SEI Wealth Platform: The five tech risks that can be an opportunity for wealth firms
As rapidly evolving technology, profitability pressure and customer-driven experiences continue to shape the wealth management landscape, traditional financial services firms face an array of risks that are growing more prominent, SEI Wealth Platform has warned.
However, SEI believes that firms that view these increasing risks as an opportunity to drive change throughout their business will have much to gain as the wealth management industry evolves over the long-term.
Below, Kevin Russell, Proposition Director at SEI Wealth Platform, outlines the five technology risks facing wealth management firms and how they can transform these into opportunities.
Risk One – The rise of disruptive technologies
While disruptive technologies have recently garnered significant attention in the financial services industry, thanks to the rapid proliferation of fintech startups, disruption isn’t new. Motorways threatened the trainlines, and on-demand TV content providers upset traditional television. Innovation is around every corner.
The biggest threat from the recent growth of fintechs is their cultural ability to fail quickly and use that failure to adapt and move on. They embrace a culture of learning through failure without fear. Traditional wealth management firms need to determine how to adopt this “no fear” approach to change and embrace new technology, while operating inside a heavily regulated environment.
Risk two – The assumption of information security
Data security has evolved, and it’s not all about hackers and the threats they pose. Wealth firms are handling vast amounts of confidential data every day, and technology is rapidly accelerating the movement of this data. Data leaks are just as damaging as data breaches. That’s why you should treat information security as a continuous process—not just a one-time event.
Controlling implementation within all areas of your organisation – from HR security to communications to software development – gets everyone on the same page. The finance and technology sectors will begin speaking the same language, supporting the core that ensures security. When you implement a systemic strategy for information security, client confidence increases and this cannot be undervalued in today’s world.
Risk three – The reality behind disparate systems
It can be all too easy to respond to the challenge of constantly evolving technology by continually adding new, best-of-breed applications to an existing infrastructure. As a result, you may find your firm managing a large number of disparate systems and data becoming disjointed. Further, the need for constant upgrades to systems in this type of environment can be daunting and expensive, as it costs more to support the structure and connectivity.
Wealth management companies need to be thoughtful and stay focused on the value of integration and improvement of your employees’ and customers’ holistic experience. It’s also important to spend time identifying your unique value proposition within the markets you serve. What is it that your firm does better than anyone else? More important, do all of your disparate technologies enable your value? If not, why pay to maintain them? Focus on creating substantial differentiation for your customers, and consolidate systems that don’t support that value.
Risk four – The (un)sustainable investment
Keeping pace with the technology treadmill requires a lot of money and management focus. Often overlooked, these costs can build up over time, are sometimes not easily visible, and may not be aggregated in a single report.
Technology’s price tag can overwhelm the largest of organisations, and paying for disparate systems a la carte can quickly run up the tech bill. Consolidating onto a unified platform creates a cohesive environment that brings cost benefits, and it creates transparency and simplicity in understanding cost drivers.
Risk five – The challenge with adviser/client alignment
The adviser is the face of a wealth management company. It is often the trust an adviser builds with the client that promotes and differentiates a firm’s brand. When an adviser and the client each use different systems to view and manage wealth, the experience suffers. The effect here is a double-whammy—when both adviser and client are frustrated, your firm is liable to lose both.
A fully integrated, modern platform provides a unified experience that takes customers from “prospect” all the way through the client lifecycle. When information is shared seamlessly across an organisation, from executive management to an adviser or portfolio manager to the end-customer, all stakeholders remain on the same page.