EXCLUSIVE: International Perspectives On Client Onboarding: Takeaways From Thought-Leadership Roadshow - Part 1

Wendy Spires WealthBriefing Head of Research London 2 December 2014

EXCLUSIVE: International Perspectives On Client Onboarding: Takeaways From Thought-Leadership Roadshow - Part 1

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 first part of a feature pulling together key insights which emerged from this fascinating project.

The research reports produced by WealthBriefing cover a wide range of the strategic and operational issues wealth managers face. However, they all share the same broad aim: to gauge where the industry currently stands and to signpost where it should be heading by gathering best practice insights from senior executives and consultants at leading firms internationally.

Synthesising these views, along with those of front-line professionals, is always a fascinating task, and particularly so when the subject is as wide-ranging and topical as client onboarding. We pride ourselves on providing the industry with research that is both broad and deep, and on shining a light onto previously under-investigated areas. As such, it very quickly became apparent that client onboarding was an ideal candidate for a new piece of in-depth research.

In many ways, the topic of improving client onboarding captures the zeitgeist of the wealth management industry, since it is where some of its most pressing concerns intersect. Given the intense scrutiny institutions are being subjected to by regulators internationally, demonstrating immaculate compliance is clearly top priority for all firms. At the same time, wealth managers are under pressure to deliver a really slick client experience during onboarding. They need to differentiate themselves by showing that they have put real thought into making a notoriously “sticky” process go as smoothly as possible. More broadly, wealth managers need to ensure they can stand up to service comparisons both in and outside of the financial services sector. And, as if that wasn’t enough, wealth managers then need to serve both these masters as efficiently and cost-effectively as possible to protect their profitability in what continue to be straitened times for many.

Competing priorities
Even at first glance, it is clear that there are huge inherent tensions within the onboarding piece. On the one hand wealth managers need to onboard clients as quickly and painlessly as possible, but on the other they must be absolute certain of fulfilling the letter of the law on a vast range of compliance requirements at the national, regional and supra-national level. Furthermore, these requirements are increasing all the time. Witness, for example, the recent moves towards a “mini-FATCA” being made by the UK tax authorities, adding even further to what could fairly be described as an alphabet soup of new rules to have hit the sector in recent years.

Yet while mitigating business risk has to be wealth managers’ absolute priority, most firms will also be feeling an urgent need to stem spiralling compliance costs: PwC has predicted that compliance is going to account for 7 per cent of annual wealth management revenues globally by next year. However, on the side-lines of the events which formed the international client onboarding roadshow, senior executives were often very frank in telling us that at their firm compliance costs were accounting for a far greater proportion of revenues – to quite a shocking degree in some cases.

With new regulations coming thick and fast, even just keeping on top of the compliance requirements for each market and client segment a firm operates is a significant task. It is little wonder that compliance is starting to look like a dark hole for some firms, siphoning off ever-greater amounts of money, time and energy. Coping with the compliance burden is undoubtedly a big distraction from wider strategic efforts at many wealth managers today, and a significant bar to innovation.

Top of the “to do” list
Many of the executives we spoke to, both in producing the report and during the roadshow events, shared the view that client onboarding is really the last piece of the puzzle when it comes to what we might call the digitisation of wealth management. Client onboarding is a lower volume process than others and it seems to have been the case that in the past management teams saw better candidates for automation and straight-through processing elsewhere in their businesses. While there was lower-hanging fruit, and a less pressing need to make enhancements, onboarding just wasn’t a priority for investment, it seems.

Attitudes appear to be changing quite rapidly now, however. While enhancing onboarding still seems to be very much on the “to do list” of the industry generally, during the roadshow we encountered executives from firms in the UK, the US and in Switzerland who have earmarked serious budgets for investment into onboarding. Indeed, we heard that a number of firms – some top five international names and other smaller boutiques – had already ploughed very significant resources into completely revamping their onboarding processes.

Digging deeper into the business case arguments which had got each of these institutions over the line revealed an interesting picture. While risk mitigation and cost control were, of course, usually mentioned in the first breath, the potential for enhanced onboarding to act as a differentiator was never far behind in these conversations. This recognition that wealth managers can stand out from their peers by developing truly modern onboarding processes - and tackling common pain-points for clients head-on – marks a real sea-change in attitudes, we believe.

Potential to differentiate
Even quite recently, onboarding was little appreciated as a front-office differentiator. In a 2011 study, Aite Group found that only around a quarter of US wealth managers regarded onboarding as a competitive differentiator, with the vast majority instead seeing it as a back-office function which needs to be cost-contained. While cost control is still clearly a primary motivator to put more automation and integration in place, the picture revealed by our research efforts suggests attitudes are shifting towards the “softer” side of onboarding and how it really can create “wow” moments for clients.

While carrying out primary research for our report, and throughout the roadshow, we asked a wide variety of senior executives what they would mostly be looking to achieve through enhancing their onboarding systems and processes. Cutting costs, reducing the number of staff involved, taking on assets faster and being able to adapt to new regulations more quickly were all there as options and figured highly in the debates. Yet, by a quite a wide margin, the most popular option was boosting referrals by providing a better client experience – and it is easy to see why from the survey results.


Some 54 per cent of the participants in our study believe the extended questioning and evidencing necessary today has negatively impacted the client experience during onboarding; a similar proportion believe the additional regulations which have come in over the past five years have significantly slowed conversion times. Tackling a process which is slow and entails increasing amounts of “back and forth” between client and institution, seems to be an ideal way for wealth manager to showcase their commitment to an excellent client experience - and to win those all-important referrals by making clients feel sure their friend or colleague would have a great first experience of the institution too.

In the past, the business case for improving onboarding processes and systems may have been somewhat obscure. Now that wealth managers are simultaneously chasing the highest standards of risk management, operational efficiency and client service, we see the argument for improving onboarding becoming ever stronger for all manner of firms. The executives who were able to tell WealthBriefing about their own firms’ onboarding overhauls all had powerful statistics around cost and time savings at hand. Most striking, however, was the sense that improving onboarding systems and processes had driven through all manner of other positive changes, from fostering greater collaboration between RMs and compliance through to forcing firms to rethink their use of client data. It would seem that an onboarding overhaul is a real opportunity for wealth managers to get their houses in order and tackle several weak points at once.





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.

In Cooperation with:

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes