The outlook for wealth managers should feel rosy, in theory. After all, the demographics of wealth are promising. Consider:

  • In 2018, the global ultra-wealthy population with net worth of >$30M rose to 22.4 million people [i]
  • Global wealth management assets under management (AUM) is set to double by 2020 to $145T [ii]
  • By 2020, women are expected to hold $72T in assets [iii]
  • 45 million US households will transfer $68T in wealth over the next 25 years [iv]

Yet, despite this dynamic, we hear the same ailments from business executives: net new money is flat, there is an ongoing struggle to shift assets into advisory programs, and advisors are not able to consistently bring the most relevant investment and lending solutions to clients in a timely fashion.

As a result, I’m having a lot of client conversations about how to transform front-office advice. And I’m seeing significant interest in how firms can more effectively use data, analytics and artificial intelligence (AI) to better serve clients. (This is also a key trend discussed in more detail in Accenture’s Capital Markets Vision 2022 report.)  The reality is that technology-led innovation will never replace human advisors, but wealth management leaders should use it to empower them. I’ve seen it done and the result is that their businesses can run more efficiently and effectively, and clients can have a superior experience.

In my client conversations, most agree that data-informed actions drive efficiency. Yet, despite the head nodding, most firms are still dabbling with basic science experiments, rather than implementing transformational front-office change. The unfortunate reality? Financial advisors managing wealthy clients are still offering advice predominantly supported by the manual and paper-based processes that worked in the past.

Does this scenario sound familiar? Advisors track prospects for months or years via in-person meetings and social events. They record names, needs and interests in a mishmash of paper notebooks and under-utilized customer relationship management (CRM) systems. They set up calendar reminders to check in with certain clients on upcoming life events where advice is needed. And, even from a portfolio construction standpoint, advisors rely on an email, or verbal communication from an internal wholesaler as to when product is available for clients to invest in.

In the age of digital technology, advisors should be able to provide advice faster, more efficiently and more relevantly than the model just described. We are working with a number of firms to make this happen using data, analytics and AI—generating meaningful financial results in client acquisition, servicing and pricing.

Client Acquisition

Who is your desired customer and what are they looking for from you?

This sounds like a straightforward question, but most firms struggle to answer it in a consistent way. Using data and analytics, firms can far more rapidly, correctly and efficiently understand things like how old their prospects are, where they live, what they value, how they get their money, how they buy advice and how to find them.

For example, Accenture has worked with many clients on how to attract and serve the female wealth creator. She researches, engages and buys differently than her male counterparts. She is largely underserved in today’s model, but in the United States, she controls 39 percent of investable assets today and is one of the most important buyers in the future. [v]

Accenture works with wealth managers to help identify these prospects using predictive and prescriptive analytics. We’ve built interactive campaigns, helping wealth managers reach out with a combination of digital and in-person marketing tactics—surfacing opportunities directly to advisors’ screens.

Client Servicing

What products and services does your client need now?

We believe the future of advice is hybrid—and our research shows that it’s investors’ preferred method. Many of our clients are working toward the North Star of intelligently-enabled human advisors.

However, hybrid advice is not a human advisor positioning a static, pre-packaged 60/40 portfolio filled with Exchange-Traded Funds that automatically rebalances once per quarter. The very definition of the word advice is “to give an opinion or recommendation offered as a guide to action.” In order to recommend the right action, advisors need to have context around what the customer needs or wants. We now live in an era where data can provide that information. Credit-card statements reveal purchasing patterns, like shopping for home improvement materials. Bank statements show when excess assets sit in cash, effectively earning nothing and not helping the client reach financial goals. While human advisors have manually tracked these patterns in the past, technology allows us to do this automatically.

Surfacing intelligent analytics on this data to the client or advisor, we can position products like home equity lines of credit or cash management products, in real time, when the advice is most relevant. In most examples, we find this is a win-win strategy. The client is served far more efficiently and effectively, and the wealth manager can diversify its revenue across multiple product sets, at scale.

Client Pricing

How do you ensure pricing makes sense?

One of the common complains clients have within wealth management is that they don’t understand pricing. Some charges are at the transaction level, some are at the asset level, and some come at the time of initial investment. Further complicating pricing is the fact that the fee is applied to assets that are constantly riding a wave of market volatility, where fees are applied against asset values that could be up ten percent or down three percent when compared to the initial deposit.

At Accenture, we are working on using data and analytics to create more transparency by benchmarking pricing and sharing it directly to the field—comparing “advisors like you” with “clients like you” with “transactions like you.” We believe that in the very near-term, shopping for advice will be as straightforward as shopping on Amazon, where clients demand transparency and will be able to compare the cost of advice across multiple providers in seconds. While we do believe some advisors will continue to be able to charge a premium, that would only be because the service they provide is beyond investment management and is highly valued by their customers. Status quo will not be a static 1.5 percent on assets managed. Our teams are already using data and analytics to educate advisors and firms on pricing strategies of the future.

Transformation through humans + machines

At its base, wealth advisory is a relationship based on trust, and innately human. But, applying a layer of technology can make that relationship more targeted, useful and productive for your clients. It’s the best of both worlds—humans and machines. If you’d like to discuss how to create that balance with your advisory workforce, using technology-led innovation to leapfrog ahead, please email me, k.sullivan@accenture.com. Let’s map out your next steps.

[i] https://www.wealthx.com/about-us/press-news/press-releases/2019/wealth-x-releases-high-net-worth-handbook/
[ii] https://www.wealthmanagement.com/industry/global-wealth-management-aum-set-double-2025
[iii] https://www.economist.com/graphic-detail/2018/03/08/womens-wealth-is-rising
[iv] https://www.cnbc.com/2018/11/20/great-wealth-transfer-is-passing-from-baby-boomers-to-gen-x-millennials.html
[v] https://www.xmlfg-w.com/wp-content/uploads/2018/02/Women-Control-39-of-Investable-U.S.pdf

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