5th TECH TRAPS REPORT Showcase Your Solution to the Largest Global Community of Wealth Managers!
2024 5th ANNUAL EDITION
TECHNOLOGY TRAPS WEALTH MANAGERS MUST AVOID
Rationale for 5th edition TECHNOLOGY TRAPS WEALTH MANAGERS MUST AVOID There are myriad risks inherent in the pace and sheer scope of change in the digitisation of the wealth management sector and huge investment is set to continue across the front, middle and back office for all but the most complacent firms. Every year more challenges arise.
Expert guidance on strategy, selecting solutions and implementation
The potential for ruinously expensive mistakes when selecting and implementing technology solutions has been made abundantly clear by the number of headline-grabbing disasters in recent times, but anything other than an optimal result will reverberate down the years too. The proliferation of providers makes technology choices immeasurably harder.
Sponsored by
Showcase Your Technology Solution Now in its 5th edition, Technology Traps Wealth Managers Must Avoid has been one of WealthBriefing’s most popular publications – for both readers and the providers who use it to showcase their solutions. Demonstrating how their solutions can help avoid the traps gives firms the opportunity to reach a highly engaged audience of wealth management professionals globally, so that they can offer C-suite executives invaluable tips on what to look for, and what to avoid as they invest. This is a compelling and very cost-effective opportunity to highlight what a truly leading solution looks like.
What is Included? l Inclusion in an extremely popular annual report which continues to be downloaded by wealth managers long after launch. l High-profile editorial coverage, through stand-alone reproduction of your organisation’s chapter across WealthBriefing,
WealthBriefingAsia and Family Wealth Report. l Social media promotion for your firm’s chapter via our highly influential corporate accounts, and those of our well-respected
senior team. l Bandwidth amplification through multi-channel distribution of the report through mailings to our extensive and engaged
community and banners on our popular news sites. l Association with a prestigious Consultancy Partner, EY
Technology contributors can either:
l Write their own chapter (in-house editing included) - $4,995 l Have the chapter written for you through an interview with our experienced editorial team - $6,995
Real estate in this tightly-curated guide is in high demand - we only have one exclusive provider in each technology area, so contact angus.chapman@clearviewpublishing.com to confirm your chapter.
TECHNOLOGY TRAPS WEALTH MANAGERS MUST AVOID
CONTENTS
2023
4th ANNUAL EDITION
TECHNOLOGY TRAPS WEALTH MANAGERS MUST AVOID Expert guidance on strategy, selecting solutions and implementation
6
THE WEALTH DATA PUZZLE EY
9
FUTURE-PROOFING A WEALTH BUSINESS COULD BE EASIER THAN YOU THINK additiv
12
ALTERNATIVE INVESTMENTS Canoe Intelligence
16
BUILDING AN EFFECTIVE FAMILY OFFICE TECH STACK. A GUIDE FOR BUYING TECHNOLOGY PRODUCTS Masttro
18
REINVENTING THE PORTFOLIO MANAGEMENT EXPERIENCE SS&C Advent
20
ROBOTS IN THE FAMILY OFFICE? NOT AS SCI-FI AS IT SOUNDS SS&C’s Family Office Services
22
NEW MODEL CLIENT PLATFORMS Summitas
24
Sponsored by
THE WHATSAPP SCANDAL, WEALTH MANAGERS MUST AVOID 2023 Wecan Group
Future-proofing a wealth business could be easier than you think
Wojtek Buczynski, CFA, FRM, AI Specialist and Phil Tattersall, Partner at EY, describe 2022 as another year of technological transformation on a mass scale for the UK wealth management industry. This came despite the challenging economic, market and geopolitical backdrop. We expect 2023 to follow a similar transformative trajectory.
INCREASE CLIENT STICKINESS BY FOCUSING ON WHAT YOU SHOULD DO, NOT WHAT YOU CAN DO BILL
14
TECHNOLOGY TRAPS WEALTH MANAGERS MUST AVOID
TECHNOLOGY TRAPS WEALTH MANAGERS MUST AVOID
The Wealth Data Puzzle
Unsurprisingly, in a field as dynamic and disruptive as financial technology we see a lot of innovative ideas (for example tokenization), emerging trends (like AI), and the well-established megatrends (such as the cloud, ESG or alternative data). Betting on a new trend is one thing, but implementing it is another, and it rarely comes without challenge. The adoption of some emerging technologies is discretionary and will depend on firm budgets and appetite. But other areas, like the cloud and ESG, are increasingly essential. ESG is particularly notable as we strive to reach net zero. Virtually all the challenges and opportunities the wealth management industry - and arguably the broader investments space - must contend with are underpinned by data. Data is the ultimate, broadest megatrend, and should be regarded as an asset. Having the right data strategy is likely to be one of the key determinants of future success for wealth firms. EY’s extensive research and client work have given us valuable insight into the industry. This article looks at four key themes that will benefit from a robust and progressive data strategy. GOING DIGITAL The wealth industry is currently focused on the mass affluent customer segment as its next big target demographic. This segment’s wealth will in part be powered by what is dubbed as “The Great Wealth Transfer”, whereby trillions will be passed between generations, most notably from baby boomers to millennials (although many individuals in this bracket are first-generation wealth-builders).
