2. 2
5
1. Introduction
6
2. Generational attitudes
7
3. Improving the client experience
9
4. Improving the advisor experience
11
5. Robo-advice
12
6. Last words
Contents
4
Executive summary
3
About this paper
3. 3
About this paper
This paper is a second instalment in our series that looks at how wealth management is becoming
increasingly digitalised. It is partly based on a webinar as well as a panel discussion from CISI
Fintech Forum with contributions from the experts listed below.
Senior Content Editor - FT Live; Contributing Editor -
The Banker, FT Group Deputy Chairman; FinTech Professional Forum;
Chartered Institute for Securities and Investment (CISI)
Michael Imeson MCSI
Webinar & CISI forum moderator
First Vice President for Corporate
Innovation and Analytics in the
CEE region, UNICredit
David Derenik
Man GLG’s Chief
Operating Officer
Carol Ward
Business Solution
Manager at Comarch
Anna Sacha
Business Consultant
at Comarch
Dominik Łyżwa
Head of Digital, Design
and Experience, Coutts
Jonathan Brierley
Chief Operating Officer
of LGT Vestra
William Habberfield
4. 4
Executive summary
As the number of wealthy people around the world increases, wealth management
as an industry is being digitally transformed to ensure their clients’ needs are met,
whatever their age and other characteristics.
Mobile devices are becoming a more important delivery channel, but the right
balance has to be struck between the latest methods of communication and
the traditional. The personal touch – face-to-face meetings and telephone calls
between clients and advisers – remains the bedrock of advice and relationship
management. While it is possible to make assumptions about different
generations, care has to be taken not to stereotype everyone because every
client is different.
Digital transformation is improving the client experience in many ways –
through chatbots, gamification, AI and other innovations – but the technology always
has to tie-in with how the client interacts personally with their adviser.
Digital transformation is also improving the advisor experience in areas such
as prospect management, customer due diligence and portfolio modelling.
Some advisers can be reluctant to adapt, but there are ways of helping them
see the advantages.
Robo-advice, or automated advice as many prefer to call it, has made inroads into
the wealth management arena in recent years, but its rapid rise in popularity has
tailed off. One reason is the high cost of client acquisition; another is that it only has
limited appeal at the middle to upper end of the market.
Some important last words to remember: embrace digitalisation; do not delay in
adopting it; explore novel ideas that can improve client loyalty; keep an eye on what
competitors are doing; and find the right technology partner.
5. 5
COVID-19 is likely to change fundamentally
the ways people interact. Until now, the
wealth management industry has treated
digitalisation as an add-on that will give them
market advantage. But almost overnight,
digital channels have become the most
important way, sometimes the only way, of
communicating with clients. Gartner analysts
predict that this rapid movement to digital
platforms will mitigate the effects of the
pandemic and improve operations in the
longer term.
Even before the aforementioned develop-
ments, wealth management as an industry
was becoming more technology oriented,
with digital tools being extensively deployed
to improve the client/advisor relationship.
High net-worth individuals (HNWIs) use
digital channels to run many aspects of their
lives and are doing the same to manage
their wealth. This is true for HNWIs across
all generations, not just Millennials as is
Introduction
Personal wealth has continued to increase around the world in recent years – the rich have
been getting richer, and there are more of them. Aggregate global wealth rose 2.6% to $361
trillion in the 12 months to mid-2019, according to Credit Suisse’s Global Wealth Report 2019.
Another 1.1 million millionaires were created in that period: an additional 675,000 in the US,
and an extra 150,00 each in China and Japan. The COVID-19 pandemic has put a brake on this
growth, but once the crisis is over the upward trend in wealth creation should be restored.
often mistakenly believed. Most clients are
taking their wealth management experience
online across multiple devices. Their
advisers therefore need to be more digitally
enabled and better connected than ever
before. More interactions are taking place
remotely, especially through smart phone
and tablet apps. A well-trained, willing and
technologically-enabled advisor workforce
that knows how to get the best out of mobile
channels is essential for the provision of high-
quality client service.
Around the world, in emerging as well as in
established markets, there is a race between
firms to develop their mobile services and
provide a modern, seamless client experience.
Most HNWIs, especially the ultra-rich, still want
to meet their advisers face-to-face and talk to
them on the phone… but they also enjoy the
additional flexibility, speed and convenience
that mobile apps offer.
