Wealth Management: Industry Trends, New Priorities, and Major Shifts

The research looks at exactly how this type of crisis impacts financial services organisations’ priorities, and how that can harm the customer experience (CX) they offer. It also looks at autonomous finance (financial services that are driven by algorithms and can decide what actions to take for customers). 

Below, we explore:

• The shifting wealth management priorities

• What growth-minded organisations are doing that’s working

• How autonomous finance can help create value streams and opportunities

Before we get into the specifics, let’s go back to the basics (for those that may be new to the wealth management sector). 

What is a wealth manager?

This is a question we often hear so we decided to give a quick explanation to make sure we’re all on the same page.

Investopedia classifies a wealth manager is described as “A type of financial advisor who takes a broad view of available financial disciplines and services, such as financial and investment advice, legal or estate planning, accounting, and tax services, and retirement planning, to manage an affluent client's wealth for one set fee.”

Wealth management is a combination of financial planning and high-level investment strategy and support. It is more than just general or one-off advice about financial products or investments.  

Wealth management clients are generally high-net-worth individuals, and their circumstances and lifestyles are generally more suited to the holistic approach that wealth managers can offer. In global or health crises like the pandemic, it’s going to be vital to wealth management clients that they can protect and maximise wealth.

The impact of the COVID-19 pandemic on the wealth management sector

Apart from the more general financial impact of the pandemic on individuals and their financial health, other issues have affected the wealth management sector. Volatility in the financial markets and the global recession have caused shockwaves among investors. And the unpredictable nature of the pandemic is likely to have made them more cautious and less confident in investments. 

It’s left many people questioning when it’s going to end. Are we likely to see waves of the virus causing further issues? How will the global markets react going forward?

Understandably, wealth management firms had to rapidly reshuffle priorities. CX, originally the #1 priority among financial services leaders, dropped to #5. It’s fallen behind other priorities such as implementing new technology, regaining customer trust, and creating new offerings.

Despite CX becoming less urgent for many FSIs, customers’ expectations didn’t waver. They got higher. In fact, 68% of customers say COVID-19 elevated their expectations of companies' digital capabilities. However, only 23% feel that the financial services industry delivered on those expectations.

It’s clear that in the rush to stabilise operations, FSIs sacrificed customer experiences for other priorities, and customers noticed this. One in four customers reported feeling extremely concerned about their long-term financial situation. Only 27% felt the financial services industry is customer-centric, and only 27% felt that the financial services industry provided great service and support.

The financial services industry is not alone in this. But the question is, how can the wealth management sector switch its priorities once again and provide outstanding CX?

Importance of finding new value streams

One of the insights from the report is just how beneficial automating front-office services to create new value streams will be to the financial services industry. Value streams come from the Lean movement, “The core idea of Lean is to maximise customer value while minimising waste. Lean means creating more value for customers with fewer resources.” They are optimised, sequential processes that are used to create valuable solutions to end customers.  

So how do you identify a value stream? 

The principles of Lean are:

1. Identifying value

2. Mapping the value stream

3. Creating flow

4. Establishing pull

5. Seeking perfection

Once you’ve identified your existing products/services or potential new products/services, and their value to your customers, you can map the value streams to ensure they give maximum CX. 

Wealth management priorities in the wake of the pandemic

We’ve established that for wealth management firms, just like with every other FSI, closing the CX gap should be a top priority.

For instance, here are a few ways wealth management firms can optimise their clients’ investments:

• Automate savings

• Portfolio rebalancing

• Dividend reinvestment

• Tax-harvesting strategies

Autonomous finance is key to addressing the customer experience gap very successfully and they apply across the different financial sectors. Financial services leaders view autonomous finance’s top benefits to be better personalisation (60%), improved financial wellness (59%), and proactive customer service (54%).

Examples of how wealth managers can use autonomous finance to benefit their customers, based on past behaviours and preferences, are:

• Selecting the most appropriate funds for them 

• Optimising their portfolios

• Using robo-advisors in the decision-making process

The fact is that wealth management clients, usually high net individuals, expect a lot from their wealth managers anyway. Add the global crisis, and those expectations are probably even higher. They want highly personalised service, insights into their portfolios and wealth, and they want actions planned around their individual goals. Autonomous finance can do all that, and more, offering excellent wealth management service and creating the CX that your clients expect. 
 

You can find out more about how autonomous finance can help refocus the wealth management sector’s priorities, and the wider results from the research, by downloading the Salesforce Trends in Financial Services report.