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The power of personalisation in the digital era of wealth management

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This is a sponsored article from Refinitiv.

New research from Refinitiv reveals that high-touch engagement and a truly personalised client experience are more in demand than ever, with 90% of wealth managers reviewing their client segmentation models in favour of a persona-based approach and advisors harnessing the power of technology to help develop a more client-centric approach to their wealth management strategies.

Digital challenges persist
Digital technologies continue to redefine the wealth industry, and traditional approaches to understanding clients are changing beyond recognition as technology delivers more innovative ways for advisors to personalise the experience for every client.

Our latest in-depth research, commissioned from global research and advisory firm, Aite Group, collated the findings from questionnaires and executive interviews with leading wealth management firms around the globe, and discovered that 86% of wealth management firms consider servicing clients as a highly important digital capability to acquire.

Whilst the technology to deliver these capabilities is readily available, the transformation of the wealth industry is not without hiccups – our survey also indicated that 46% of respondents were only partially satisfied or not at all satisfied with their current digital offerings.

Wealth transfer is a top concern
A key finding from the report showed that 100% of respondents consider wealth transfer to be one of their top 3 concerns.

Consequently, these managers are starting to tailor their offerings to the next – digitally savvy – generation. Interestingly, our research found that the firms that have already invested in digital service platforms often treat next generation clients as a distinct persona.

Many firms are focusing on developing strategies for targeting specific client segments and offering fully customised offerings to meet the needs of those segments. In fact, 90% of those interviewed had recently reviewed or revised their client segmentation models in line with the belief that a tailored and customised approach, which moves away from strict individual AUM thresholds, is the key to future success.

The power of personas
In order to deliver the digital capabilities that clients now expect, firms are leveraging more data and digital touch points than ever to understand their clients’ wants, needs, desires and unique character traits, and to create personas based on their findings.

Understanding specific client personas can foster greater transparency and strengthen client relationships by giving advisors the ability to provide a personalised digital experience based on individual preferences. Personalising the online experience improves engagement, educates investors, boosts customer loyalty and ultimately helps to grow lifetime value.

Success in delivering personal experiences across often diverse client bases can be linked to a firm’s efficiency in terms of data collection, analysis and understanding. Where front office processes are able to take client requirements into account in an efficient and holistic manner, firms tend to be narrowing their traditional product shelves and emphasising firm-defined model portfolios that are tailored to the client’s risk profile. This approach allows the focus to shift to building strong and personal relationships.

This trend towards a narrowing product shelf, however, is not necessarily true for firms concentrating on ultra-high net worth (UHNW) clients. These organisations often offer clients tailored services, such as investment clubs or concierge services, and some are actually expanding their product offerings in certain areas – for example, by adding high quality alternative investments such as hedge funds, liquid alternatives, or private equity funds.

Driving change: technology and data
The necessary foundation for developing meaningful personas is accurate and complete data. In fact, our research concludes that data and analytics are quickly becoming key differentiators for wealth management firms, enabling them to serve clients more holistically and generate relevant, timely, and actionable insights for clients and advisors alike: 61% of respondents viewed analytics and creating insights as “very important”, and 39% as “important”, for their firms over the next 12-18 months.

Our findings, however, also point to a persistent stumbling block. Many wealth managers continue to struggle with data sets that are inconsistent, dispersed across the organisation, and/or hard to consolidate – our report indicates that the top concern or challenge associated with developing advisor analytic capabilities is building a clean database of advisor metrics.

There is an urgent need for firms to develop client-centric data models that connect the front and back offices seamlessly, and that can consolidate disparate product silos and legacy systems. Once data are clean, complete and consolidated, they can be used to create persona-based segmentation models, which will in turn deliver more personalised client experiences.

Open APIs are already becoming key enablers for implementing this type of strategy and, as the wealth management industry continues to evolve and digitise, we expect to see technology stepping up to the plate to draw advisors and clients closer together, rather than creating more distance between them.

The next few years in the wealth management arena are sure to deliver exciting changes and Refinitiv will continue to develop client-centric solutions that enable firms to remain relevant, agile and successful.

To learn more about the key trends transforming the wealth management industry, read the full report.

This is a sponsored article from Refinitiv.

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