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
1
6. 6
Generational
attitudes
2
Millennials – people born in the 80s and 90s –
are taking a bigger share of the wealth
management market as they build successful
corporate careers or businesses. Even
so, the older ge-
nerations – Gene-
ration X, Baby
Boomers and the
Silent Generation –
collectively still hold
most of the wealth.
There is a widely
held belief that
Millennials are more technologically profi-
cient than these other generational groups.
It is possible, therefore, that if wealth mana-
gers focus too much on digital channels and
reduce the personal touch, they could alienate
their older clients. Wealth managers must
therefore strike the right balance to ensure
the needs of clients of all ages are met.
Yet it important not to stereotype individuals
or the demographic groups to which they
belong, because there is plenty of evidence
to suggest that technology recognises no
boundaries. The private banking arm of
UniCredit, Italy’s biggest bank, conducted
a survey of nearly 700 wealthy clients in
six central and eastern European (CEE)
countries to get a better understanding
of their readiness for digital channels and
automated, or “robo”, advice. “We asked
various types of clients about their preferences
and willingness to invest through the digital
channel,” explains David Derenik, who is
now the bank’s First Vice President for
Corporate Innovation and Analytics in the
CEE region but at the time of the survey
held a similar role in the CEE Private
Banking division.
“We surveyed youn-
ger clients and older
clients, those who
we thought were
more technology
oriented and those
who were not, and
those with a huge part of their portfolio in
investments and those who were sitting
mostly on cash. Surprisingly we found that
older clients in all CEE countries were more
keen to use digital channels to steer their
investments than the younger ones.”
On further investigation, UniCredit discovered
that older clients were more likely to be
“wealth preservers” who had sold their
businesses, or retired from a prestigious job,
and therefore had more time on their hands.
In turn, this meant they were more willing
to monitor and optimise their portfolios,
and they found it more convenient to
do this using their laptops, tablets or mobiles
to comple-ment discussions with their
relationship managers. “One could assume
that older clients are less digital-savvy, but
it’s not true. For many of them, using
new technologies is the way to keep
frequent contact with grandchildren”,
says David.
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
Surprisingly we found that older
clients in all CEE countries were
more keen to use digital channels
to steer their investments than
the younger ones.
David Derenik, UniCredit
7. 7
Improving
the client
experience
3
The technological tools that wealth mana-
gement companies are experimenting with
to improve their clients’ digital channel expe-
rience include natural language processing,
voice assistants, chatbots, gamification,
predictive data analytics, artificial intelli-
gence (AI) and, in some cases, augmented and
virtual reality. Some companies are already
using these tools,
while others have
partiallyimplemen-
ted or are still deve-
loping them. A
few have actually
shown no interest
in such technologies, which is surprising
considering the importance of fintech
throughout the financial sector.
Dominik Łyżwa, a Business Consultant at
Comarch, says some innovations work and
some do not. “Taking a positive view, I believe
that AI is one of the technologies that has great
potential,” he says. “Gamification, as a way of
generating and maintaining loyalty, also shows
great promise.”
Gamification is the use of computer game
theory, technology and practices in the
marketing of consumer services to generate
higher levels of customer engagement,
satisfaction and retention. Investing and
keeping track of one’s portfolio can be a
chore, but if gamification techniques were
used to liven up the process, with mini-
rewards for the investor when he or she
makes a good decision, it would make a dull
process more interesting, even fun. Additional
incentives could be added to increase the in-
vestor’s loyalty to the wealth manager.
“Gamification is not
new, says Dominik.
“We’ve seen it work
in other industries
but it’s not present in
wealthmanagement.
If it were used in this sector I think it could
strengthen the bond between the brand and
the client.”
Chatbots have been around for some time
and have proved themselves useful for firms
in many industries as a computerised means
of communicating with customers, either
by textual or audio methods, thus freeing
up humans for more complex queries and
functions. They have their drawbacks, but
they can provide smooth and efficient
communications. Older people are gradually
getting used to them. They are especially
useful for client questionnaires. Answering
questions through a chatbot can be easier
than completing a lengthy form.
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
Gamification,asawayofgenerating
and maintaining loyalty, also shows
great promise.
