80% of firms have invested in technology to support client reporting.
Nearly all firms have invested or expect to invest in technology to support their wealth management advisors. This is important because these advisors work in the important areas of asset gathering, servicing and investment selection.
Identifying investment opportunities
Wealth management firms are investing across a broad spectrum of technologies, headcount and processes not only to support their product and client strategies, but also to meet new regulatory requirements.
80% of firms have invested in technology to support client reporting.
Wealth management firms with over 100k clients report a broad range of areas they have or expect to invest in, including:
- Back office execution
- Client on-boarding
- Client reporting
In which of the following areas have you invested in the past year? In which of the following areas do you expect to invest
in the next year?
Technology
People and processes
Source: Greenwich Associates
Note: Chart based on 39 respondents. Percentages do not total to 100% due to multiple responses by survey respondents.
Primary drivers for investment
Our survey found firms targeting largely mass-market clients were somewhat less likely to say they were targeting revenue growth and much more focused on efficiencies and improving client experience.
Those targeting high-net-worth clients were more likely to attribute investments in the due diligence process to growing top-line revenue than those firms targeting primarily mass-market clients — most likely because of the broader range of alternative investments offered to clients and the robustness of the due diligence process that is required.
What were the primary drivers for the investments you just described? Please tell me the primary reason(s) you invested or expect to invest, individually. [Advisor desktop/advisor support tools]
Source: Greenwich Associates
Note: Number in parentheses represents the number of respondents.
Changes to mitigate company risk
The majority of firms we interviewed have taken multiple steps to mitigate risk through investments in:
- Client investment suitability
- Manager selection due diligence
- Monitoring (performance and risk)
In which area do you expect to invest the most?
Overall
Source: Greenwich Associates
Note: Chart based on 35 respondents.
Alternative investments
Source: Greenwich Associates
Note: Chart based on 27 respondents.
Transparency in manager due diligence process
Overall, fewer than half of the wealth managers we interviewed said they had increased transparency into the investment manager selection process over the past year.
The largest firms — those with more than $150b in assets under management — were least likely to have offered additional transparency into the process, with more than 80% saying they have not made any changes.
Those that do offer more transparency said they improved client marketing materials and have been educating clients through direct conversations about the due diligence process.
In the past year, have you increased transparency to clients in the investment manager selection process?
Source: Greenwich Associates
Note: Chart based on 38 respondents.
Plans for adapting to the new fiduciary standard
Wealth managers have been proactive in multiple areas as they adapt to the new fiduciary standard. They have been investing in additional advisor training and enhancing disclosures and processes for client suitability.
Interestingly, far fewer said that they were rationalizing their product offerings and limiting their product range.
Those targeting the mass market are much more apt (73% versus 55% for those targeting high-net-worth clients) to revisit their suitability processes, but little difference in expectations was evident elsewhere.
How is your firm planning to adapt to the new "fiduciary standard"?
Source: Greenwich Associates
Note: Chart based on 37 respondents. Percentages do not total to 100% due to multiple responses by survey respondents.
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