FEATURE: Moving On From Legacy Technology Systems In Wealth Management

Eliane Chavagnon, Deputy Editor - Family Wealth Report, 22 October 2013


Most wealth management firms are still deploying capital in a “fragmented fashion” when it comes to addressing technology issues, Al Chiaradonna of SEI Wealth Platform tells Family Wealth Report.

Rising regulatory requirements and
associated costs, among other developments, have made wealth managers more aware of how technology can help alleviate the pain. A recent SEI study points out, for example, that advisors who must manually handle market and client data causes a big drag on firms' revenues.

Rather than relying on various systems for
individual processes, The Legacy of Legacy Systems, the SEI report, urges firms to use a
single platform for product distribution and client data management, and it warns
against the use of technology “quick fixes” in particular.

However, most firms are still deploying
capital in a “fragmented fashion” when it comes to addressing technology
issues, Al Chiaradonna, senior vice president, SEI Wealth Platform, told this
publication in an interview.

Indeed, the RBC Wealth Management/Capgemini World Wealth Report 2013, published earlier this year, acknowledges that “given the
complexity and regional variation of regulations, many firms take a tactical
compliance approach by addressing requirements in a one-off manner," he said.

Such insights come at a time when there
continues to be debate about what is the most efficient approach wealth
management firms should take in handling issues like technology upgrades and
replacements, particularly when sensitive client data is at stake. For example, a client might have just
acquired new technology or be in year one of a several-year contract. They may
also have concerns about implementation and integration costs, disruption to
clients, and the pace and degree of change.

Chiaradonna said the latter
can be “hard to put your arms around from a financial perspective and is
challenging in some instances to put your arms around it from an emotional
perspective.” Factors to consider on this point include 1) managing change 2)
minimizing end-client disruption, and 3) understanding clients from a
segmentation perspective beyond size of wallet. He noted that a pressing
business issue such as bleeding cash flow will usually dictate the speed at
which clients want the change to occur.

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