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Three Technology Trends that All Wealth Managers Should Understand

If used right, technology will help wealth managers keep costs down, comply with a growing mound of regulation, and serve clients better

While profitability is a concern every year for wealth management firms, over two-thirds of those running them anticipate that 2017 will bring even tougher tests of their ability to maintain healthy bottom lines.

And firms’ profitability challenges are only compounded by multiple industry headwinds they face: the growing influence of disruptive fintechs, uncertainty about regulatory compliance, and continually evolving high-net-worth (HNW) client needs. Technology, if used correctly, can help with a number of these problems; there are three trends that wealth managers should be on top of.

  1. Extending automated onboarding to wealthier clients and more complex portfolios: For years, wealth management executives have aimed to improve HNW clients’ “onboarding experience,” which essentially means encouraging clients to start using their services. In fact, members of CEB’s network of wealth managers identified “improving client onboarding from front to back office” as the most important technology initiative in both 2016 and 2017.

    Many firms have been able to provide an effective onboarding experience to mass market and mass affluent clients by using automated onboarding capabilities; leading wealth management firms are now enhancing their onboarding processes by bringing these features to HNW clients.

  2. Simplifying technology use through platform consolidation: With some US wealth management firms using more than 200 technology applications, IT system complexity is creating costly issues.

    Wealth executives most commonly report that extracting data from diverse, uncoordinated systems is the biggest technological bottleneck to a steady flow of information around their firm (see chart 1). Addressing this trend by retiring under-used applications is key to ensuring efficient digital operations.

    Chart 1: Top technological bottlenecks to information flow  Percentage of wealth management executives, 2016; n=54  Source: CEB 2016 Financial Services Technology Survey

  3. Using technology to accelerate regulatory compliance: In almost every country around the world, financial services firms are grappling with new regulations imposed on the industry, and nearly 70% of firms saw regulatory compliance expenses increase last year. In the US, there is an added layer of uncertainty surrounding the Department of Labor’s new fiduciary rule, after the department recently announced plans to delay the rule’s applicability date.

    In a rapidly changing regulatory environment, wealth management firms are looking to invest in new technologies that will create value for their firm (i.e., that they can use to serve existing clients and attract new ones), even if regulations are repealed or delayed, and that will help them comply with new regulations as efficiently as possible.


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