Private wealth has been slow to embrace the digital transformation that has evolved across many other parts of the financial services industry. This inactivity is now putting pressure on financial advisors to either cross the digital chasm ahead or risk disintermediation. The cost of doing business has also risen tremendously while technology has enabled new entrants, such as robo-advisors and social investment platforms, that are not subject to the same cost constraints in the competition for client assets.

The ever-increasing compliance burden has also forced a re-direction of important IT investments, making risk and compliance the #1 investment priority for financial advisors around the globe. In Europe, MiFID 2 is still evolving and the new fiduciary rule from the Department of Labor is taking the United States down a similar path. In addition, Fatca and its OECD equivalent, the Common Reporting Standard, have ushered in a new era for tax transparency. At a critical time like this, financial advisors are becoming bogged down with administrative tasks and training, rather than spending time with their clients.

Today's clients expect targeted, relevant and timely interactions with their advisors, depending on what’s happening in the market and their individual preferences and interests. Many industry leaders see the solution in a so-called "high-tech, high-touch” approach that combines digital advantages with tailored service and support to give clients greater choice and control in the way they interact with their advisor. One thing is clear: the advisor will continue to play a critical role in the relationship between the client and an institution. And this involves a lot more than content, since digital transformation is important for scale, engagement, and consistency.

The challenge is to integrate the new digital front-end into the backbone of an organization. However, many of the current systems leveraged by advisors were never meant to be connected to any kind of client view. Hence, a sad but common reality for advisors is having to deal with a host of tedious and disjointed manual processes due to siloed systems. On top of that, compliance teams are looking closely at client suitability and compliance with KYC requirements, as well as ensuring that every client interaction is tracked in order to establish a seamless audit trail.

Competitive firms are beginning to turn to CRM solutions to address the challenge at hand. Some of these solutions can provide a full 360-degree view of both the client and the household. Firms can also begin to manage regulatory compliance with confidence and can use analytics capabilities to surface key insights on engagement opportunities, financial goals, interactions and more.

Advisors are finding that a new breed of CRM solutions are bridging the digital gap and ultimately driving productivity in three key ways:

1. If they are able to interpret client data faster and within context to broader household and relationship networks, advisors will not only be able to increase the number and frequency of interactions with clients, but also their relevance.

2. Advisors can deepen and grow their book of business by spending less time analyzing each portfolio individually and more time gathering holistic insights across all accounts. With actionable insights, advisors can aim to have a deeper conversation with the client, based on market activity or the client's core interests. Given the myriad of products and actions at their disposal, augmenting advisors with these kind of data-driven insights is critical.

3. With compliance and administrative tasks taking up much of the advisor's time, a system that consistently tracks, monitors, and helps manage compliance while automating data entry, proposal documentation, and interactions can help advisors spend more time strengthening their client relationships and less time working on administrative tasks.

Looking ahead, private wealth is likely to see growth in the use of CRM solutions to augment an advisor’s day-to-day job and ignite a broader digital transformation. The combination of technology and data is essential in today’s competitive landscape. Having timely and relevant information, with actionable insights into what clients want and are eligible for, will be the table stakes in the tough competition for private wealth.

Hear more from Thomas Zink, Associate Research Director for IDC Financial Insights, in the webinar Actionable Insights at Advisors’ Fingertips with Salesforce Financial Services Cloud.

About the Author

  Thomas Zink is Associate Research Director for IDC Financial Insights and covers the digital transformation of the European banking industry with a particular focus on payments, wealth     management and retail banking omnichannel strategies. Thomas’ core research coverage includes recent research reports on a variety of topics such as proximity and remote payments,   xCommerce, immediate payments, digital channels, blockchain, cybersecurity, business process outsourcing and wealth front- and middle office systems.