The Covid-19 pandemic has undeniably impacted client service across the globe. As various trends emerge from this new normal, one issue wealth management firms must address is technology. How are the most successful firms approaching technology and innovation? And is my firm on the right track?

The pandemic proved the necessity of serving clients digitally. In the last three months we have seen a decade’s worth of technology come to life. The flip to digitization within the wealth management industry happened quickly. Firms who are laser focused on innovation and technology report a smoother journey through the pandemic and increasingly satisfied clients.

In a recent study, Silicon Valley based financial technology consultant F2 Strategy explored how wealth management firms are faring through Covid-19. Participants in the study are decision makers from a diverse group of 70 wealth management firms, together accounting for $7 Trillion in assets.

Ultimately F2 reported tangible insights around best practices, and also some major failures, in what wealth management firms are doing – or should be doing – to provide best-in-class client experience and increased satisfaction through digitization.

Early in the pandemic, as most went under lockdown and volatility roared, nearly all wealth managers in the study reported budget cuts for tech projects. By April firms recognized the long-term impact and over 40% expected to increase their spend on automation and digitization. In early summer, as many firms returned to the office, most expected client digital engagement to increase more than 25% over the next 3 years.

Although overall resiliency of wealth managers has been higher than expected, the most successful firms had already made significant investments in technology and shifted to a culture of innovation. Unfortunately firms that continued to delay investments in tech innovations and data management got hit hard.

Bottom line – we should be investing in technology. In the wealth management industry, successful firms are spending $20-30K per year per advisor on technology. Very aggressive firms, who have made technology a cornerstone of who they are, spend up to $100K per advisor per year. This typically equates to spending around 15-20% of operating expenses on net-new technology.

Where to start? Two key areas of digital client engagement have become the norm for wealth management firms:

1. Client portals that provide access to data on the clients timeline; and
2. The automation of operations such as client onboarding and signature forms. 

To ensure you make the right investments in the right technology, concentrate your spending where it matters most to the culture and focus of your firm. Digitize what people already expect you to be good at. Match your technology to your vision, and your advisors will use it.

F2 advises, find the thing that you’re really great at and own it. What is the one thing that wins you business? Automate it. And realize it’s ok to outsource technology. Competent partners in the tech space can provide a multitude of solutions.

Most importantly, understand the value of data in relation to the ROI of your investment spend. The architecture and control of your data is the #1 predictor of success in wealth management. Firms with secure, reliable data move faster, have greater control, do more with their data, and have happier clients. Simply put, organized data makes your firm 30% faster and 30% less expensive.

A few closing thoughts…

• Wealth management firms must have a work from home policy with supporting technology. This is no longer negotiable. Your employees need this, and your clients will demand it.
   
• All clients want usable, consumable, easy technology. Smart tech is no longer just for young people. All age groups and demographics are now digitally savvy.
   
• Client experience standards for the wealth management industry are set by other industries that perform automated, fast and easy-to-use client service, such as Amazon or Uber. These so called “liquid expectations” from other industries spill over into ours, and clients expect the same kind of automated service from us.
   
• Tons of great tech is available. Zoom, Teams and WebEx all existed before Covid. Be on the lookout for wildly developing technology, such as facial recognition and auto translation.
   
• Stay ahead of the curve. The unpleasant result of underserving your clients is that within 6-9 months, they will start shopping their business to someone else.
   

The ease of doing business with you on a daily basis is your measure of success. Good experiences are those that people don’t expect or didn’t necessarily ask for, but once they have it, they are excited and delighted that they received the experience.

Bill Sullivan is the president of Family Office Exchange (FOX). He is a thought leader who understands the role that disruption and innovation will play in transforming our industry. He leads FOX in helping members to understand and plan for future transitions in the family enterprise, the family business, and the family office. Areas of Expertise: Enterprise Families, Disruption, and Innovation Read More →