Despite what many may believe, R&D is not the same as innovation. Innovation is defined as the combination of clever new ideas and technologies with sustainably profitable business models. Whether it be product upgrades or new innovations, technology enhancements should be focused on moving beyond the firm’s core business model. They should provide a sandbox for the firm to explore new ways of reaching new customers and market segments, not just reaching the same customers with an improved product.

As new trends emerge in the wealth management industry, how are firms going to adapt to these trends and meet the evolving expectations of their clients? The goal for designing new technology must be to create value by providing the data and insight needed to create better investment strategies.

What are the 3 Biggest Trends in Wealth Management Today?

1. The digitized ecosystem will be 2021’s most significant disruptor. If you were to place one technology at the center of this thoroughly powerful (and disruptive) ecosystem, it would be Artificial Intelligence. The world has pivoted quickly from technology complementing humans to humans complementing technology. Is it any wonder that more than half of all wealth managers now say AI is essential to their business? AI comprises a variety of technologies, such as machine learning and natural language process/generation, that are changing the business while its lifeblood remains firmly planted in the expertise and nuanced touch of a human advisor.
2. The second trend that will have the biggest influence will be the implementation of consolidated advisor dashboards. Over the past few years, an eruption of niche applications has swamped advisors and turned their workflows into a nightmare of screen switching and duplicated data. Many broker-dealer and RIA aggregators are performing full technology refreshes of their advisor portals. These modernized ecosystems will have deeper integrations with key third-party systems, as well as enhanced onboarding.
3. The third trend is ESG or sustainable investing. It has taken 20 years for ESG (Environmental, Social, Governance) investing to move from niche to mainstream. This intense transformation of the wealth management industry is here to stay; however, it will continue to evolve, as will investor expectations to provide investment strategies that meet their goals while fulfilling their personal values.

How Can Firms Harness These New Technologies?

Technologies like artificial intelligence (AI) and automation will drastically increase financial advisors’ efficiency, giving firms the opportunity to provide clients with more personalized services. With some manual tasks eliminated, advisors will have more time to focus on customized advice for clients, such as goals-based planning, relationships, and brand-building. Wealth firms can develop a unique value proposition by addressing the growing demand for holistic advice, philanthropic strategy, sustainable investing, and family resource planning. However, the first step for wealth firms to take advantage of these new solutions is to understand what areas of their business that they bring value to. There are four main areas where firms–and their clients–will benefit from AI technologies:

1. Powerful Proposals: Resonating with potential clients hinges on the product and service proposal put forward. This is a reflection of how well the wealth manager has listened to their potential client and how good a fit the firm is for their wants and needs. AI-enabled technology can streamline the production of proposals by using automating reasoning to generate initial investment and financial planning recommendations. Importantly, the dynamic profiling of clients can continue during meetings with complex calculations that are refined automatically as more information emerges, meaning that proposals can be perfected “live” rather than later when momentum has been lost.
2. Sentiment Analysis: By using NLP (natural language processing) to scan and analyze various client communication mediums, whether verbal or written (i.e., calls, surveys, emails, tweets), firms can better understand the customer sentiments and quickly provide them at scale. It can be the most effective tool to provide a better customer experience by prioritizing urgent, needs-based on sentiments rather than traditional first-in, first-served models.
3. Relationship Management: NLG systems can provide advisors with pre-generated discussion points for upcoming client meetings, which reduces the preparation time and effort. This pre-generated meeting agenda can contain information such as client investment objectives, risk profile, portfolio performance, investment recommendations, market insights, and house views. Based on this intel, advisors can create customized plans and reports for clients.
4. Compliance and Reporting: The advanced capabilities offered by NLG technology will allow compliance teams to quickly identify the discrepancies embedded within the data and raise alarms on time. NLG solutions optimize this process by providing access to meaningful information and considerably improving the quality of reporting.

What Differentiates First Rate’s Innovation Lab and Latest Solutions from Other Product Enhancements?

It starts with expertise and knowledge. In order to build the right AI model and solutions, there needs to be deep domain expertise and horizontal business knowledge. Our solutions experts at our Innovation Lab understand the economics behind the data and believe that signals are more important than just developing complex technical solutions or algorithms. Furthermore, we follow the “law of parsimony” and keeping the dataset size close to a minimum. We are creating a data-driven organization where the whole wealth management process is empowered by the data life-cycle.

It is a firm-wide process. The main benefit of this approach is that business decisions driven by financial data and intelligent analytics are easily spread around the organization in a transparent and multi-directional way. In addition, the data-driven process is not static, but dynamic, which means that the technology and organization can learn from feedback given and adapt faster to the changing business environment.

These solutions are designed to allow First Rate to continuously build and offer advisors new features so that they are always ahead of client demands – eliminating the need for upgrades to access the latest enhancements.

For more information regarding First Rate’s latest innovations and to understand how to leverage the latest technology download our white paper.