How Digital Transformation is Democratising the Wealth Management Industry

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    By Hannes Helenius, Head of Sales and Marketing, FA Solutions (pictured)

    Wealth management firms and financial institutions around the globe are now under pressure to evolve due to changing client demographics, expectations, and perceptions. Additionally, emerging fintech players are levelling the playing field of what was once a members-only club where investors needed serious cash in the bank to sit at the table. With the right technology and system in place, it’s now much easier to attract new investors who want to invest as a form of regular saving.

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    In order to remain competitive in today’s changing landscape, companies need to ensure the continuity of their business while also expanding into emerging customer segments and meet the changing investment preferences of those segments, such as putting a bigger focus on ESG (environmental, social, and governance) opportunities and impact investments.

    According to a study by Morgan and Stanley, 86% of millennials state they would like to incorporate environmental and social factors into their investment portfolios. Not only do they want to invest in more sustainable impact investments, but they also want to start doing it with lower sums of cash.

    Due to industry-wide pressures such as fee erosion, regulatory burdens, and emerging competitors, wealth management companies are facing headaches on how to keep their costs low yet still have enough time to acquire new clients and best serve their existing clients in an effective and scalable way.

    Therefore, companies are increasingly aware of the need to automate and digitally transform their operational processes to solve these challenges. But what are the implications of this on the financial industry and on society as a whole? The answer: the democratization of wealth management to a wider audience and more companies engaging in social responsibility.

    Digital transformation can combat complex business processes

    A study by Gartner in 2019 shows that almost half of global financial services organizations are still in a very early or even immature stage of their digital transformation journey.

    Many wealth management companies still rely on out-of-date and unoptimized legacy systems and tools such as Excel in their everyday processes. Back office staff need to upload and check data across multiple databases while front office staff has to jump around various tools and platforms to extract the data they need to make insightful decisions that bring value to their clients. Adhering to industry reporting standards is also extremely time-consuming and prone to human error.

    Not only do these outdated business practices make it tough to manage the investment data of your current customers, but it becomes extremely difficult to scale up your investment products and compete with more agile competitors, giving them an opportunity to undercut your services.

    Every cloud has a silver lining

    By digitally transforming their processes and overhauling old legacy systems with new cloud-based SaaS platforms, companies can enjoy the agility and flexibility of having their data stored centrally in one place and updated in real-time. New digital workflows enable more effective collaboration between formerly siloed departments. Back office staff can focus on more value-adding tasks than manually updating clients’ data on a daily basis, while investment advisors are able to effectively select the best-performing securities for the customer portfolios they manage and quickly provide necessary reports on demand.

    Reporting can be done at the click of a button, safe in the knowledge that it adheres to all industry standards and regulations. With the help of APIs, your asset management platform can connect to the trading platform and automatically send in trade orders as well as fetch trade execution information by sending a request to the trading platform. These processes, which normally take up hours of valuable time to execute manually in the back office, can now be fully automated.

    Alfred Berg

    Managing on-site systems requires a specialist IT team to keep your servers running smoothly and efficiently. Helge Arnesen, CEO of Norwegian wealth management company Alfred Berg, explains that their decision to switch to a cloud-based management platform has enabled them to focus on data quality and availability for their clients instead of worrying about the upkeep of their legacy systems.

    “Due to the industry environment changing so rapidly, with new regulations issued every year, wealth managers need to increase the frequency of major changes to their tech platform. By using an agile, cloud-based provider, we can rely on them to keep watch on new industry developments and to reduce the cost it takes to implement the changes. We can just focus on providing good service to our clients,” he says.

    Millennials are transforming wealth management

    It is expected that by 2021 there will be more than 200 trillion of assets distributed globally. The new wealth generation will contribute to about 50% of the total amount, while the performance of existing assets is explaining the other half.

    It is clear then that to remain competitive, companies need to evolve to acquire this new wave of younger, more socially conscious investors who are looking to drive real change through their investments. However, ESG and impact investments are much more difficult and expensive for financial institutions to offer without some form of automation in place. 73% of millennials cited a lack of available financial products as a barrier for including sustainable investing in their portfolios (Morgan and Stanley).

    Additionally, digital natives such as millennials and Gen Z are far more comfortable using self-service platforms as opposed to directly working with advisors in person. Data from a Gartner survey shows that industry leaders are most focused on the challenge that client-facing technologies such as client portals do not meet firm requirements or their clients’ needs. Modern customers require reports on-demand and access to their data in real-time. Developing a good self-service platform in-house is time-consuming and extremely costly. White-labeling a modern wealth management solution is a cost-effective way to provide a flexible client portal without taking on the burden of ongoing in-house software development.

    Work with solution providers that help you build new ways of working

    Wealth managers are strong at helping their clients make wise investment decisions. It is not their forte, nor is it their job, to build software systems to manage the portfolio data of their customers. That is why to stay competitive in the modern digital world, asset managers need to concentrate on what they do best, and entrust data management to professional software providers.

    Using comprehensive portfolio management software allows you to forget the burdens of running multiple Excel sheets that need to be updated manually, or building a hefty in-house solution that is expensive to maintain. With a single-database solution that automates core processes such as trade order management and reporting, all you need to care about is matching and exceeding client expectations by providing superior wealth management service.


    As more and more companies move to automate their business processes in an attempt to drive down costs, acquire new customers, and remain competitive, wealth investment opportunities are going to be democratized to more people at a lower cost and with lower initial starting sums.

    Pick a platform that’s going to help you become more efficient, competitive, and ultimately drive long-term value for your clients. Cloud-based platforms are a future-proof way of achieving this. Whichever platform you buy, make sure that it delivers instant value, focused around a core function and build it out from there with your provider.

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    Nordsip Insights

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