With the start of a new year, my conversations with wealth management clients continue to center on the shift to their future wealth platform. As they mobilize their teams to re-imagine their firms’ next generation platforms and architecture, they are doing so and in part, to forge new relationships with their clients to deliver hybrid advice. Different firms are building from different starting points. Some are still working through how to decouple products from advice, while others are already more focused on blending human and digital-led advice.
Regardless of where they are beginning, most wealth management firms know they need to scale hybrid advice quickly. And to achieve that, they will need a strong digital ecosystem that could help them drive innovation and work towards their goals. I realize this will be a vast change – especially for many firms that traditionally used to work with a primary core partner.
My strong belief is that firms will likely not succeed alone anymore. The successful wealth management firm of tomorrow would provide personalized value to its clients by marrying its truly differentiated internal capabilities with a strong network of specialized partners who could help drive innovation, speed and scale. This could allow firms to offer a compelling hybrid advice experience to its target groups.
To bring any new advice ecosystem to life, think about investing time and money in these four factors:
1. Wealthtech providers. Find and engage vendors that are leading the way in innovation. Continued fintech investment over the years has created solutions that are enterprise-ready today and could accelerate transformation across your firm.
2. Robust data capabilities. Delivering a personalized advice and service experience relies on a rich client profile. To get that richness, you need a robust data pipeline to turn insights into action. Focus on new data architectures that will evolve with your digital offerings and will help enable new insights for your business.
3. Lightweight architectures. For your digital agenda to succeed, use new architecture powered by Application Programming Interfaces (APIs) and microservices to help decouple your firm from monolithic core clearing platforms and custodians. APIs and microservices are the glue that allows you to team up with new ecosystem players more flexibly and rapidly.
4. Ongoing innovation. As the rate of tech innovation accelerates, move relentlessly toward technologies, operating models and cultures that equip your firm for the future. While this should not distract from delivering your short-term roadmaps, avoid the temptation to let it do so. Work both, but know that innovation is what positions your firm for what is just around the corner—widespread adoption of artificial intelligence, blockchain and other innovations as they mature from buzzword to critical value drivers. Don’t forget the people part of the equation; reskilling and incentivizing your teams for a digital world is essential.
Creating the wealth management platform of tomorrow takes a village. Beginning to make the necessary changes now, from operating model to investments, culture to training, could be essential to remaining competitive in a changed industry. Look for more from me in this space on how firms need to be accelerating their shift to the platform of the future—what that shift must include, what is ahead of us and what firms are doing in the market to compete on innovation.
