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Is your digital strategy a competitive advantage?

Jul 28, 2021
By: Tim Fargo

Wealth management firms face dramatic change in the marketplace. Consolidation of the industry is one of the biggest changes  —  and challenges.

It has not been uncommon recently that registered investment advisor (RIA) firm is either in the process of consolidating or has recently been through the process. Firms are intent on increasing their assets under management (AUM), either by recruiting independent advisory representatives (IARs) or by acquisition.

The result? Numerous industry participants are either targeting others — or are themselves targets.

Given the state of the industry, firms naturally want to improve their competitive standing. One way a firm can distinguish itself is through its digital strategy.

How’s your tech?

A firm’s digital readiness and the state of its technology profile is often the basis of discussions we have with prospective technology consulting clients. But these topics are just as important for RIA firms. What does the firm’s leadership think about the condition of its technology? We want to hear what’s working — and what isn’t.

Learning about the firm’s present state of digital readiness can be as important as learning the reasons for other areas of success, the types of clients it serves or what those clients value most from the relationship. All these answers provide important insights into the firm’s strategy and market positioning.

What recruits expect

Competition over the recruitment of IARs has grown fierce. The most immediate need for many firms is winning the talent war. Many might be surprised to learn that one win-or-lose factor is the firm’s technology — especially its ability to analyze its data, developing and acting on valuable, data-driven insights. Technology issues that are often top-of-mind for recruits:

  • Can you convince IARs that they will be able to grow their pipelines when joining your firm? Can your IARs efficiently send high-quality collateral and proposals thru the marketing technology and track client open and click interactions with sent email
  • Can prospects get high-quality leads that are generated by the marketing technology tied to your front-end Customer Relationship Management (CRM) systems?
  • Can you track referral sources, identifying capture rates and conversion rates for the referrals?

Firms that have robust data management systems in place tend to enjoy a good deal of success attracting recruits. But if a firm’s data capabilities fall short and don’t match the competition’s, a data tune-up might be necessary.

Advisor adoption rate

Beyond recruitment efforts, we always ask how a firm’s own advisors use its data systems. This is usually expressed as an adoption rate, which a firm administrator or marketing executive tracks. Without adequate advisor adoption of data systems, firm management — who likely paid dearly for the systems — can’t realize a satisfactory return on investment (ROI).  

User adoption is an important piece of the equation when evaluating the type of technology to implement. The most difficult part of a data transformation project isn’t simply selecting the right platform. It’s determining the right underlying application design and ensuring the business processes and workflows will meet the needs of the many stakeholders.

To be successful, a Wipfli consulting project must take change management into consideration. Although advisor adoption is a key milestone, firms also need to make sure that advisor assistants and supervisors are comfortable using the data systems, too.   

What clients want from their RIA

Our technology consultants within our Wealth and Asset Management Industry group keeps close tabs on marketplace changes that affect a firm’s data needs. Don’t be surprised if clients have the following expectations of your RIA firm:

  • Immediate self-service. Clients want immediate access to their account balances and holdings, no matter how many different intermediaries may be reporting on parts of a portfolio. This is at least partly a result of what people got used to during the COVID-19 pandemic: They had more time to think about their investments and they became more demanding. The patience that previously existed regarding collection of financial information from a variety of sources seemed to evaporate over a relatively short period of time.
  • Advisors' with intimate knowledge of portfolio. Many clients would like to have in-depth discussions about their portfolios on short notice. Advisors find this frustrating. For those with large books of business, it is only possible with the help of very good technology where clients can access an advisor’s via chat, or easily schedule an in-person or virtual appointment via a portal. Clients expect RIA firms to have this capability and expect their advisors to know how to use it on the fly (e.g., while fielding their phone calls). Is your team ready? Some clients are quite forthright about saying they would leave their RIA for another that can meet this expectation.
  • Innovative reporting and planning tools. Sizable RIA firms, say over $1 billion in AUM, are pressured by their clients to provide services that are best described as innovative. Clients expect these firms to add new toolsets fairly often, simply as a normal course of business. Most RIAs aren’t yet able to address this type of demand, but they need to know that application integration is a rapidly growing piece of our business. And this leads to the innovative uses of Artificial intelligence (AI) now being leveraged to deliver results to clients. Many clients have complicated needs and portfolios. AI can help with IAR proficiency by noticing certain critical client sentiments sent to an IAR in an email and bubbling that email to the top of an advisor's priority list. AI can also bring to bear analysis skills of top portfolio experts around the world. In this way, AI can provide proactive suggestions to the advisor to reduce risk, advance returns and improve portfolio positions based on a particular client’s risk tolerance. Armed with this research and information the advisor is positioned further curate these suggestions and to spend more qualitative time advising their clients.

Firms that recognize their organizations are not yet winning the technology battle shouldn’t panic. But they should know that Wipfli’s technology consulting practice is robust, award-winning and eager to serve. Being part of a major accounting firm, we have a unique perspective that considers the tax and attest implications of each engagement.

How Wipfli can help

At Wipfli, we are committed to helping wealth management and asset management firms succeed and grow with compelling and powerful insights, resources and solutions.  See how we can help you with everything from digital solutions and regulatory compliance to financial solutions on our wealth and asset management firm web page.


Tim Fargo
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