Dominik Łyżwa, Comarch
8. 8
Wealth managers and private banks need
to be aware that although the main compe-
tition in the digital arena currently comes
from their peer group, and to some extent
from fintech start-up firms, in the future they
could be up against the Amazons, Apples
and Googles of the world. These and other
“big tech” compa-
nies already provide
world-class digital
experiences for their
customers in their
core product areas,
and in recent years
they have branched
out into payments
and other financial services. It may only be
a matter of time before they start to make
inroads into wealth management.
This is a point echoed by Jonathan Brierley,
Head of Digital, Design and Experience, Coutts,
part of the wealth management division of
the RBS Group. “When we think about the
digital experience we think about it in the
context of the broader market place, not just
wealth management – that’s critical” he says.
Although digital is
important, “a big part of
the value-add in wealth
management is the
relationship with the
adviser”, which means
that whatever Coutts
does with technology
it has to tie in closely
with how the adviser interacts personally
with the client, through telephone calls and
face-to-face meetings.
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
When we think about the digital
experience we think about it
in the context of the broader
market place, not just wealth
management – that’s critical.
Jonathan Brierley, Coutts
9. 9
Improving
the advisor
experience
4
Wealth management companies are also
using technology to make operational
processes easier and faster for advisers:
from prospect management, customer due
diligence and account opening; to portfolio
building and asset allocation; to order
management and reporting – technology is
improving the advisor experience.
Most advisers are digitally enabled in some
way. They may not always be fully conversant
with the technology, so training may be
needed. User-friendly interfaces are essential,
with useful lessons learnt from consumer
technology.
Chatbots are also a
good example. “They
help clients, but they
also help advisers
by covering simple
tasks and allowing
advisers to focus
on more complex
things,” says Dominik
from Comarch. “Artificial intelligence also has
a role in helping advisers propose products
or generate reports.”
No matter how much advisers may appreciate
usingdigitalchannels,theycannotrelyonthem
for the entire client relationship. Telephone
conversations and physical meetings still
need to take place. But even in a face-to-face
meeting – in the client’s office, in a restaurant,
or in the home – digital has a role to play. Pull-
ing out an iPad in any of those situations can
make a big difference for the advisor. For
advisor and client it is a far more user-friendly
and less formal alternative to paper documents
or a laptop when discussing investment
portfolios and potential investment decisions.
Anna Sacha, a Business Solution Manager
at Comarch, says that taking an iPad to
meetings and interacting with customers on
the spot is a powerful
demonstration of the
value of digitalisation.
“Advisers make full
use of the mobile
channel in so many
other ways, such as
sending a secure
message to a client
about an investment
opportunity, or setting
up a meeting,” she says. “In the end, though, it’s
all about the customer experience. Irrespective
of how well an advisor is equipped with the
tools and the training, the focus has to be on
how much the customer will benefit from the
digital process.”
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
(...) it’s all about the customer
experience. Irrespective of how
well an advisor is equipped with
the tools and the training, the
focus has to be on how much
the customer will benefit from
the digital process.
Anna Sacha, Comarch
10. 10
Some advisers are slow to adopt digital tools.
There are ways of sympathetically dealing
with such situations. “We
speak to those who are
resistant to change to
understand why,” says
William Habberfield, Chief
Operating Officer of LGT
Vestra, the UK-based
wealth manager owned by
the executive partners of LGT Vestra and LGT,
the private bank and asset manager wholly
owned by the Princely House of Liechtenstein.
“For example, we ask them about the on-
line services they use for shopping, travel,
entertainment and other purposes. They talk
about those. We then
ask them why, if they’re
happy using those digital
channels at home, they
don’t apply the same logic
to the use of digital in their
relationship management
role at work? They can
usually see our point. We then address
any specific concerns they raise and lead
them through the transition. It’s very much
a two-way process”.
Parallels with institutional
asset management
Many asset management and fund mana-
gement firms that primarily serve financial
institutions and large companies also
have wealth management divisions. Man
GLG, the discretionary fund manager
which is part of the Man Group, is one
such firm – 40% of Man GLG’s clients are
retail, though they are served via wealth
management companies not directly. “We
keep a close eye on how wealth managers
interact with their clients,” says Carol Ward,
Man GLG’s Chief Operating Officer. “As an asset
manager it’s important we understand the
trends taking place in wealth management.”
