Revolutionizing Wealth Management: A Comprehensive Guide to Implementing Automation Technologies

There is a technological revolution in the wealth management industry. It is getting disrupted by new technologies. What technologies? Artificial intelligence, machine learning and robotic process automation. These are automating most of the conventional business models. Their other effect is the transformation of the way the investment advisors communicate with their clients.

This paper gives an extensive review of major automation technologies that are revolutionizing wealth management. It also gives real life strategies of the implementation of these technologies.

 

The Rise of Automation in Wealth Management

Wealth management has been behind other sectors in terms of the adoption of technology. But profits are declining. Digital experiences are desired by the young people. Thus, automation is rapidly adopted by wealth managers. This is so as to remain competitive and efficient.

A survey has determined that 95 percent of executives indicate that automation is a priority. Key drivers are:

• Saving costs through automation of manual activities.
• Better advisor efficiency and ability.
• Improved customer experience, using online media.
• Creation of facts-based insights and advice.

The amount of assets managed throughout the world will amount to 147 trillion by 2025. The wealth managers will be dependent on automation. It will assist them to manage increasing assets of clients effectively.

Key Automation Technologies for Wealth Management

Some of the prominent technologies that should be considered by wealth management firms are mentioned. These have the potential to automate and convert client experience.

Robotic Process Automation

To start with, Robotic Process Automation or RPA. RPA involves the implementation of software bots to perform routine, rules based tasks. Historically, these were manually performed. RPA can also automate back-office in wealth management. These are trade reconciliation, performance reporting and compliance monitoring. Using RPA frees up staff. It enables greater time to high-value advising. It also cuts costs. As it has been estimated, RPA saves back-office expenses between 25-50% cost. It is also 50-70 times more productive.

Customer Relationship Management.

Then Customer Relationship Management or CRM systems. CRMs unify customer information and enhance customer communications. This provides the advisors with a 360 client perspective. It allows individual, active recommendations – individual advice to each investor.

Examples of the top CRM are Salesforce, Microsoft Dynamics, and AdvisorEngine. They do big data and predictive analytics; to create insights about clients. It is important to integrate the CRM with other wealth tech because it facilitates data flows.

Digital Advisory Solutions

Lastly, digital advisory solutions or, so-called, robo-advisors. These make use of algorithms to offer services. They are automated financial planning, investment recommendations and portfolio management. This provides cost-effective, custom guidance on a mass basis.

Betterment, Wealthfront, and Personal Capital are the top robo-advisory companies. In 2020, they were managing more than 1 trillion worldwide AUM. Although they replace human advisors, robots can also be used to complement.

Data Aggregation Tools

Such data aggregation services as ByAllAccounts, Quovo (acquired by Plaid) and Yodlee have been built to consolidate client account data accurately and reliably across thousands of sources. This provides advisors with real-time access to comprehensive client financial views to determine client needs.

Aggregators facilitate transferability of clients, assessment of portfolio performance and help advisors to shun the tedious manual data entry. Application programming interfaces (APIs) enable connection in a safe and trustworthy manner.

Cloud Computing Platforms

Cloud gives wealth management companies elastic access to computing resources, storage, and analytics services, with no initial infrastructure expenses. The technology allows advisors to check client data and applications at any place.

Leading cloud providers, such as AWS, Microsoft Azure, Google Cloud, and Orion Advisor Solutions, are fully compatible with other wealth tech offerings to allow the effective execution of workflows.

 

Developing an Automation Strategy

The over-hasty automation without a plan can be counterproductive. Wealth managers are advised to do it in phases:

Determine automation processes by viability and payback.

Complete process analysis to map out all manual processes and determine the priority processes to automate first out of the processes on the basis of the possible efficiency gain, revenue opportunities and cost savings. Begin with high volume repetitive work.

Select software solutions

Automate research and a variety of processes and choose the most suitable applications to the needs of your organization and technical environment. Use free trials as a way of testing products.

Start with a pilot program

Implement automation of small targeted processes initially to prove potential and solve any kinks prior to scaling. Learn to draw lessons and then spread automation further.

Phase rollout and iterate

Gradually introduce automation at a step by step organization-wide. Keep on getting feedback, evaluating impact, and improving solutions and integration with legacy systems.

 

Getting Staff Buy-in for Automation

One of the leading obstacles to successful automation is the absence of organizational change management. Wealth managers need to win the employees over and calm fears of change.

Key strategies include:

• Engage employees at the initial stage of automation planning to consult them on workflow structure, and solution recommendation.
• Encourage upskilling by offering training opportunities to have the staff transferred to new positions to eliminate job losses.
• Sell the rewards of automation such as new revenues, enhanced efficiencies in the workplace, the ability to have more time with advisors and clients.
• Promote adoption through bonuses, or promotions based on the use of new technology. Identify groups and leaders who excel with automation.
• Identify champions of change within the organization to facilitate automation and offer user support.

 

Optimizing Workflows

It will not be possible to impact by simply automating the current defective processes. The companies should reengineer the processes. Steps include:

• Record every present workflow process and data transfer.
• Determine bottlenecks, unnecessary processes and places where automation can be applied.
• Cut cross-group silos using integrated platforms.
• Unify processes to be used throughout the company.
• Constantly collect user feedback to improve workflows
• Conduct continued education on new workflow to the staff

The redesign of the workflow is the key to the full utilization of automation technologies.

 

Monitoring Outcomes

Continuous monitoring of metrics and reviews also help wealth managers to extract complete ROI of automation projects and make improvements. To monitor, the key performance indicators are:

• Process KPIs: Automated processes cycle times, error rate, volume of output.
• Operational KPIs: Cost savings, staff and advisor productivity.
• KPIs of the business: Client satisfaction, revenue, advisor capacity.
• Technology KPIs: system usability, API uptime and performance.

 

Conclusion

The future phase of transformation in the wealth management industry will be characterized by automation as companies use artificial intelligence, machine learning, and other emerging technologies to address clients’ transformed expectations.

Incumbents and new fintech disruptors who put the automation into practice strategically will thrive. The ones that cannot make changes to their old processes will risk falling behind more nimble competitors. This playbook is a complete guide to wealth management leaders on the considerations and best practices to have a successful journey into automation.

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