Using next best action as a competitive asset in wealth management

Most wealth and asset managers have heard the adage that data is the new oil. But many organizations still struggle with truly being data led and using data as a competitive asset. CEOs of financial services firms have been quick to acknowledge the importance of this shortcoming, with 25% of executives reporting that being a data- and technology-led enterprise is the most important element of success.¹

Financial services clients believe their providers’ advice continues to feel “off-the-shelf,” lacking personalization, and can be dated by the time they receive it.

In the age of automation, the demand for real-time and bespoke advice continues to be a value driver that should be prioritized. In recent years, the combination of product shelf complexity, less experienced advisors due to high attrition, and the growth of the number of clients being served by an advisor have led to some advisors feeling ill equipped to adequately meet their clients’ needs.

Next best action (NBA) is a form of predictive analytics that can be used to guide efforts more strategically and answer the important questions: what should I offer and when? By focusing on one or more of the following key levers, organizations can build to enhance their NBA strategy: 

• Customer-centricity
• Omni-channel strategy
• Data governance and design

Becoming a client-centric organization

There is an opportunity for advisors to develop a deeper understanding of who their clients are beyond their wealth by focusing less on available products and instead on suitability. This deeper understanding helps remove the dichotomy between client needs/goals and sales incentives, and allows for a broader view of client attitudes, behaviours, ambitions, pain points and knowledge.

By shifting away from a rudimentary product-based approach to a client-centric one, roadblocks to value realization are removed by capturing micro-moments rooted in goals-based planning, spur-of-the-moment decisions and other cross selling opportunities available through other lines of business.

For firms looking to move from being product centric to client centric, there are three key considerations:

1.     Firm-level strategy: This entails validating the client-centric approach against the firm-level strategy and adjusting the approach as needed based on market positioning, required capabilities and current strengths to effectively execute.

2.     Operating models and governance: Beginning with a clear view of the ideal customer experience allows for high-priority capabilities to be identified that are required for effective execution. Designing an agile operating model that defines functions and organizes resources efficiently against those needs is often a missing link in client-centric organizations.

3.     Performance and reporting incentives: Capture and report the right metrics at the right intervals to create incentive-based alignment. 

Once a strong culture of client-centricity is established, the introduction of hyper-personalization and NBA can be introduced. Hyper-personalization in the form of individualized communications, including emails and videos, is a common and effective method of marketing used by wealth and asset management firms to engage with clients in a more meaningful manner.

Taking a more nuanced approach than simply adding a name to an email, some leading insurers have captured users’ attention by sending individualized emails on client milestones that contain a photoshopped image of employees holding a message on a whiteboard. This unique messaging approach is supplemented with incentive-based nudges: limited-time offerings based on consumer demographics and psychographics, which allows firms to interact with clients during “micro-moments.”

Intelligent chatbots are another way to enrich the client experience through 24/7 availability and access to comprehensive client data, which allows for the resolution of highly specific personal inquiries.

Below are some additional use cases of how NBA is being effectively used:

NBA has shown increases in client response rates, known to reduce client churn and result in in NPS (net promoter score) improvements. Although NBA is extremely effective when done right, access to data can be a major blocker for organizations. This reluctance isn’t due to client willingness, but rather because of firm data and integration strategies.

In the EY Global Consumer Privacy Survey, over 50% of the participants stated the pandemic has made them more likely to share personal data, not less.¹ In the post-pandemic global landscape, users are more willing than ever to share data if they are receiving value for it in return. Getting your firm’s data strategy right is the next step to enabling NBA and hyper-personalization strategies.

Getting your omni-channel strategy right

One of the largest changes brought on by the pandemic was the acceleration to digital, whether it be how clients interact with brands, organizational processes or purchasing habits. The need for an omni-channel experience is more prevalent now than ever, with over 40% of consumers surveyed in the EY Future Consumer Index saying they expect to visit stores less frequently than before.²

Omni-channel is an approach to having a uniform client experience regardless of the interaction channel and allows NBA engines to capture rich data. When a client drops off from an interaction online and wishes to resume in-person, or has had a poor experience, an NBA omni-channel strategy can feed the crucial information to advisors or systems in a timely manner.

Take the experience of a financial advisor, Beth, as an example. Beth receives a notification that a client has had a very poor online experience over the weekend, and that the NBA is to reach out with a personalized apology on Monday morning. The apology is well received and is then converted into an opportunity for cross-sale, given the poor experience stemmed from credit card malfunction. Beth closes the sale and turns a poor experience into an opportune micro-moment that can be capitalized on, aligning the firm’s and client’s interest in the process.

Moving from single- or multi-channel to omni-channel requires end-to-end integration between all systems and channels to give the client a consistent brand experience. There is no place where this holds truer than in the modern contact centre. Whether the interaction takes place originally through SMS, chatbot, social media or phone, previous information is captured, responses and language are consistent, and solutions offered remain the same.

Understanding how clients move between channels, along with the data elements that travel with them, can create tremendous value and offer plenty of opportune micro-moments where an NBA nudge can be made. The three crucial functions of operations, technology and marketing must act as the stewards of change to enable the omni-channel transformation. Investing in a strong omni-channel platform while building core digital marketing capabilities and reengineering processes helps to avoid a product-centric “we will build it and they will come” approach.

Designing data governance for value

Delayed data discovery, poor ingestion models and the cost to clean data are all core cost drivers and main reasons why organizations don’t realize value from their analytics. Over 50% of business intelligence and analytics project hours are spent cleaning up the data.¹ This value loss is compounded by the fact that many organizations suffer from fragmented data repositories and multiple sources of truth, which are both costly to manage and decrease confidence in the data. By shifting to a democratized data model that’s owned at the domain level, teams can manage data at the source and move from the notion of a single source of truth to the most relevant copy. The data-cleansing programs can then be tailored to the specific domain data model, allowing for specified data transformation.

The journey from on-premises to cloud-based servers, coupled with intelligent APIs, allows for a modern data pipeline that feeds the decision engine and business intelligence platforms in real time. This modernized data strategy enables the move from batch to real-time processing, which is critical to providing NBAs that are timely, capturing the decision opportunity while the client is in the right frame of mind.

Due to the fleeting nature of micro-moments, advisors don’t want to be making recommendations based on data from 30 or 60 days ago and losing an opportunity altogether.

Second, through an intelligent API layer, modular-based platforms can be introduced that take commercial databases from multiple sources — such as CRM, transactional or online behaviour — and couple them with open-source or third-party data to provide a more accurate and thorough understanding of the client, leading to a feeling of hyper-personalization.

Getting these key elements of data strategy right are instrumental to your firm’s NBA success.

Reframing your NBA journey

The next step to unlocking your firm’s NBA strategy and realizing the value of real-time insights is to identify suitable pilot opportunities that will strengthen the business case and begin delivering results.

If you’re ready to accelerate your journey to become a data- and technology-led organization, visit ey.com/ca/wam and reach out to one of our Wealth and Asset Management advisors to start a conversation.