3 minute read 4 Apr 2018
colleagues planning brainstorming paper floor

How convergence is changing everything — and why simplicity is vital

By

Mike Lee

EY Global Wealth & Asset Management Leader

Spirited leader for wealth and asset management. Champion for change. Driven to produce better outcomes and simplify the complex. Passionate about family, friends and sports.

3 minute read 4 Apr 2018

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Wealth and asset managers looking to succeed in the digital age can’t afford to go it alone or get carried away with complexity.

From the way we shop to the way we travel, the convergence of technologies and industries is increasingly ingrained in our daily lives.

Here’s a perfect example. Recently, the dean of Business at my alma mater told me about an intriguing idea for a new store on campus.

As well as providing traditional services to faculty and students, the store would also harvest data on customer behavior. And this data would then form the basis for a new course focused on customer experience.

This type of integration would have been rarely encountered five years ago. But today, convergence is a constant topic in my conversations with clients and colleagues.

Collaborating to compete

It’s getting pretty hard to find a business that isn’t exploring the concept of converging with other industries as a means to improve user experience, invest in innovation or optimize data analytics.

The pace of change is particularly quick in some industries. Investment and financial advice was identified as one of four global hotspots for convergence at EY’s recent Convergence Lab in San Francisco.

The lab also highlighted the potential for firms to transform themselves through collaboration. I often refer to this as collaborating to compete.

In a converging world, partnering with companies from other sectors — and even with rivals — can help wealth and asset managers succeed.

Of course, collaboration is not that easy to pull off. Firms need to strike a careful balance between making the most of their strengths and recognizing when they need external expertise.

Keep it simple

The need for collaboration is only one of the challenges posed by convergence. If I take a step back, I see that the greatest challenge my clients face is the same one I face as a partner at an EY member firm: the need to make complexity simple.

Businesses used to embrace complexity. Complex analyses or processes are difficult to replicate, so they enabled companies to brand themselves as unique. This helped them to defend themselves against rivals and new entrants.

But today, complexity and a resulting lack of clarity can be significant impediments for investors, regulators and other stakeholders. The explosion of data and ideas enabled by digital technology is creating more complexity than many organizations can handle … or than their stakeholders can easily grasp.

For our clients — and for us at EY — it is more important than ever that we make our goals, strategies and methods transparent and easy to understand.

The search for simplicity could take us in some unconventional directions. Here’s one example: to take full advantage of convergence, firms may need to drop the “wealth manager” tag for a more holistic label.

Why do I say that? To younger investors, “wealth management” is more likely to represent a complex process than a clear benefit.

Millennials are excited by purpose, unique experiences and connectivity — probably more so than creating wealth.

Changing the label would help investors and consumers see the industry in a different light. And it could help firms to focus on clients’ life goals and motivations, thereby creating greater financial well-being.

As convergence accelerates and complexity grows, the need for collaboration — and simplicity — is crucial to lasting success. The goal of my upcoming blog series is to bring new thoughts and plain speaking to this subject in hopes of achieving better outcomes for the industry and its end clients.

This blog is part of a series from Mike Lee on convergence in wealth and asset management.

Summary

To succeed in an increasingly complex and confused world, wealth and asset managers need to collaborate across industries and simplify.

About this article

By

Mike Lee

EY Global Wealth & Asset Management Leader

Spirited leader for wealth and asset management. Champion for change. Driven to produce better outcomes and simplify the complex. Passionate about family, friends and sports.