As part of a new weekly opinion slot, we carry this commentary about what the core mission of wealth management should be and why it has to be so much more than investment performance, significant though that is.

This news service is delighted to launch a new and regular feature: Opinion of the Week. These columns will come from Tom Burroughes, Group Editor, and Stephen Harris, publisher and CEO of ClearView Financial Media (owner of this news service). In time, other voices will join the fray (we invite those interested about writing opinion pieces on agreed topics to email tom.burroughes@wealthbriefing.com)

In this article, Stephen looks at what he used to think was the core mission of wealth management, and how this has changed. As a new year gets under way following 12 months of market pain, this commentary is particularly apposite. Remember, these opinions are meant to spark debate, so don't be shy and get in touch if you want to reply.
 

Some years ago, I was the editor of this news service before being relieved of that duty by the current, more competent, incumbent. During my tenure I wrote several opinion pieces, but one sticks in my mind.

The article was a monologue about the essence of wealth management. My opinion at the time was that investment management was at the heart of wealth management and that everything else was in a very real sense peripheral. It got a reaction!

It may not surprise the reader to learn that this rather naïve view has been tempered over the years but perhaps not in the way that immediately springs to mind. My thinking on the matter has morphed through several stages.

I have been enamoured of the widely-held view that wealth management should be seen in the round – that its essence is to be an holistic magus at the centre of the client's finances, lifestyle and legacy – controlling and guiding the uninitiated through twists and turns of sophisticated advice and advisors.

This extends even more widely in the upper reaches of wealth, particularly in the US where it is described as integrated wealth management and encompasses family dynamics and psychology. I was recently at a wealth management conference in New York where it was only at the end of the day that I realised that investments or investment management hadn’t been mentioned at all – and it didn’t even seem strange. 

Worthy though this approach is, I reckon that something else lies at the very heart of wealth management. And that something is providing the client with the warm feeling of knowing that someone has “got your financial back.” It’s about knowing that you can trust an individual or organisation to have everything in place, that nothing has been missed and that everything has been accounted for. Properly.

It's knowing that you will be onboarded in a smooth, efficient, and timely way with minimal needless repetition and that if artificial intelligence can be used in the AML process, then it will be.

Investments can go up and down. We all know that, and most clients will accept short-term losses with good grace and look to the long term. With robo-advisors and commoditised investment strategies, ETFs and standardised portfolios, investment is no longer the differentiator that I once thought it was.

But if a client finds a basic error in a report or if a transaction is not correctly settled then trust is destroyed, and the question is asked: “What else has gone wrong that I’ve missed?”

Clients want the assurance that their wealth manager is not making mistakes and don’t want the bother of having to check everything just in case they are. Giving that peace of mind and a smooth, painless service is the differentiator – investment management, wealth planning and other core activities are a given.

The solution is, of course, the judicious use of relevant technology. There is much merit in the argument that wealth management is a people business. It is. But not when it comes to the production and oversight of statements, transfers, and settlements that well deployed automation can bring.

I think the industry understands this and there’s certainly much interest in new technologies that achieve the ends I’ve outlined, whether it is outsourced or in house, on-premise or SaaS-based, best of breed or all-in-one. Wealth management is also waking up to the possibilities of artificial intelligence and machine learning – not only in the KYC process, but also in curating financial and market information in personalised formats.

In short, I’m now convinced that getting the basics right, through intelligent automation, is the key to differentiation and is now the essence of good wealth management. Businesses in our sector should ignore this at their peril!