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The Need to Modernize in Trust

Making the case for a transformed business model.

If there was any segment of wealth management at a crossroad, it would be in the world of trust. Changing client demographics, decreasing revenue, compressing margins, and now increased competition from RIAs and the emergence of Fintechs that traditionally lead the race in the delivery of innovative solutions and are not tied to legacy technology or processes, start the list of headwinds. Along with the threat of lower yields, inflation, and questionable economic growth projections, you can see a perfect storm approaching this important market segment.

Successful teams transform their game plan rather than adapting and waiting for the market to return to how it used to be, which would be an effort in futility. This leads to the question: how do I improve outcomes for my clients? My firm? Transforming all aspects of the ecosystem – technology, operations, including all the aspects of the client journey, sound like the best starting place. But what does that really mean? How can it be done? What is needed to create an actionable plan that will deliver better outcomes?

Digging deeper into the drivers of change

Rarely is disruption caused by a single factor or event. The same holds true here, where impacts will vary by each unique situation yet need to be evaluated collectively. Identifying the macro trends, recognizing the micro impacts to your business, and evaluating the long-term impact are the keys to developing your strategy. The industry will always face issues around the economy, evolving regulatory requirements and global factors driving the market. The more controllable disruptions can be categorized in four key trends.

Clients are changing before our eyes

Generational differences and the existence of other options to transfer wealth are two key drivers to changes in investor behavior. Sometimes we forget, the oldest millennials have turned 40 and the oldest Gen Xers are nearing retirement age. Both developed wealth earlier in their lives. These generations have grown up leveraging more technology and have lived through different life experiences than their predecessors. This has led to different value choices, expectations for service providers and expected experience with their advisor or trust officer. Broadridge research found that millennial and Gen X investors not only want to hear more frequently from their advisor more often, they also are very willing to invest in at least one new asset class this year. This demonstrates engagement models are changing. This includes the beginnings for a hyper-personalized experience through all channels. Other changes include offering ESG and thematic investing and the availability of cryptocurrency as an investment option as table stakes to today’s investor.

Continued emergence of technology

We know that technology will continue to evolve and what we are using tomorrow will look different than today. This starts with the impact that artificial intelligence and advanced data analytics are having on the client and advisor/trust officer experience. The ability to deliver more personalized interactions through all channels has evolved with how clients can be serviced. Further, the ability to drive significant scale in the front, middle and back offices using these technologies is greater than what has been in the past. North American industry leaders (62%) overwhelmingly told Broadridge how important they believe next gen technologies will be to driving strategic transformation. Where we see a divide between the leaders and laggards is how the technology is being deployed to transform versus how to optimize an experience.

Changing business models

The need to capture emerging wealth continues to be critical for growth. Despite a focus on retaining assets during the transfer of wealth, organizations are still not meeting the expectations of the next generations. Many have not changed their view on who their competitor has become, mainly because of the emergence of digital banks, micro-investing, and a blurring of the lines between business verticals. Firms who target retail or mass affluent individuals have put an emphasis on financial planning or emphasizing the investor’s long-term goals. There are also several options for RIAs to offer trust services and the number of banks that have launched an RIA to complement their trust department. No matter how you look at it, Lauren Bacall, while not intending to talk about wealth management, was ahead of her time in saying ”Standing still is the fastest way of moving backwards in a rapidly changing world.”


The reason why firms are opting for M&A activity has not changed. Organizations are constantly looking to expand their geographical footprint, provide their clients with access to more investment products and services, reduce costs, and acquire talent. What is changing is the pace of the activity. Using the RIA market as a benchmark, DeVoe and Company reported that the RIA market has already eclipsed the 2020 record for deals in that vertical through the first three quarters of 2021, with 64 deals in the third quarter alone. Half of those firms having more than $1B in AUM. This further demonstrates that your competition is changing and impacting market dynamics.

What needs to be done?

Some tend to move immediately to action when faced with a challenge, bypassing the necessary step of formalizing or re-evaluating their strategy. This will lead to mistakes and inefficient execution, which can limit the ability to differentiate in a competitive market. We see three areas of focus in the development of an actionable plan.

