Expert: David Hinton, Chief Operating Officer, SEI Facilitator: Gilly Green, Board Advisor and Management Consultant at FoxRed Insight
Overview:
Productivity is a key challenge within the wealth management industry and a subject often under discussion. Self-reported firm productivity scores averaged 6 out of 10 overall, with the front-office at 5-7 and back-office at 4-7 out of 10. Relationship managers' 'golden time' averages 43% of time spent advising clients rather than administrative tasks. There is clearly room for improvement.
However, although firms are experimenting, they have yet to fully implement specific innovation and productivity projects. It was thought important to analyse the root causes of a firm's productivity issues using a practical framework that would help shape and optimise future projects before diving in.
Key pain points that are obvious and that could be improved, however, include the need to customise client journeys, automate back-office processes, address data issues, change adviser incentives, understand cultural barriers to change, and build confidence in AI.
Such improvement, however, is a multi-faceted process that relies on several components, such as having the right technology in place and clean and high-quality data to feed into processes and systems. Indeed, many firms have problems with data accuracy and efficacy. Participants acknowledged and discussed the criticality of getting data right from the start.
Data is all the more important when introducing AI. Without high-quality data to input, any AI output will be sub-optimal. Although AI pilots are promising on tasks like suitability letters, firms still need to train tools properly and build confidence and experience over time.
The Cloud was also discussed, with firms aware of the benefits of Cloud use when it comes to analytical capability, but also the need to balance data privacy and security challenges.
Cultural change is also needed to ensure that advisers and other workforce members are upskilled and supported in using new technologies or processes that impact their book of clients and revenue. Lack of technology itself was not thought to be the root cause of productivity issues; complexity of products/services and firm culture play a bigger role and advisers at some firms have resisted new digital client options post-COVID. However, cultural change is something that can be hard to do with highly paid veteran advisers who are often incentivised in a way that no longer fits modern business objectives. One participant spoke about using a 3:1 adviser-to-relationship manager ratio, automated reporting, data analytics, and incentive structures to achieve high technology adoption rates.
Key findings:
- Although firms are experimenting, they are yet to fully implement specific innovation and productivity projects
- Key pain points that could be improved include customising client journeys, automating back-office processes, addressing data issues, changing adviser incentives, understanding cultural barriers to change, and building confidence in AI
- AI pilots are showing promise on tasks like suitability letters, but firms still need to train their tools properly and thus build confidence and experience over time
- Cultural change is also needed to make sure that advisers and other members of the workforce are upskilled and supported in using new technologies
