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If there is one quality that defines the 21st century consumer experience, it’s customized communication. Online communications, with their personalization algorithms, have made it possible for two individuals to go to the same website, enter the same search term and receive completely different results, based on their previous history of searches and page views. Information is sorted and segmented, based on algorithms that take effect without our notice, so choices can be presented in the most useful, appealing manner.
Despite this technological evolution, the wealth management industry has lagged the consumer world in the ways that it manages and transmits information—a surprising development, considering the amount and quality of information that goes into making high-quality investment decisions. Increased competition for wealthy clients, though has spurred wealth managers to focus more intently on the client experience, and to use technology to enhance it. New capabilities enable advisors to tailor advice to clients’ needs as individuals, and to be more responsive—customizing the type and frequency of advice and communications to clients’ individual needs.
Leading the leap forward are advances in performance reporting and analytics. Wealth managers that seek to differentiate their services can use customized reporting capabilities and advanced analytics to produce reports that are attuned to individual clients’ planning goals, and to incorporate information from various accounts, even those that are held at other firms.
Essential capabilities including information on demand, ad hoc reports, custom time periods and benchmarks are available in a secure, scalable environment, with a level of accuracy that meets Global Investment Performance Standards (GIPS).
These reporting capabilities are needed in order for wealth managers to meet their own performance goals. According to CEB Tower, 64% of executives say that building holistic advisory relationships and improving clients’ perceptions of the value of advice are the most important characteristics of their firms’ business performance.1 This focus on client experience and perception—on their ability to recognize and appreciate the value their advisor brings—is driving the increased emphasis on client-facing technology.
Advanced analytics—going beyond the standard, fixed performance periods and index comparisons to look at blended benchmarks, custom time periods, multiple accounts, currencies and more—provide a more accurate indicator of portfolio performance as well as a closer attunement with client goals. The advisor who has access to these reports for all of a client’s assets, not just the assets at the advisor’s firm, has a true competitive advantage.
Imagine this not-so-unusual example: A client is thinking about retirement and wants to diversify a concentrated position in the most tax-efficient manner. The client has investments in a trading account that have sustained some losses—but this account is not under the purview of the advisor. Aggregation empowers the advisor to recommend harvesting losses in the trading account to reduce the tax impact of diversification. Using custom time periods, the advisor can show the rate of return on the account as the diversification process moves along, and can share real-time reports with the client—perhaps even on the client’s smartphone.
Clients want this level of access to information, and want it on their time. They now prefer online, real-time reports to periodic, written reports.2 Wealth management executives know this—and 77% have upgrades to their reporting software on their technology roadmaps in 2015, 2016 or 2017.3
Beyond information, clients want insight. Goal-based reports provide it by answering that fundamental question: Am I on the right track? With investment management becoming more commodified, goal-based management is gaining prominence. Goals-based asset allocation, bucketing, and risk management are crucial tools for the new style of holistic advice.
Wealth management technology has moved beyond the basics, such as gathering, organizing and centralizing data, to enhancing the advisor’s ability to manipulate and share that data to provide insight. This is the next wave of innovation and tools such as Broadridge Performance Analytics, which provide provides custom, advanced reporting, can help your firm stay at the forefront of this wave.
Going forward, clients will expect more from advisors’ technology offerings, never less. The next generations of investors are as comfortable working online as on the phone or in person—sometimes more.4 Broadridge can help you provide the experiences these new clients will expect, and then some.
1 CEB 2014 Advisory Experience Diagnostic
2 CapGemini World Wealth Report, 2014
3 CEB 2014-2015 FSI Technology Survey
4 CapGemini US Wealth Report, 2014