The Wealth Mosaic Study: How and Where to Prioritize Automation and Efficiency

What's inside this White Paper?

Where does the UK wealth management sector stand on its adoption of intelligent automation? We recently partnered with global research and directory firm The Wealth Mosaic (TWM) to ask that very question of a panel of UK wealth managers, focusing in on four areas: business goals, business efficiencies, automation, and growth and technology.

The resulting report spells out the current attitude to adoption, which TWM describes as: “Rather than seeking large scale change, the UK wealth management sector is still largely plotting its way slowly and project by project towards improved efficiency levels within its business.”

Overcoming barriers

This insight demonstrates that while there is a ready appetite for technology that can deliver efficiencies to wealth management firms, there are still barriers that get in the way. The first of these is associated with firms’ culture and traditional service models.

Many clients value one-on-one meetings with experienced advisers, backed up with detailed investment research undertaken by colleagues. Given that this model is preferred by the highest net worth individuals (HNWIs), it’s not something that can be jettisoned overnight, especially when firms are seeking to grow their income and client base.

The second barrier is lack of automation adoption by other counterparties in the sector, such as custodian and trading brokers, which is making it difficult to introduce straight through automation.

A third is the fear of wasting investment in technology projects that may not deliver any value, that threaten to replace valued professionals, or that introduce more inefficiencies. Firms are rightly focused on growth, and many believe that their teams should be concentrating on delivering and excellent service to clients rather than working on IT projects.

No more business as usual

Yet as we have written in our foreword to the TWM report, business as usual will eventually run out of road. As with other sectors of the financial services industry, technology is enabling agile wealth management start-ups to build new, efficient propositions that connect clients to investment opportunities more quickly and at lower costs than traditional firms.

Not only are so-called wealth-tech firms having a democratizing impact on the wealth management industry as a result, but they are particularly attractive to younger investors used to managing many of their financial affairs on-line, without human intervention.

The key question to ask is: when does the balance tip from the need to meet HNWIs’ expectations to servicing a broader set of younger investors? Particularly when the need for investment instruments will be driven by a combination of a low-interest economy and the eventual release of parental wealth, bolstered by the house price boom of the last few decades and enormous levels of personal savings accrued during the pandemic?

Looking to the future

Those firms looking forward to the future recognize that technology will be the only enabler of change that will help them respond effectively. However, the TWM report shows that there is still resistance to implementing technology ‘for the sake of it’.

Our advice is to consider using intelligent automation where it adds the most value, and where this value can be clearly demonstrated. The place to start is with processes that could be improved through automation, and where human skills are wasted, such as data retrieval for KYC or client onboarding, annual investment audits, or investment research.

Once in place, these automated processes can be replicated to take on more work across the firm, and link previously unconnected systems, reducing the administrative burden on investment professionals at the same time.

Accelerating change

As with so many sectors, the pandemic has exposed the inefficiencies of existing processes, especially with teams working from home and unable to access documents and systems easily. This may well be the spur that nudges firms to take their next steps towards the adoption of intelligent automation.

As one participant in the TWM report said: “We are not leading edge, but we do deploy technology where we think we need it and where we can define and show a significant benefit in doing so. Interactions with clients is a key area that we want to make efficient and we think this has seen massive change, promoted by COVID-19.”

The need to scale in a sector that is seeing significant merger and acquisition activity will not abate, and nor will the march of new competitors. Introducing the right light-touch, cloud-based intelligent process automation solution is the key to driving both cost savings and incremental revenues. 

Yet in the end, concludes another participant, this investment and strategy has to be driven from the top down: “There can be resistance to change, but that is an inevitable given and normally where people have got comfortable—they need to be brought round by an understanding of the vision and the bigger picture.”