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Are You Staying Competitive?

Three industry analysts report

Advisors are spending far too much effort making technology work for them, according to reports recently released by key wealth management industry analysts: the Aite Group, Celent, LLC, and Datamonitor.

These analysts agree. Firms must address the advisor productivity issue by integrating their online platform into their overall wealth-service proposition – enabling advisors to use it as a tool for research and education, in addition to attracting new clients.

Many wealth management firms are experiencing low levels of productivity from their advisors, largely because of the lack of an integrated advisor platform. A single, integrated desktop is needed. Firms that continue to have a hodge-podge of point applications, and who fail to increase their advisors' productivity to competitive levels, will increasingly fall behind their competitors and become prime targets for acquisition by more technology-savvy firms.

In its report, Evaluating Wealth Management Advisor Platforms: Integrating the Front Office, the Aite Group said time spent on technology issues “significantly eats into the time they (advisors) have available for advising clients.”

Aite Group's study reveals that retail banks and brokerage firms are leaders in the wealth management industry when it comes to platform deployments. By analyzing 250 deployments across five of the leading advisor platform providers, it was found that 75% of deployments may be contributed to these two industry sectors. Other wealth management firms will need to consider deploying similar platform technologies to remain competitive.

The Aite report analyzes the requirements in the wealth management front office, defines the wealth management advisor platform concept, and differentiates requirements and implementation strategies by platform type and wealth management client segment.

Celent recently published its 2007 Wealth Management in North America report. The report looked at the wealth management business at the start of the year, and said one of the apparent conclusions is that “technology will continue to gain in importance, both as an enabler of more sophisticated solutions by advisors and as a tool to deliver better client service.”

Celent’s report says the population of affluent and wealthy individuals in North America will grow to 37.7 million in 2010, a 24% increase from 30.4 million people in 20 million households today.

Datamonitor’s report, The Case For Online Wealth Management, looks at an online wealth management proposition as a distribution channel and includes market portfolios for innovative players. Key findings include:

• Wealth managers are becoming increasingly aware of the potential of the online platform within the overall structure of their advisory offering. However, there are as yet few wealth management firms who are fully harnessing the inherent potential of the Internet as a medium for meeting client demands.
• The use of technology is slowly gaining in relevance and the pace of technological development is reflecting the demands of a customer base that is increasingly turning to the Internet to communicate with their relationship manager, co-ordinate investment plans and manage the holdings and overall structure of their portfolio.

“The increasing importance and widespread usage of the internet by wealthy individuals cannot be ignored by wealth management and private banking institutions,” Datamonitor’s report says. “Firms must increasingly look to integrate their online platform into their overall wealth service proposition, by using it as a tool for research and education, in addition to the medium's inherent potential in attracting new clients.”

Interestingly enough, all three of these major analysts who track and predict key business and technology trends within the wealth management industry agree that firms must improve advisor productivity and they need to do it by providing an integrated online platform or desktop. This is a clear mandate that wealth management firms need to adopt an integrated advisory desktop to stay competitive. Those firms who delay may face loss of talented advisors, loss of clients, and may even be forced to consolidate their business altogether. Given this mandate, can you afford to wait?

About the Industry Analysts:

The Aite Group is a leading independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry.

Celent LLC is an international strategy consultancy for financial institutions.

Datamonitor is one of the world's leading providers of online data, analytic, and forecasting platforms for key vertical sectors.