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Wealth management 2020: Embracing the shifting tides in the digital race

Wealth managers need to digitize their businesses in order to compete in today's environment

5 min read


Wealth management 2020: Embracing the shifting tides in the digital race

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This post is sponsored by Refinitiv.

Joseph Mrak

As the pace of change driven by technology continues to accelerate, wealth managers need to find ways to digitize their businesses. Firms looking to provide better client service are increasingly turning to new technology to foster better engagement and deepen relationships. In this Q&A, Refinitiv Global Head for Wealth Joseph Mrak looks ahead to 2020 and talks about how wealth managers are embracing technology to make smarter decisions, better engage clients and create cultures around using digital tools.


What are some of the industry trends you’re watching heading into 2020?

There are several trends we’re watching for 2020, especially when it comes to the use of technology and the digitalization of wealth management. With an estimated $68 trillion in wealth expected to pass from baby boomers to millennials in the next 30 years, this is a critical time for the wealth management industry. The decisions companies are making now will have significant implications for their growth and competitive advantage going forward. According to McKinsey research, the average digital transformation will deliver lower-than-expected revenue 45% of the time. Some key challenges to successful implementation of digital technology include costs, low volumes and lack of communication across departments.

One critical decision wealth managers must make is to either buy or build new technology and how this buy versus build decision affects the structure and strategic direction of organizations. Buying technology can be a quick path to implementation and often comes with support to tailor that technology to an organization. The downside is that the technology may not seamlessly integrate into current processes and structures. Building technology solutions may take longer, but can offer the advantage of meeting specific business needs. Companies must weigh the pros and cons of buy versus build, and no matter the strategy, must break down barriers to innovation and embrace new technology.


How is the wealth management industry using technology to drive innovation?

Harnessing the power of data is just the beginning. Many firms are leveraging technological innovations, including artificial intelligence, robotic process automation and distributed ledger systems to improve portfolio and asset management.

Data analytics and AI can help predict consumer behaviors, build more complete risk profiles of clients, better analyze research quickly and then compile all that information to recommend products that are relevant for clients’ portfolios. Relationship managers can use these insights to create personalized interactions, both online and in person.

This is particularly important as wealth managers make changes to be more client centric and integrate data to better serve their individual needs as well as cut costs. This greater integration of technology is quickly becoming the industry standard, meaning firms will need to be at the forefront to remain ahead of the competition.


What are some of the biggest drivers of these changes?

Competition continues to drive wealth management forward. Online brokers are gaining more assets and leveraging technology to make wealth management more accessible. For example, Charles Schwab’s $26 billion proposed acquisition of TD Ameritrade will create a company with more than $5 trillion in client assets and 24 million brokerage accounts. That’s an unprecedented combination of consumer data, trading trends and portfolio holdings. With new technology-driven companies entering the market all the time, traditional brokerages need to adapt to remain competitive.

Private banks and wealth managers, particularly those with strong brands and decades of experience, will need to continue to leverage their cultures, traditions and deep customer relationships as they integrate new technology. Combining decades of institutional knowledge with new ways to leverage data can help companies better retain assets and demonstrate how they are evolving to meet shifting consumer demands.


Where should wealth managers focus their digitalization efforts?

Despite the need to control costs as margins shrink, companies should stay client-focused as they implement new technology. Customers are looking for a seamless, personalized, experience across channels, whether it’s in person or via an AI-driven self-help bot. With that in mind, wealth managers should think about how they can automate tasks so advisers can focus their time on crafting a client-specific service experience.


Creating a culture that embraces digital technology must go beyond appointing a head of customer journeys or a chief digital officer. Wealth managers need to train advisers on the advantages of new technology and how to best leverage it for the different needs and life stages of their customers. Many, in fact, will likely need to modernize their entire infrastructures instead of just making incremental changes to fully integrate digital technology into how they do business.


Joseph Mrak is the Global Head of Wealth Management at Refinitiv. Mrak is an expert in software as a service-based financial technology with expertise in the wealth, data and asset management industry. He is also a successful and seasoned CEO and an active chairman and board member for several high-growth fintech firms. 


To learn more about Refinitiv’s Wealth Management solutions, click here. For more insights, click here.