Reimagining your client experience

Much has been written about the impact of the pandemic on client engagement. The emphasis has been on how to deploy technology to automate existing processes. Where some of the discussion has fallen short is the limited focus on transforming and reinventing how we engage. Your digital transformation shouldn’t be just a lift and shift of a potentially broken or inefficient process, it must be transformative and drive simplification. This can only be done through journey mapping and defining the role of your CRM. Begin by reviewing the current state then defining a future state with less friction, based on who your target client will be based on who you are today and how demographic trends will impact tomorrow. This will also help avoid the client perception that each expansion of the relationship becomes a new beginning. 

Your newly developed foundation should also include holistic planning and personalized advisory services, aligned with the investor’s goals and values. Delivering a goals-based plan is not a new concept to most; the differentiating factor is a consideration of what is important to the client. Broadridge found that more than half (53%) of investors who are aware of ESG investments and who have not discussed ESG with their advisor would like their advisor to broach the topic. Choosing to not engage on these topics is a major lost opportunity to hyper-personalize an experience.

Modernize your business model

What is your response when asked, “how do you describe your firm?" If you are a bank trust organization, non-depository trust company, RIA, or a combination of these, two things are true: you are a wealth manager; and your business is changing right before your eyes. Every firm is faced with the challenge of meeting a wider variety of client needs (e.g., acting as a family office, providing retirement services, delivering on direct indexing, offering collateralized lending) to achieve their desired outcome.

Although some changes will require regulatory approval or a different registration, there are many opportunities to redefine who you are to the market. Start by benchmarking your capabilities versus who you think your competitors are. Determine which ancillary services you can deploy (e.g., securities-based lending, bill pay, customized market information) to expand your relationship by delivering additional value which they may already be receiving from another firm. You also need to evaluate how your team engages clients and compare it against client expectations. Are your clients looking to be treated as a family office? Are they asking for a hybrid experience with greater touchpoints? Regardless of the detail, clients are expecting a segment of one.

Resetting Operations and Technology

We tend to forget that successful client-advisor experiences are rooted in the back office. This continues to fuel the need for operational predictability and scale. A typical hinderance to this goal is a complex ecosystem built on a legacy infrastructure. This makes the modernization effort more challenging though still attainable using emerging technologies. Low code/no code workflow solutions have allowed many to deliver scale and an improved control framework in a cost-effective manner. They have also provided an opportunity to re-engineer client-advisor engagement in some of the most complex processes like account opening and closing. Artificial intelligence, mainly machine learning, and predictive analytics not only can help determine the next best action, but they can also provide the backbone for intelligence automation especially when paired with optical character recognition (OCR). These solutions tend to be more costly and require a more complex, risk and/or highly repetitive process to support a positive ROI.

Irrespective of how you modernize your technology and operations, the creation of a continuous feedback loop supported by the appropriate metrics is critical. This leads to a more objective evaluation and will make future improvements easier to identify and prioritize.

Where do we go from here?

It is very easy to become overwhelmed with where to start and how to execute. As noted earlier oftentimes organizations, feeling behind the market, will make the first mistake by jumping straight into execution rather than recalibrating their strategy. This may seem like a good way to catch up, however, it can lead to longer-term issues impacting the ability to scale and be flexible. We recommend a more disciplined and structured approach where you address the following questions.

  • Where in the wealth management value chain do you believe provides the best outcomes for your existing client base?
  • What does your client of tomorrow look like? What are their needs?
  • Does your value proposition align with what is required in the market?
  • What does your revised target operating model (TOM) look like?
  • Are there any gaps in your future offering not addressed through your updated strategy?
  • What is the priority for projects needed to achieve your target operating model?

Each inquiry will certainly lead to other more personalized questions that need to be resolved. What is important to realize is, this gives a starting point to move quickly and decisively knowing that one thing will remain constant – change.

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Want to speak with a sales representative?

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+1 800 353 0103North America
+65 6438 1144APAC