With the increase in regulations governing financial advisory, along came the requirements of reporting and compliance. Even though increasing digitalization and automation have reduced some of the traditionally manual operations, new regulations continue to be imposed by the regulators in response to market mishaps, fiduciary violations and increase in financial crime. Overall, the workload on the advisors and their firms have increased as regulatory burden continues to outweigh gains in productivity.
Serving a broader population of mass affluent clients, which generate lower fee, with the same number of advisor was not feasible. Robo-advice platforms were supposed to solve the problem. They have eventually morphed into a hybrid setup where standard tasks are handled by digital workflows, but advisors could step in as and when needed. Wealthy clients have complex asset mix and nuanced needs even within the same peer group. A one-size-fits-all approach using a robo advisor doesn’t effectively deliver in such situations. Serving a larger client base has put in even more pressure on advisor time. The challenge really is to provide the same level of service to the larger client base while making do with the lower margins of the mass affluent segment. The talent wars, the independent advisor movement, and the tight labor market are adding to the already compressed margins of wealth managers. Finally, wealth managers are beginning to take cognizance of the importance of advisor productivity and improve their experience.
Improving advisor experience and productivity is a battle that is to be fought on multiple fronts. A number of repeated operational tasks drag down productivity. Additionally, lack of adequate support manpower can bog down advisors, which a lot of small and mid-sized firms may not have a lot of control over. A fragmented IT ecosystem also adds to the frustration. This is especially true for high growth organizations that added capabilities and acquired other firms without having the time to consolidate and think of an enterprise IT strategy.
Advisors and their leadership lay emphasis on spending less time on operational activities and more on business development activities like prospecting for new client and cross selling to existing ones. Servicing the existing clients leaves very less time for new business development which is the key factor determining financial results and variable compensation. Below graphic provides an overview of where advisors spend time and where they would like to spend time eventually.
Fig 1: Where advisors currently spend their time and where do they want to spend more time
As per the market trends we see, advisors typically seek improvements in the below aspects:
- Increased responsiveness for inquiries and automated briefings
Interpreting incoming messages from clients and prospects and having them bucketed into patterns organized via priority can lead to faster response and better sales outcomes. Clients who are anxious for consultation based on recent market trends and updates can be briefed automatically in a proactive fashion via newsletter or an auto-generated video that is based on their portfolio composition and how those events are affecting them.
- Reduction of IT complexity with better integration of data and workflows
In many setups, a financial platform is fragmented into various systems that provide a disconnected view of planning, execution, and reporting. As a result, it becomes difficult for the advisors to connect the dots across the service units, and making sense of the data, not to mention the inconsistent user experience for authentication, workflows, and reporting. Multiple vendors worsen the problem, making it hard to achieve seamless flow of information, experience, and reporting.
- Automate repetitive tasks and reduce time for data gathering
Having an intelligent system that can learn typical user interaction like logging into “Gain/loss screen of the equity portfolio on every Monday morning at 9:45 AM” demonstrates contextual client orientation that can be leveraged for the advisors as well. Another example of this would be to store and create a typical template of portfolio filters that helps the advisor spot up-selling or cross-selling opportunities. A single click on the template will pull out fresh data set based on the parameters selected last time.
Making the advisors more productive does not have a one-size-fits-all approach. Every advisory firm has its own unique core capabilities, target client segment and staffing levels. The right, and achievable, solution will be driven by their current processes, core platforms, staffing levels and the target client segment. The investment in productivity has to be justified by the resultant benefits to the advisor – sometimes that can be a chicken and the egg story in executive decision making.