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Private Banks, Wealth Managers Must Harvest Client Data To Prosper In Digital Era
Josh O'Neill
5 May 2017
Private banks and advisors must use data to fully-understand clients' needs in order to effectively tailor financial advice and justify their fees, technology experts have said. The conference is an example of discussion around how technology is said to be changing the face of financial services, including wealth management. To see an example of some of these issues in latest research from ClearView, publisher of this news service, see here. Hybrid: Marrying Data With Hands-On Advice
Wealth managers typically group clients based on risk appetite and requirements, but they are currently too generalised to maximise investment returns, said Charles Savage, chief executive of South Africa-based investment platform do this, there will be a low adoption rate of advice. Technology enables a deeper level of understanding... and this justifies the fees.”
Both Savage and Del Rey agreed that there is too much emphasis on robo-advice, and that the average wealth management client is not yet ready to take financial advice from an automated system.
Savage described the ideal advice process as a marriage of technology and human, a process where data aggregation systems act as “co-pilots” to advisors.
“Technology has the ability to, believe it or not, create more engagement and more trust between clients and advisors,” said Savage. “The vast majority of clients still want human involvement, but they want the cost of advice to be lower and the overall experience to be more efficient. Advisors have a chance to create this using technology.”
Del Rey claimed we are now in an age where client advisors and relationship managers are “just that”, and, as a result, must be willing to facilitate technological advances.
“Charging the current fees is not sustainable,” Del Rey said. “This is why we must integrate data into human advice to create something that is truly bespoke.”
He continued: “I think that we are moving out of an era where the benchmark of success is total return on investments and moving into an age where the client is the benchmark.”
Driving Change
When asked by your correspondent what will potentially be the driving force behind a shift towards data harvesting, Del Rey and Savage held conflicting views.
Del Rey said: “Shareholders don't trust firms to make any massive investments. No one is giving Deutsche Bank or any firm for that matter a free pass to pour hundreds of millions of dollars into innovation and technology.
“For that reason, it will be very difficult for anyone but chief financial officers to drive change. It is not directly in the advisors' interests, as it is too long and expensive of a process.”
Savage on the other hand said that although data technology systems can do a lot of heavy lifting behind the scenes, in his experience, clients “still want to understand exactly what is going on”, and they will ultimately be the ones rallying for change.