require thought and consideration, or in other words extra time, effort, and costs.

How far in the future are we talking? Well, that depends on what is holding you back.

Let’s first take a step back and consider when might be the right time to invest in selecting and deploying such technologies within a private wealth firm, especially in an environment where we may be at the latter stages of COVID-19 lockdowns and anticipation of substantial business growth. The way I see it, your options are:

  1. Never. Easy done, however by avoiding the adoption of these technologies, firms will inherently be less efficient at monitoring and making decisions associated with personalised portfolio propositions. Ultimately this can lead to: 
    1. Slower responsiveness to clients in times of changing markets and research.
    2. Increased costs of operations, which lead to lower profitability and a possible threat to sustainability.
    3. More staff engaged in lower value activities, challenging morale and workplace attractiveness.
  2. In the Future. This is a deferral strategy, which means that in a period of growth firms will have to grapple with the conflicting priorities of servicing current clients and attracting new ones. Whilst this will almost always be the case to some degree, it is the extent to which this happens that can be critical in determining whether there is sufficient time for client growth, or not. Here lies a catch-22 where we see a lot of firms struggle. They are so busy servicing current clients (inefficiently) that they can’t find the time or focus to properly grow their business and take new clients on. The desired (if not required) growth is therefore delayed, allowing more equipped competitors to take the lead. Ultimate outcome: the firm stagnates.
  3. Or, now. You already know what I’m going to say. By investing now in a relatively quiet period firms can:
    1. Make significant improvements in their client servicing model, which:
        1. Builds client trust and loyalty, increasing the chance of referrals.
        2. Improves staff productivity.
        3. Increases overall business morale.
        4. Creates opportunity to increase fees and hence profitability (and ability to invest further in the business).
    2. Take a step back and consider with their new capabilities how to best position their proposition to address the needs of an ever-changing marketplace so that they can be more competitive and easier to deal with.
    3. Have confidence (and confidence sells!) that they can take on clients and know they can make the new client experience excellent without compromising current client service.
    4. Have an operating model that makes it more attractive to grow further through mergers or acquisitions, and certainly on better terms.

Clearly, there are considerable benefits of enhancing the business now, and the major challenge is often the perceived effort and risk to pull off a technology project to make such a difference. However, this is misguided. By working with specialists like Financial Simplicity, these projects can be achieved in days or weeks rather than months, providing a foundation for transformational opportunity and growth.

So ask yourself, what is holding you back? And by doing so consider what your competitors may be freeing themselves up from in readiness for being more competitive, agile and client focussed.