Technology challenges facing wealth managers in Asia
Wealth managers in Asia are facing challenging times as they must meet fresh demands from the region’s fast growing mass affluent sector, comply with many new regulations and win long-term clients amid increasing competition.
One often overlooked solution which can significantly contribute to tackling all of these challenges is to invest in a dynamic and flexible software platform.
A recent Celent report indicated that technology adoption amongst Asian wealth managers is lagging behind other regions.
But as investor demands and competition grows, Asian wealth managers will realise that an advanced technology solution which adheres to global standards is the smart option to get ahead of the competition and ensure service delivery excellence.
Incomes are rising rapidly in Asia contributing to the growth of the mass affluent sector, which is typically defined as those individuals having investable assets of $50,000 to $250,000.
This new generation holds higher expectations of money management services – they require more transparent, dynamic, visually appealing and real-time portfolio reporting. Historically, wealth managers have published a hard copy report either monthly or quarterly.
Today, modern investors expect to see information on-demand. Many want detailed analytics relating to exposure, performance, attribution and risk.
However, the rise of the Asian mass affluent sector and above has been relatively quick. Investors are not necessarily financially sophisticated and tend to require a high level of assistance from the wealth manager when considering investment options for their portfolio of assets.
A technology solution that can provide information in a digestible format, while enabling the wealth manager to drill down to more detailed data upon investor demand, is key to servicing a client successfully.
A common issue for wealth managers is the ebb and flow of each individual client’s needs as they traverse the various stages of life and subsequently the level of support and data required differs.
To deal with the diverse needs of clients with differing wealth profiles, many wealth managers have been forced to use multiple platforms, causing huge administrative headaches, client disruption and often gross over- or under-servicing of the client account.
As a client’s circumstances change, moving them from one platform to another can be a painstaking and laborious task. If migration between platforms remains challenging, some clients could be enjoying a higher level of service than they should receive, at a cost to the manager.
A worse scenario is that the wealth manager may be giving more affluent clients a lower level of service– thereby increasing the risk of losing them to a competitor. Alternatively, the wealth manager may be supplementing the service with laborious manual processes, which could be both error-prone and time-consuming – causing operational risk and increased cost.
Compliance requirements add further complexity to the technology platform. Wealth managers face increasingly extensive and complex regulation forcing them to adapt quickly to measuring and managing market data in new ways.
Regulations include generic rules such as Know Your Customer (KYC) as well as market-specific legislation with varying degrees of global compliance implications, such as Markets in Financial Instruments Directive (Mifid) in Europe and Fatca in the US. These regulations will drive wealth managers to depend on intelligent and customisable reporting to give them the business intelligence to make decisions that comply with these rules.
Finally, wealth managers face the challenge of making best use of all available data related to client activity and preferences to strengthen customer relationships as well as maximise cross-selling of investment products.
This may well be a manual process with high-net-worth clients, but when it comes to servicing the mass affluent population, effective handling of scale is all-important. The efficient, intelligent and expert handling of data in this regard is crucial.
Wealth managers seeking to meet these challenges should look for technology solutions which offer an investment data management solution based on a dedicated data model for wealth management business operations.
It should be able to receive and pass data to existing, highly specialised wealth management modules and, virtually in real-time, produce value-added information for client reporting and internal management, both online and in print.
Making shrewd use of technology partners that have highly scalable, flexible and real-time investment data management solutions is an important step for wealth managers to meet the growing investor demands of Asia’s mass affluent, maintain high standards of data security and distribution and offer clients the most suitable options to manage their portfolios.