How Advisors Leverage Technology to Survive in Such Shaky Environments

Changes in technology, regulations and industry standards have come together to force the wealth management industry to undergo a paradigm shift. Rapid changes further moulds the uncertainty with regards to the future of the industry. In order for firms to thrive, not only survive, they have to forensically examine themselves and identify their core abilities.

It comes as no surprise that many firms, having identified what their core provisions are, find themselves outsourcing the non-core elements of their operations. In fact, a report by Celent suggests that investments into outsourcing non-core elements of businesses will increase by 13 per cent over the next 12 to 18 months. It gives companies the ability to free themselves of the headaches associated with compliance, regulations and the mundane in order to focus on the functions that matter.

There is an abundance of new technologies making themselves relevant in the financial sector. Therefore, it doesn’t make sense for wealth managers to incorporate any technology gaining popularity. Outsourcing gives them the ability to dip their feet into the water, so to speak, without immersing themselves completely into the new technologies.

How this relates to wealth managers

It is obvious that recent technological and regulatory developments in the financial advisory sector has placed a lot of firms under pressure. Advisors are pushed to bring better advice to their clients through heightened customer expectations and transitions in advisory models to one that is less commission focused.

Advisors have to quickly evaluate their value propositions and focus on what really matters - the building of relationships with their client, to truly secure a place in their hearts and minds. Advisors can chieve this through increased access to data, industry knowledge and processing capabilities without having to put in the arduous hours. Outsourcing and/or automating these elements of their propositions gives a significant edge over competitors. Independant advisors, or smaller financial firms, are able to get in on the action by leveraging affordable automation to remain afloat.

Since we are living in an age of industry disruption, wealth management will not remain unscathed either. Robo advisors have already have a huge impact on the sector by making wealth managers less reliant on portfolio managers. With robo capabilities, a significant portion of the costs and inefficiencies associated with the traditional advisory model are mitigated.

From our industry learnings, we have realised a need for some sort of human intervention when it comes to more financial services. There still exists a need for a human element in the advisory process, since pure-play robo lack the capacity to provide a sense of empathy to truly understand the investor. This gives a rise to an opportunity for financial advisors to demonstrate their value in the investment process. There is still value in the human empathy to ensure that the clients are in fact making the best investment decisions by diving deeper than any computer could into what a client actually wants.

The survival and efficacy of advisors depends on their ability to adopt functionalities and adapt to the turbulent environment.

Rutul Gandhi

Associate, Privé Managers

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