From portfolio manager to success partner

From portfolio manager to success partner1

The world of wealth management is undergoing a series of big changes from both an infrastructure and business perspective. A number of factors have contributed to this, including the largest transfer of wealth in history, a growing base of new digital savvy entrepreneurs, and an increase in life expectancy. More than anything, an increasing number of investors are thinking more carefully about the impact their holdings are having on the world. This has resulted in the need to radically change the services and interactions the wealth management industry has traditionally offered. 

Wealth managers are now redefining success by shifting their mindsets, going from being portfolio managers to success partners. Focusing on things that create social impact, such as helping the local community and reducing one’s carbon footprint. Today, the general population, in particular millennials, are concerned about doing good. As such, wealth managers have had to pivot their focus and look into companies’ committed to environmental, social and governance before proceeding to invest. 

What is an ESG

ESG stands for the Environmental, Social, and Governance factors that play a role in a type of investing known as sustainable investing. It is a practice that places value on companies who play an active role in managing their carbon footprints to upholding labor laws. 

The theme of ESG investment isn’t new, however, more and more people are paying more attention to everything from climate change to how companies treat their employees or respond to pressing social causes. This focus has, in some extreme cases, led active investors to push organizations to adopt more environmentally friendly policies. But for many, policies that will take 30-50 years to take effect aren’t enough. Customers are committed to seeing organizations reduce their carbon footprint today, complete with actionable insights.

There is an opportunity here for both financial institutions and major corporations to create partner/ecosystem strategies and technical infrastructures to ensure joint success. The ultimate goal of this would be to create an interaction field where different players are able to exchange data and relevant content for end consumers. To do this, wealth management organizations can adopt a flexible frontend and microservice architecture that enables 1:1 communication without having to spend time and resources in launching new sets of experiences or onboard a new partner.

In the end, organizations should be able to use their mobile channel to communicate relevant information to customers around:

  1. Their money – how their investments are performing and how the reports are presented to them
  2. Their impact – how their behaviours are impacting their passions and causes that they care about such as sustainability or social impact investing with reports and images about how their wealth has been put at work
  3. New opportunities – such as networking with peers, NED or advisor roles in local communities or charitable organizations

The benefit

This will unlock the role of bankers, as they will no longer need to focus on day to day interactions with customers, rather, they could shift their attention to acting on key life milestones. Indeed, keeping up with the hobbies and interests of every customer would be difficult. As such, they can create automated and cost effective ways to engage with customers that add value. 

The key message is that wealth managers need to switch from being a product provider to a community builder. This will drive more engagement from the customers and avoid turnover to other firms. The ability to create a community will drive customer acquisition velocity increasing the AUM. The access to a broad ecosystem will also enable new revenue streams and will trigger new interactions like a flywheel. BCG estimates that for every $100 billion in assets that a bank has, it can achieve as much as $300 million in revenue growth by personalizing its customer interactions.

How can you get started

  1. Expand the experience availability – do not relay on old school tool for communication, but create meaningful point of contact with your customers, both digitally and physically
  2. Enable the mobile channel – turn the most adopted digital channel into the cornerstone of your communication strategy
  3. Continue the journey to 1:1 engagement via digital assets – enrich the everyday life of your customer with tailor made news, nudges, offers and lifestyle related content 

What you should consider

  1. How can you create an infrastructure that is able to support a scalable ecosystem
  2. Your digital workforce skill set

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