There are parallels between digitalisation in
asset management and digitalisation in wealth
management, in terms of the client and advisor
experience. The role of the portfolio manager
in asset management is similar to the role of
advisers in wealth management. Both are
seeking to automate away some of the lower
value and more manual aspects of their work
– such as client on-boarding, or using data
analytics to optimise portfolios – so they can
free up time to focus on higher value tasks.
There is a lot of hyperbole about what digi-
talisation and technological innovation can
achieve so many asset managers are reluctant
to be first-movers; on the other hand, they do
not want to be laggards either, so they must
closely track developments and act quickly
so they do not fall too far behind what the
competition may be doing.
We speak to those who
are resistant to change
to understand why.
William Habberfield,
LGT Vestra
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
11. 11
Robo-advice
5
Automated, or “robo”, advice has made inroads
into the wealth management market, but not
as comprehensively as first predicted by some
industry experts. Even so, robo-advisers run
by independent fintech firms should still be
regarded as potentially serious competition by
traditional wealth managers, who may even
learn a trick or two from them.
“Our robo-advisory solution was inspired by
these independent robo-advisers,” says David
from UniCredit. “I like the level of simplicity
it creates for users. We try to keep the digital
journey for clients simple.” Robo-advisers run
by fintech firms are focused on plain money
market products, whereas those operated by
private banks and wealth managers can offer
structured, more complex products – which is
a challenge if simplicity is a requirement.
Independent robo-advisers have not thrived as
well as expected for a number of reasons. One
reason is the high cost of client acquisition.
Robo-advisers new to the market have to
spend a lot of time, effort and money to attract
investors, a task made more difficult because
they do not have the long track record that
well-established wealth managers have.
Another factor holding them back is that robo-
advice really only appeals to the mass affluent,
not the middle and upper ends of the market.
Even well-established private banks and
wealth management firms often have to work
hard to convince clients to use robo-advice.
They first have to educate their clients about
investment management – and sometimes
even onboard their clients at the branch for
regular portfolio-based services – before they
introduce them to their robo-advisory services.
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
12. 12
Last words
6
So what conclusions can we draw? We can
safely assert that wealth management will
remain a high-touch personal service, but
there is no denying it will become increasingly
high-tech too. Irrespective of age, most clients
are embracing digital channels. The challenge
for wealth managers is to tailor their products
and capabilities to the different personalities
and behaviours of their clients.
Specific tools, like chatbots, and AI-enabled
innovations, will become more popular and
enable proper client clustering and the
tailoring of information to share with clients.
Data security is of the utmost importance –
firms must ensure strict compliance with the
data privacy and protection rules, otherwise
they face huge fines, especially if they fall foul
of the EU’s General Data Protection Regulation
(GDPR) which came into effect in 2018.
Using innovative technology to meet the
needs of the affluent and HNWIs, irrespective
of their age and other characteristics, is a
necessity. It is not a “nice to have”. If you
embrace digitalisation and make it work, it will
be a competitive differentiator and help ensure
your future success.
WHITE PAPER | DIGITAL TRANSFORMATION IN WEALTH MANAGEMENT
Report author
Senior Content Editor - FT Live; Contributing Editor -
The Banker, FT Group Deputy Chairman; FinTech Professional Forum;
Chartered Institute for Securities and Investment (CISI)
Michael Imeson
Some key points
to remember
Do not be afraid to use new
technology to improve the client
and the advisor experience.
Do not delay – there are many
useful things you can do now with
new technology.
Explore gamification and other
novel ideas that can help engage
clients more with their wealth
manager, which in turn will improve
loyalty and retention.
Look at what your competitors are
doing and consider adopting their
best ideas to improve your service.
Find the right technology partner
to develop the best solutions.
13. 13
ABOUT COMARCH
Comarch prides itself on being one of the leading software houses in Europe with over 6000 employees
worldwide and multiple successful projects carried out for the largest international brands. With 20 years’
experience in the industry, Comarch Financial Services, a business sector within the Comarch Capital
Group, specializes in developing sophisticated software and IT systems for major financial institutions in
banking, insurance and capital markets. Our expertise has gained worldwide recognition and a significant
portfolioofclients amonginsurers,banks,mutualandpensionfunds,brokeragehousesandassetmanagement
companies in more than 30 countries.
finance@comarch.com | www.finance.comarch.com
