Knowledge is power: The roadmap to digital distinction for wealth management firms

Wealth management firms are swapping digital transformation for digital distinction, where organisations target solutions that benefit clients and best align with business needs in order to stand out from the competition, according to Ville Somppi, Vice President of Industry Solutions at M-Files

The wealth management industry is rapidly evolving and digitsation is at the very core of this transition. Clients are seeking a more personalised and instant form of service, with expectations shaped by the Covid pandemic, and wealth managers are turning to new tools and technologies to meet these demands.

However, recognising digital transformation is an important industry trend is the easy part; implementing a digital strategy that adds value is where the real challenge begins. In fact, many fall at this hurdle – just 45% of software purchases meet or exceed their expected return on investment.

To avoid falling into the same trap, wealth management firms should prioritise digital distinction over digital transformation when updating operating models. This means refusing to integrate tech for tech’s sake, and instead choosing the options that allow their advisors and support teams to focus on clients and align with company goals.

Take a client-facing approach Technology is best used for freeing up financial advisors from repetitive tasks & admin, allowing them to spend time on work that improves the quality of service their firm delivers. According to recent research, advisors in the wealth management industry spend up to 70% of their time on non-advisory and non-revenue generating activity. To buck this growth-stunting trend, wealth management firms need to consider how they can deploy digital tools to lift the administrative burden on employees and maximise their potential.

Through the use of collaborative tools, firms can connect clients and advisors through a centralised portal, facilitating the seamless and automatic sharing of relevant documents, data and processes.

Similar technology can also improve client servicing by opening an easy-to-navigate communication channel between advisor and client, reducing the amount of time spent going back and forth on recurring issues.

Digitising Compliance

Compliance is another key area where wealth management firms should strive for digital distinction, by leveraging technology to strengthen regulatory compliance and reduce the volume of administrative work.

Document management tools can automate access controls to follow the rhythm and rules of business, meaning the right staff or clients have sole access to the documents they need. Compliance controls can also be embedded into daily work, with each access or edit to a piece of content instantly creating an electronic audit trail.

Additionally, firms can ease the compliance burden by introducing automated workflows that seamlessly gather and retain compliance evidence, supporting end users who no longer have to worry about collating the necessary files themselves.

Finally, through the use of AI wealth management firms can automatically classify files and apply pre-defined compliance rules, minimising risk and decreasing time spent on manual processes. 82% of compliance breaches are the result of human error, so employing technology to automate procedures will drastically reduce the chances of malpractice.

Achieving efficiency through digital distinction

When deciding whether a digital overhaul is necessary, companies often identify inherent inefficiencies in their operating models that cannot be solved without the help of technology. Recent research supports this claim, highlighting that 65% of businesses cite improvements in efficiency as the primary motivating factor for implementing new technology. However, efforts to achieve efficiency targets should be highly targeted and all solutions should be introduced with a clear and achievable purpose.

In addition, firms should look to digital distinction to manage the increased volume of data they handle as they scale. Failure to adapt processes to accommodate new streams of information will lead to content chaos, where firms cannot easily access or collaborate on key documents.

Better management of information is a realistic way of instantly boosting the operability of existing processes and avoiding company-wide disorganisation. For example, wealth management firms can integrate document management platforms that ensure knowledge workers are accessing the latest version of a given file, avoiding duplication.

These tools also leverage metadata to improve file-location capabilities, allowing advisors and operational teams to search internal databases with key words to find the documents they need, without having to trawl through disorganised folder trees.

Wealth management firms can prioritise their clients, avoid content chaos and lay the foundations for future capability by adopting a document management solution.

Make informed choices

To avoid overwhelming both employees and clients, wealth management firms should be selective when choosing which business processes to digitise. Information management is the backbone of this approach, as digital distinction is only possible if all files are properly ordered and classified, and employees are accessing the latest version of documents.

Digital distinction will allow firms to future proof themselves, as AI establishes itself as a way to improve compliance and accelerate client solution personalisation.