While some of the older millennials still remember life pre-internet, they are the first generation to be considered “digital natives” and access and consume services – including financial - differently to their parents.
The mass affluent segment may have been previously deemed ineligible for wealth management services due to the size of their assets, which are relatively limited by traditional Wealth Management standards (USD 100,000 – USD 1,000,000 excluding property).
While some of the older millennials still remember life preinternet, they are the first generation to be considered “digital natives” and access and consume services – including financial - differently to their parents. While the old paradigm of wealth and private banking is exceptional personal
6
Whether data is centralised (e.g. in a data lake) or merged across multiple repositories (e.g. via data mesh or data fabric) is a technological and operational decision – in any case data needs to be “de-siloed” and shared more widely. Data education for employees is also important. EY research found that internal training programmes (particularly around data governance) were met with active interest by the staff. However, cultural changes take time and patience and wealth firms need to be mindful of that.
Our research has shown that improved culture enhances trust within the organization, trust from the clients, and trust from business partners. Our research has shown that improved culture enhances trust within the organization, trust from the clients, and trust from business partners. Given the fundamental importance of trust to Wealth industry a positive cultural shift may benefit not just the organization’s morale or efficiency, but also, tangibly, its bottom line.
CONCLUDING THOUGHTS In conclusion, while the themes above are all data-focused, their range is very diverse, spanning culture, analytics, client experience and environmentalism. It goes to show that data is much more than just a technological consideration. Data is all-encompassing and fundamental to wealth firms’ success. 1
2
About EY
EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets. Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate. Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. This news release has been issued by Ernst & Young LLP. For more information about our organization, please visit www.ey.com and email: wojtek.buczynski@uk.ey.com
Transformation Leadership: Humans@Centre | Saïd Business School (ox.ac.uk) Failure defined as transformations not delivering on their objectives, not necessarily a complete failure.
Christine Schmid, Head of Strategy at additiv, a Swiss-based financial services orchestrator, offers a view on how to leverage technology to provide a wealth management service aligned with digital savvy consumer expectations.
W
henever you pay for groceries with a single click, use “buy now pay later” or get travel insurance with a holiday, you’re taking part in a transformation of the financial services industry. This is “embedded finance” - financial services embedded in other platforms, often big consumer brands.
of consumers would happily save or invest via a non-financial provider2. While this creates an opportunity for consumer brands, most don’t have the right expertise (or regulatory setup) to capitalise on it. They’ll need to partner with regulated wealth, asset managers and technology solutions to embed these new value propositions.
It isn’t a new idea but, thanks to technology and regulatory developments like open banking, it’s becoming seamless and more widespread. It started with transactions like payments, consumer lending and insurance and is now, inevitably, expanding into longer-term, more relationship-driven financial services like investing and wealth management.
Embedding wealth management into other channels is a big opportunity, but it isn’t the only one. Embedded finance also gives you the freedom to expand in new directions.
financial services face a fundamental restructuring, but banks who successfully manage the transition will be bigger and more profitable1.
Wealth management is a natural gateway to many other financial and associated services, from pensions and mortgage to healthcare insurance and goal savings. Complementing your existing offer means an expanding revenue source lays at your fingertips.
As a wealth manager or private bank, the prospect of Amazon or Google providing investment services might be daunting. Where do you fit? Are you a competitor or a service provider? However, embedded finance isn’t just about consumer brands expanding. It’s about the integration of financial services into the broader consumer ecosystem, using technology to make financial products and services available to customers now when they are most convenient or attractive. According to McKinsey, financial services face a fundamental restructuring, but banks who successfully manage the transition will be bigger and more profitable1. There’s no reason why wealth managers and private banks can’t profit too.
EMBEDDED FINANCE IS AN OPPORTUNITY NOT A THREAT We estimate that there are over $30 trillion in undermanaged assets globally, much of which is not accessible via traditional financial channels. Additionally, we found that two-thirds
8
Of course, embedded finance also enables partnerships between financial providers. For example, the digital bank Starling has embedded digital wealth manager Nutmeg, allowing customers to access investments through the same app as their bank account.
CAPITALIZING ON COMPONENTS Additionally, the same composable building blocks that are used to embed finance can also be used to enhance the user experiences and client proposition of an existing wealth business. For example, embedding CRM systems, communication software or portfolio tools and innovating your investment services through a digital platform can improve customer experience and give advisors the capacity to provide personal advisory services to more clients. Whether it’s innovating via new distribution or complementing and renovating your existing offer - implementing these changes will involve technology. And that means that there are a couple of technology “traps” - that you should avoid.
TECH TRAP #1: DO NOTHING Technology projects have had a reputation for big budgets, delays and overspend. Given private banks and wealth
9