Expert: Matthew Lonsdale, Director, Asset & Wealth Management, Davies Group Facilitator: Adam Flowers, Senior Consultant, Asset & Wealth Management, Davies Group
Headlines:
- The industry struggle to find a balance between profitability and accessibility of financial advice for a broader client base
- The challenges of serving lower net worth clients profitably relies on the potential of emerging technologies like AI to increase operational efficiencies, as well as the need for better integration of technology systems
Context:
The discussion explored various approaches, such as categorising clients based on complexity rather than wealth, leveraging AI for automating routine tasks, and consolidating disparate systems to reduce overhead costs. However, concerns were raised about data privacy, regulatory compliance, and the significant investment required for large-scale technology transformations.
Delegates acknowledged the difficulty of serving clients with lower asset levels profitably due to the high costs associated with providing personalised advice. Regulatory requirements and potential liabilities make it risky to take on clients who cannot generate sufficient revenue. However, some expressed a desire to be more inclusive and not turn away clients based solely on their net-worth.
It was suggested that if firms capture efficiency not only does it make smaller clients profitable, allowing for growth in client base, but also makes existing clients even more profitable.
The idea of leveraging AI and other emerging technologies to increase operational efficiencies and reduce the cost of delivering advice was then introduced, with the possibility of automating routine tasks, such as generating reports and fact-finding, through AI-powered solutions.
The conversation then highlighted the challenges posed by using multiple disparate systems within firms, leading to inefficiencies and increased overhead costs. It was suggested consolidating systems and moving towards a more integrated technology stack as a potential solution. However, the significant time and investment required for such large-scale transformations, as well as the potential disruption to ongoing operations is a concern.
Action Items
- Explore the potential of AI and emerging technologies to automate routine tasks and increase operational efficiencies, while addressing data privacy and regulatory concerns
- Evaluate the feasibility of consolidating disparate technology systems to reduce overhead costs and improve integration, considering the required investment and potential disruption
- Develop a strategy to categorise and serve clients based on the complexity of their needs rather than solely on their net worth, potentially leveraging digital solutions for simpler cases
- Engage in ongoing discussions with regulators and industry bodies to address the advice gap and explore innovative solutions that balance profitability with accessibility of financial advice
