Unable to meet in person during the pandemic, Asian wealth managers have turned to digitization to get timely information and advice to their clients. This in turn is delivering productivity gains, scalability and higher profits in some segments despite such turbulent times, writes Nicole Bodack. But digitization holds as well the key to further growth.
How can a business that depends on personal relationships and keeping in close contact with clients thrive during a pandemic when interaction must be remote? The answer, according to leading Asian wealth managers (WMs), lies in new and focused approaches to digitization.
In the face of lockdowns resulting from COVID-19 and ongoing restrictions on meeting in person, digital channels and tools have allowed Asian WMs to not only maintain contact with clients throughout this difficult period, but also to learn how to capitalize on remote interactions as a way to expand their business.
Citi, for example, signed up 355,000 new mobile clients in Asia in the first four months of 2020, and its digital brokerage volumes jumped 78 percent year-on-year in the first quarter.[1] The Asia-Pacific arm of UBS Global Wealth Management, meanwhile, posted record second quarter results, with a six-fold increase in revenues to $658 million and pre-tax profits of $233 million.[2] The firm attributes its success to maintaining close contact with clients and its use of digital channels. Such a strong performance was even more impressive given the circumstances in which it was achieved – during the height of the Covid-19 pandemic.
The lesson is clear – the pandemic has accelerated a client trend towards digital transactions, providing a welcome growth opportunity for those WMs equipped to deliver an enhanced digital experience. New digital tools are also helping to overcome a major structural problem – a critical shortage of wealth advisors in Asia.
The rising demand for advice continues
Within wealth, advice is a growing area. Last year, China was reported to be adding two people a week to the billionaires’ club.[3] But clients new to wealth need more advice and the region is also seeing more families seeking help with inheritance planning as first-generation entrepreneurs look to the future. More companies are held privately across the region than elsewhere, according to Credit Suisse – 55 percent of global family-owned companies are in Asia – and investment in start-ups reached $8.58 billion in the first seven months of 2019, helping to enrich the region further.[4] [5]
Traditionally difficult to scale, advice relies directly on the number of advisors a wealth management firm can employ. Face-to-face contact is the bedrock of the relationship, so productivity has traditionally been limited by the number of hours in the day. Rising demand for advice has also exacerbated the advisor shortage.
But companies have found that tech is increasingly changing the advice game, enabling them to scale it for the first time across multiple client segments. The right tech also gives advisors a previously unheard-of speed of analysis that benefits clients and raises productivity so WMs can serve more clients with the same number of advisors.
Advancing the hybrid model
Post Covid-19, the shift to an emerging advice model will likely accelerate. When it comes to scaling, new hybrid human/machine models – in which some elements of the relationship are automated while others remain personal – will prove to be winners.
Not long ago, an advisor had to spend hours understanding a client’s needs and risk tolerances, reading financial papers and analysts’ reports before putting together a number of options ahead of client meetings. Today’s software will automatically collate all the relevant information about each client in a daily report, rank them by performance or risk deviation, prioritize for contact and suggest next steps. The level of automation can vary from goals and risk-based profiling to analysis and reporting to trade execution and auto-dialing the client and sending out relevant alerts, reports and suggestions to them. The resulting boost to productivity, through automation, means technology is also helping WMs retain top-performing staff and be attractive to new talent.
How to follow the early movers
So what’s stopping other wealth managers from jumping on the digital bandwagon? The quick answer is that making that jump is not easy. It is uncertain how the return of face-to-face interaction will evolve post pandemic. Choosing the right business model, finding the right tech to fit it, designing the client and user experience as well as putting in place the relevant training is far harder than it looks. Underpinning every successful digitization is the data insight and access to it. Get that wrong and the advisor/machine efficiencies will likely not flow through.
The scale of the task was revealed by the most recent Accenture/Orbium Wealth Management Survey in which just one-in-four firms said they believed they had a clear view of the next-generation advisory model and the right framework to get them there. That leaves 75 percent in the dark.
But help is at hand. Tools such as Accenture-Orbium’s next generation wealth management framework provide an accelerator to help WMs assess performance and opportunity gaps. This could help firms make the right decisions and find the right focus for their future business model across the client/advisor journey and the supporting investment management processes. In this way, WMs could maximise the impact and return on their digital investments while also scaling advice to save costs and increase growth.
Financial results from early digitization movers during the pandemic prove that digital channels and investment tools could help WMs advise clients remotely and scale that advice – and that wealthy clients like the results. Now it’s time for the next wave of WMs to learn from the pandemic and adapt to deliver digital so they too can grow productivity and scale advice, allowing their clients to experience the benefits of next-generation advice models.
