Scaling investment offerings from HNWI to retail investors

Democratization Of Asset Classes And Strategies

Retail investors are demanding access to the same asset classes and investment strategies as HNW and institutional investors. The mass affluent are not offered access to the same investment products and strategies. Instead, they are increasingly expecting the same access to high yield asset classes and strategies as wealthier, accredited investors, especially in the wake of a low yield environment following the financial crisis.

As such, a number of start-ups have entered the market in the last five years to respond to this demand for yield and access to best-in class investment solutions that were historically the sole purview of commercial or high net-worth investors. Asset and wealth management institutions are left with no choice but to develop and provide investment products that can cater to the entire spectrum of investors from retail to HNWI.

In order to stay competitive, wealth management institutions will need to industrialize and digitalize. This will require substantial investments and yield both efficiency gains and service level improvements (for example, portfolio monitoring and rebalancing). Leveraging digital solutions is a major opportunity to extract productivity gains.

There are many steps in the client advisory process that can be better performed by a computer than by a relationship manager. For example, information gathering, systematic monitoring of portfolios, tax and fee calculations, etc. Investment management firms should therefore define how to best combine technology and the relationship manager to deliver a better service in a more efficient and cost-effective way.

Multi-Stages Of Advisory

There are several stages of the advisory process. Throughout all these stages, automation and seamlessness is key to ensuring a successful customer experience.

Onboarding: When it comes to onboarding customers, it is best for the process to be completed in a timely and smooth manner. The onboarding experience can determine the entire relationship of a customer with a product or service provider. This is particularly important with digitally native millennials and HNWI who typically have high expectations from technologies.

Automating and creating the best onboarding experience for customers is essential. Automation throughout the entire investment journey and process is important to keep a client engaged and ensure that the expectation is met.

Fact-finding: An institution can automate findings using open banking to understand income and liabilities, measure risk as well as allow customer risk identification. Finding the right discovery tools to obtain both objective and subjective financial data is crucial in the fact-finding phase of this process.

Proposition: It is important to build a single or multi objective-based proposal to the customer to give them the flexibility to accept, edit or reject it. The client should be given suitable options based on this financial profile, following which, the proposal can then be finalized and subsequently accepted.

Execution: The Tradesocio Investment Suite has the capability to auto execute and trade placement on multiple asset classes to satisfy customer requirements. The solution is agile enough to scale accordingly and serve both HNW clients and retail investors.

Reporting: The customer will have real time access to view their NAV and measure their performance for each investment objective. Transparency is a requirement and a plus point for a financial service. Providing the customer with real time reports on their portfolio, showing investment, FX fluctuations and fee deductions will assist in creating trust, loyalty and a long-term relationship between a financial institution and its client.

Moving Forward

There is a significant difference between onboarding a HNWI and a retail customer.

HNW client expectations have rapidly increasing when it comes to digital onboarding, value-added services, and their wealth manager’s level of transparency. They now demand a seamless, hyper-personalized experience irrespective of the channel through which they communicate. The same can be said for a retail customer, but with much lower expectations. For example, setting up auto invest accounts in which users can accept or reject the offering.

According to industry research approximately 30% of wealth management firms take more than 20 days to onboard an HNW client. This is due to the lack of an integrated straight-through processing because their front- and back-office operations are not connected. In fact, only 20% of firms have aligned end-to-end operations.

Capgemini suggests that customer experience enhancement is a significant advantage for firms that streamline and digitize their onboarding process. By automating AML screening and compliance, advisors are free to focus on client needs, analyze upselling and cross-selling opportunities, and offer more personalized advice.

The innovative digital experience and frictionless client onboarding that challenger banks offer are forcing established wealth and investment management firms to reconsider client journey management as a critical investment. Inadequate and manual KYC/AML compliance processes compound the problem and diminish customer experience even more, causing higher onboarding dropout rates and hiked costs.

As a result of the ongoing pandemic, it is has become imperative for financial institutions to provide a seamless digital experience for customers. Majority have now become accustomed to digital experiences and expect to be able to execute and complete all transactions—banking or investment—online and in a simple straightforward manner, through a single sign-in for all financial transactions.

Financial institutions are recommended to look beyond initial interactions and address customer needs and concerns throughout their journey—from onboarding to ongoing client due diligence, to client offboarding.