SEI, a firm working with wealth managers among its other lines of business, sets out what it sees as the key ingredients for success in the future.

With a raft of changes impacting investors and savers in recent years, the need - and consequently the opportunity for wealth management firms - to provide advice has never been greater. However, given the complexity of delivering a quality service, there are a number of factors that will determine success for organisations. What then are the most important things for wealth management firms to consider? This article considers such points and is written by Brett Williams, managing director at SEI Wealth Platform, UK private banking, at SEI. The editors of this news service are pleased to share these insights and invite readers to respond.

Costs 
Increasing compliance and operational costs are forcing some wealth management firms to re-platform or at least make significant investments in new technology. As a consequence of this disruption, there is growing recognition among wealth managers and financial advisers that by engaging with technology providers with institutional capabilities, they can de-risk and downsize their business, and still deliver quality service and growth with the benefits that straight through processing and outsourcing bring.  

Others sitting on expensive, unprofitable retail platforms have yet to see the light, and face the risk that these solutions don’t pass the due diligence suitability test! The Financial Conduct Authority is looking on with interest, and this alone is reason enough for wealth managers to re-evaluate their commitments to due diligence. The regulator’s thematic review on this subject underlines how it is no longer possible for wealth managers to trust existing processes, and by ignoring this fact some firms will run the risk of exposing themselves to possible enforcement action.         

Value   
Given the intensive consolidation that has occurred across the value chain of late, firms that have pursued vertical integration are facing challenges in streamlining the component parts. Many are reliant on over-engineered applications and processes that when combined with ageing and expensive systems, restrict innovation and progress. There is a need for new models that are simpler and more efficient. Some financial advisors who are served by platforms are now of a size where they recognise the opportunity to take greater share of the margin on offer across the value chain, and promoting their own brand on services and products rather than that of others. 

Service 
Consumer expectations are growing and clients are demanding more for less. Without continuous enrichment of the range and quality of services offered, advisers face strong downward pressure on margins.  Making the time to focus on what offers real value in true financial planning – i.e. establishing a clear understanding of life goals, cash flow needs and other objectives is now more than ever dependent on the use of the better planning tools available in the market.  These investments in tools which allow consistent and controlled delivery of strong service propositions will be key to the future success of many wealth management firms. The chance of success will be further enhanced if these tools are embedded in a good practice management system and integrated with platform services to deliver a seamless solution.  Few can deliver an end to end solution that offers this potential. Advisers should make it a key part of their next due diligence exercise.    

Innovation   
The push or pull towards direct-to-consumer, mobile, internet, social media, and the increasing demands from users for simpler, more appealing, more efficient tools and applications are changing the future landscape for advisors.  Technology is now available which allows firms to engage and educate with customers digitally improving access to information and services and reducing costs. Clients who have historically seen the adviser as their finance teacher can now rely on technology, and importantly research shows they prefer this approach. Integrating digital solutions effectively with the personal touch where this is needed will be an important factor in the future success of wealth managers and financial advisors. 
 
Regulation overload
With the UK’s Retail Distribution Review, new pension freedoms, CASS [Protection of Client Assets and Money, the US FATCA legislation, MiFID 2 and other directives, many firms are facing regulation overload. The financial commitment required to continuously improve systems, processes and controls is significant. Consequently, regulation is constraining proposition development, innovation, and some would argue the quality of client service. A more proactive approach to regulation is needed across the market, with some technology partners configuring their solutions to comply thereby reducing the ongoing burden on the advisor.   

The annual process of platform and technology due diligence should be used by wealth managers and financial advisors to test their suppliers to ensure they remain suitable and fit for purpose.