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Blog | Apr 26, 2024

Avoid the Pitfalls of Uncertainty in Wealth and Asset Management

Avoid the Pitfalls of Uncertainty
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How Intelligent Automation Handles Disruption in Wealth and Asset Management

Wealth and asset managers often grapple with the unpredictable ebb and flow of the economy. Yet, embracing intelligent automation (IA) transcends the conventional wisdom of merely cutting costs; it's also a dynamic catalyst for cultivating enduring resilience. Delving into advanced IA strategies not only streamlines operations and unearths hidden efficiencies, but empowers your business for sustained optimization, irrespective of the economic outlook.

Let’s explore some of the common pitfalls investment operations teams encounter when navigating the uncertain wealth and asset management landscape and how IA can help to overcome them.

What Drives Uncertainty?

Economic factors

Fluctuations in stock prices, interest rates and currency values create uncertainty for wealth and asset managers. Sudden market movements can impact the value of investment portfolios. These require adjustments to investment strategies, which puts pressure on operations to respond to fluctuating trading volumes and react to new types of investment and savings vehicles.

More broadly, inflation, the cost-of-living crises and shifting demographics all weigh in on the evolving labor landscape, driving an ever-increasing skills gap that has reverberated throughout the financial services sector.

Regulatory changes

The wave of upcoming new regulations means that investment management leaders must stay ahead of the latest compliance demands. Otherwise, the cost of regulatory fines can affect your bottom line. New rules have been confirmed on the latest regulations requiring changes to fund reforms, shareholder reporting, cyber risk and T+1 – to name a few.

In addition, proposed rulings on ESG disclosures, open-end fund swing pricing, safeguarding advisory client assets and effectively managing conflicts from predictive data analytics are expected to come to fruition in the future.

Unanticipated risks

The onset of unpredictable risks and black swan events requires the sudden need to reevaluate the entire risk landscape, which can result in urgent bottlenecks. Firms usually have some insight that something awry is occurring to pre-empt the risk as much as possible – they just don't know exactly what the event is until it fully happens.

Insufficient time or capacity to react appropriately puts instant strain on investment operations, detracting teams away from BAU in response. Investment managers then leave themselves open to the risk of failing to meet regular obligations and struggling to meet client, investor and regulatory service levels.

How IA Avoids the Pitfalls of Uncertainty

Whether economic, regulatory or unanticipated, uncertainties can have a profound impact on investment operations. This requires firms to adapt their strategies, processes and resources to effectively navigate changing market conditions and regulatory environments. All these factors take their toll, causing operational disruptions that impact both investor and employee experiences while escalating costs.

The ability to quickly react to unpredictable risks at scale is a huge competitive advantage. Strong risk management practices, proactive compliance measures and agile operational capabilities are essential for mitigating risks and maximizing opportunities in an uncertain environment – while minimizing the impact on your services, people and bottom line.

IA provides a range of solutions to overcome the pitfalls firms risk falling into when responding to such situations. Here’s how it can help:

Pitfall: Operational disruptions

Responding to uncertainties can disrupt middle and back-office operations, leading to inefficiency challenges. Investment management firms should always be readily equipped to deal with scaling up, down or pivoting at pace in response to dynamic market volatility or regulatory changes.

The COVID-19 pandemic and economic pressures have further highlighted the limitations of traditional business models, leading to a greater focus on automation as a strategic priority and an integral part of transformation. Organizations that have already implemented automation are better equipped to handle disruptions, demonstrating the significant potential of automation for ensuring business resilience, agility and growth.

IA solution: Continuous seamless processing

Process orchestration, also called business process management (BPM), is software that helps design, execute and monitor end-to-end business processes. It helps orchestrate the flow of work across human workers, digital workers (such as robotic process automation, intelligent document processing and conversational AI), and enterprise applications in long-running workflows. These offer a range of strategic, operational, cost and risk prevention benefits by standardizing processes, automating workflows and optimizing processes.

Integrating process orchestration software into operating models enables firms to continuously and seamlessly operate most efficiently and effectively when employees’ attention requires diverting to deal with the impacts of being hit by economic, regulatory or unforeseen uncertainties.

Learn more about how Invesco effectively mitigated the risk of market pressures by implementing a digital workforce throughout its back office to achieve:

  • $2.1M estimated annual savings.
  • Doubled ROI.
  • 3,700 hours saved annually on its daily transaction reporting.

Pitfall: Client and employee dissatisfaction

Wealth and asset managers who struggle or can’t deal with uncertainty may erode client trust and satisfaction if they fail to effectively communicate and manage risks. Clients may become disillusioned with investment performance, questioning the ability of investment professionals to navigate uncertain market conditions and protect their interests.

It’s imperative to keep the already diminishing pool of industry talent happy and engaged to continuously enhance your investment operations. Chaos can erupt amid uncertainty without adequate protocols and governance in place to effectively manage the impact of shifting economics, geopolitics, regulations or black swan events.

IA solution: Deliver exceptional experiences

IA enables investment operations to provide certainty for clients and employees in times of change or crisis. Automated workflows accelerate end-to-end processing with minimal or no human intervention, giving reassurance that all processes continue running smoothly with 100% accuracy to maintain service levels and ease the pressure off your people.

IA also enables firms to build a deeper level of trust with clients and internal stakeholders at uncertain times by automatically distributing proactive updates. IA can equip employees with the necessary information to deliver speedy, informative and empathetic responses in line with investor needs.

IA removes manual, mundane, high-risk and repetitive tasks from humans enabling your employees to focus more on higher value, interesting and strategic work to maximize their skillsets.

Firms excelling in investor experience benefit from longer-term client value while giving employees a greater sense of job satisfaction from knowing their clients are delighted with the service provided. IA has been proven to be instrumental in staff retention and engagement, enabling a more productive, committed and consistent workforce.

Learn how SS&C GlobeOp has enhanced its ability to handle fluctuations in workloads in its syndicated loans operations to achieve:

  • 57% faster cash settlement times.
  • 100% accuracy, eliminating the need for time-consuming corrections.
  • 30% of employees redeployed to higher-value work.

Pitfall: Plummeting profitability

Uncertainty can result in costs quickly escalating as firms reallocate resources to combat change and risk a rise in errors causing workload to increase further with subsequent rework. The strain on operations can contribute to an unhappy workforce and drive employees to seek alternative work opportunities while firms are left to deal with the repercussions of lacking available skilled talent to fill the void.

As mentioned above, uncertainty can influence existing and prospective clients' decision-making processes regarding selecting a wealth manager. Firms that can demonstrate strong risk management capabilities, investment expertise and client-centric service benefit from a distinct competitive advantage in attracting new clients during uncertain times.

IA solution: Protect your top and bottom line

IA supports both top-line revenue growth through improved customer experience and bottom-line net profit through cost reduction by delivering continuous seamless processing.

In an intelligent automation environment, digital workers – aided by artificial intelligence (AI), document processing, analytics and orchestration – execute tasks faster and error-free, 24/7. This minimizes exception handling and re-work expenses by utilizing various technologies, such as AI and IDP, to promptly detect and address issues.

The range of IA solutions connects your existing tech stack with internal and third-party data sources and systems. This mitigates the need to invest in new technology infrastructures, maximizing profitability.

Learn more about how Eastspring Investments, part of Prudential plc, developed its “target operating model” program to simplify and standardize its business, increase visibility into operational data and embed robust controls in the investment management process to:

  • Exceed financial benefit expectations by 380%.
  • Increase employee satisfaction.
  • Give 20,000 hours back to the business.

Get in touch today to kickstart or accelerate your journey with intelligent automation solutions and counteract the pitfalls of inevitable uncertainties thrown at wealth and asset managers.

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