Note from the Editor
In Coup d’Oeil, we observe the weak signals that could influence Wealth Management industry.
Potential changes on regulation are on top of agenda these days. However, there is still more speculation than facts. Interestingly enough, concerning DOL Fiduciary act, some of market players basically say “we already invested a lot, we are ready, this is already the new world we live in and what our clients expect, so we will do it anyway”.
This seems to be confirmed by the CFA Institute study showing that Transparency, Effective communication and raising client investment knowledge, are the key contributors to Trust.
Speaking about Trust, only 26% of Americans strongly agreed with the statement that banks had their best interests in mind, according to a recent report conducted by Salesforce; and fewer than half (48%) of American consumers trust financial services with their financial information. According to this study, FinTech is certainly an advantage as it is built on transparency from the very beginning and does not come with a legacy of distrust.
That seems to be confirmed by this other study from Accenture who asked millennials whom they would bank to; Accenture included major tech brands that are not banks today (not yet at least). “Bank of Amazon” and “Google Bank” were the laureates of our millennials.
This study also raised an interesting viewpoint from millennials: consumers are willing to share their personal data with financial providers, but they want something in return. Today’s consumers understand the value of their data, and they expect those providers to whom they entrust it to deliver added benefits, such as a priority service, pricing benefits, or more personalized product, service or non-regulated financial advice.
This clearly shows that, provided you secure client data, you may use it. Even more: clients expect you to, provided this is for their benefit. That was the whole purpose of my previous post on One to One Marketing. For once, Client and Bank interests can be aligned.
In the last months, FinTech, Big Data and Robo-Advisory have been buzz words in the news. Be ready to be bombarded now by Predictive analytics, Machine Learning and Artificial Intelligence (AI) applied to Wealth Management, as shown in some of the articles in this current edition.
This should be nothing new: hedge funds have been running on algorithm and data for years; the success of data has been proven by Google, Amazon and Facebook; hardware is in the cloud with endless calculation power.
Wealth Management is a combination of sound analysis and art of relationship. AI will inevitably prevail in an industry full of data. As this industry is equally based on clients relationships, advisory type of work will prevail as well. Client will get advice from an advisor who will interact with the machine. What changes is that there will be a need for extremely skilled human advisors, skilled in the art of relationships and in machine understanding.
KYC and transactions bring so much data to the wealth management industry that most are ready now to explore how they could use it. As we do not want to lose client trust, we just need to use it for best client interest. Good news is that clients are ready for that. Actually they expect it.
Update: We are sorry to inform you that after 2 years of good service, we discontinued this weekly news briefing.
This is Coup d’Oeil, a periodic review of international news on Wealth Management to look at weak signals and beyond Swiss tropism. Curated and brought to you with passion and care by alavise advisory.