Practice Strategies

EXCLUSIVE: International Perspectives On Client Onboarding: Takeaways From Our Thought-Leadership Roadshow - Part 2

Wendy Spires Head Of Research 3 December 2014

EXCLUSIVE: International Perspectives On Client Onboarding: Takeaways From Our Thought-Leadership Roadshow - Part 2

Here we present reflections from the recently issued WealthBriefing research report on onboarding - produced in conjunction with Appway, SIX Financial Information and KPMG.

WealthBriefing recently partnered with Appway, KPMG and SIX Financial Information to produce a wide-ranging research report on client onboarding trends in wealth management, which was accompanied by an international roadshow of thought-leadership events. This is the second part of a feature pulling together key insights which emerged from this fascinating project. To see the first half, click here.

As the first part of this feature discussed, onboarding seems to be one of the last big things on wealth managers’ digital “to-do” list. While the front-to-back digitisation of wealth management has undeniably picked up pace in recent years, enhancing onboarding processes and systems seems to have been largely put on the back burner up until now.

However, if management teams felt in the past that investment could be better spent elsewhere, attitudes seem to be rapidly shifting as the perils - and pains - of outmoded onboarding systems continue to be highlighted. Huge fines continue to be doled out by regulators with alarming regularity, and for all manner of failings, making demonstrating immaculate compliance procedures paramount. With spiralling compliance costs hurting profitability across the industry and competition for ever-more discerning clients heating up, the case for improving onboarding is now arguably stronger than ever.

Fittingly, for a compliance-related topic, investing in better onboarding processes and systems has the potential to allow wealth managers to tick several very important “boxes” - improving risk management, operational efficiency and the client (and advisor) experience simultaneously. But for all the possible benefits improving onboarding holds out, what results are wealth managers really seeing from these efforts and what of those lagging behind?

Industry divergence
To take things back to the beginning, right from the start of this publication’s investigations into client onboarding a very clear division began to emerge – namely, between those firms which had “seen the light”, and which had already made or planned a serious investment, and those for whom better onboarding systems and processes were still regarded more of a “nice to have” which could be left for the future, rather than business-critical area of development today.

Correspondingly, while interest in the research project was very high, a number of wealth managers we spoke to were quite reticent about commenting on onboarding in general, let alone their own firm’s “state of play”, lest – so it seemed – they highlighted internal inadequacies. Indeed, several of the senior executives we approached were even very candid in acknowledging, off the record, a real need for investment at their organisation.

Perhaps unsurprisingly, we also found that some of the firms which are known to have made great strides with onboarding were slightly shy of talking about the cutting-edge systems and processes they had implemented too. Having spent significant resources, time and thought on coming up with a truly 21st century onboarding approach, it is perhaps understandable that these firms might then be somewhat reluctant to then hand “last mover advantage” to their peers by sharing their hard-won learning. Interestingly, several of these pioneers were also keen to keep client-facing elements of their enhancements under wraps since they put so much store in their power as a differentiator. Anyone doubting just how seriously onboarding enhancements are being taken by leading institutions should note that the phrase “secret sauce” came up several times in these conversations. Big name wealth managers really are putting cutting-edge onboarding at the forefront of their growth plans.

While this all might be starting to sound slightly evangelical, the fact remains that the wealth management industry is increasingly seeing technology as a saviour and that a low-tech approach is starting to look untenable. When questioned for the 2014 Advent/WealthBriefing Technology & Operations Trends Report, a massive 83 per cent of wealth management professionals said that technology plays a very important or critical role in helping their firm meet its regulatory obligations. Strikingly, 86 per cent said that technology could play an even greater role. Meanwhile, we have come to the point where, according to a new study by MyPrivateBanking research, 80 per cent of affluent and high net worth individuals around the world use apps or mobile websites for their financial affairs. This cannot sit well with the fact that 70 per cent of the wealth managers included in our onboarding report describe their current systems and processes as a paper/digital hybrid.

Aside from all the inefficiencies – and risks – using paper can present, clients’ growing intolerance for piles of documents was another big theme of the panel discussions which the publisher of this news service convened on both sides of the Atlantic. For the environmentally-conscious client who feels a pang when presented with hundreds of pages of forms or for the globetrotter who sees “snail mail” as an irrelevance, paperless onboarding is likely to be very attractive indeed. Forward-thinking wealth managers are realising that large swathes of clients are as keen on doing business efficiently as they are – whether that be in terms of saving time, hassle or trees.

“Wow moments”
Over the course of the roadshow, we heard many examples of how wealth managers are seeing onboarding as a set of opportunities to really wow their new clients, through small things as well as large. We heard, for instance, that one private bank digitises new clients’ passports and then gives this to them to use elsewhere in their life – just in the spirit of being useful, which clients really appreciate, it was said. Meanwhile, other wealth managers revealed how they are encouraging clients to set the pace for their relationship with the institution by specifying which kinds of communications they are happy to receive, when they would like to receive them and what their favoured channel is for each type across the full range of digital and traditional options. Since onboarding is the point that a wealth manager goes from telling a client about their brand values and service standards to actually evincing them, the value of these kinds of client-centric touches cannot be over-estimated.

While improving onboarding is not a panacea for the challenges wealth managers face, the experiences which have been related to us by senior executives all over the world suggest that it can come pretty close – improving things in several areas for a variety of stakeholders all at once. Of course, the sums which the onboarding pioneers have ploughed into this hitherto neglected area have been significant. The work-shopping and consultation these firms have gone through – across departments and often across international business units too – has clearly been a large undertaking as well.

These firms are already reaping huge benefits, however, with efficiency savings of 50 per cent commonly cited, along with far happier clients and advisors - who have been freed from to-ing and fro-ing on paperwork so they can focus on having the kind of conversations which lay the foundations for long-term, highly-productive relationships for both sides.

Seeing things in these terms, the question wealth managers seem to face is not so much whether they can invest the necessary thought and resources on improving their onboarding approach, but rather whether they can afford not to. Having taken the pulse of the industry through our research and events, we believe that onboarding is one of the hottest topics in wealth management technology and operations today. This publication is very much looking forward to tracking developments in this area in the years ahead.







Round Table

On 24 October 2014, leading industry experts met at Vestra Wealth's offices in the City of London to discuss the findings of this exciting new research report and to discuss the many challenges onboarding has for both the advisor and the client.

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