What should wealth managers and private banking leaders do to win?

Client reporting is one of the most important and complex types of communication in the financial industry. As firms up their investment in technology to improve this, it’s important to understand how the wealth management industry is evolving and how to get your client reporting communications right.

Smart Communications explored the key trends, challenges and opportunities facing wealth management and private banking leaders in a recent eBook.

Changing client demographics and expectations means ever customer experience must be easier and faster than ever before. What’s more, increasing competition from technology-driven digital disruptors, including robo- advisory services and challenger banks, makes new client acquisition and current client retention increasingly difficult.

In addition, operational challenges around business and IT agility impact the ability to scale quickly and support new ways of interacting with clients, especially with the shift to virtual workplaces. And ever-shifting, highly complex regulatory landscape makes compliance and data privacy concerns a constant battle.

These pressure points are driving wealth management and private banking firms to accelerate investment in technologies to both improve client-advisor relationships and grow market share in an increasingly crowded space.

Smart Communications highlighted five key trends that are shaping the next generation of client reporting in financial services.

One major trend, is the so called “generation shift in wealth” or the “great wealth transfer. According to Accenture and other sources, $68trn in wealth with change hands between various generations over the next 25 years. The GenX children of Baby Boomers – along with their children – are finding themselves responsible for estate planning and looking for different ways to manage their money, and this shift has only accelerated during the pandemic.

This is relevant to wealth management firms because data shows that these younger generations of investors have higher expectations around personalisation and digital self-service. Smart Communications said savvy firms will implement better client-facing technology now to secure the loyalty of those who will receive that wealth well before they see a penny of it.

In addition, according to the EY Global Wealth Research Report, 61% of very-high-net-worth investors and 80% of millennials are willing to pay more for experience-related features. Smart Communications said financial client reporting is a good example of a client experience that has the potential to either help clients see the value a firm provides, or leave them wondering, “what am I paying for, exactly?”

Given all of the above, it is then somewhat unsurprising that 82% of wealth management businesses plan to increase spending on client-facing technologies in the next two years, and 75% plan to invest in client reporting, according to Gartner’s industry forecast. Smart Communications advised that to stay competitive, wealth management and private banking firms of all sizes need to invest in technologies that improve the client experience.

It is not just who has the wealth that is changing, it is how they invest, too. Smart Communications said 70% f households with a net worth of $500,000 or more, headed by a person under 45, have an investing style that is either strongly or mostly self-directed. Most young investors for example, would rather pick their own stocks or invest in crypto, than stay with the wealth management firms their parents rely on. As such, advisors must adapt and modernise key areas of their practice.

The final trend Smart Communications highlighted, was that 57% of wealth management firms would continue to use paper communications for ultra HNWI segments. Whilst this may seem surprising, it highlights an important truth: when it comes to financial service, there is no one-size fits all approach. That’s why companies need to invest in a customer conversations management platform that is not only future-leaning, but also “backwards compatible” with paper and traditional PDFs.

You can find the full eBook here.

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