A new whitepaper from Bain & Company and banking platform provider Backbase points out that by 2030, wealth management firms will be serving close to 250-million high income Gen Y and Gen Z clients who will demand technology-driven, client-centric solutions. Embracing this by investing in omnichannel platforms and artificial intelligence (AI) agents can reportedly create a 25 to 35 per cent increase in revenue per advisor.
The assertion, according to the paper, Driving productivity and profitability with next-gen wealth management, is based on the fact that advisors currently spend up to 70 per cent of their time on administrative tasks. The paper warns readers that without the right data foundation, however, firms cannot deliver timely, seamless and consistent experiences across channels, “no matter how much they invest in experience and integration.”
Accurate and accessible
They add that data must be accurate, accessible and as near real-time as possible. “Otherwise, AI will underperform, data silos will cause operational barriers and friction, and insights will be outdated,” they write.
“While AI and automation can simplify and streamline operations, without the right data architecture it will fail to deliver efficiencies and business value,” they add.
They say wealth management “is undergoing a significant transformation, driven by evolving client expectations and mounting competitive pressures.” They add that speed and convenience are now top priorities across all demographics. “By 2030, there will be 250-million high-income Millennial and Gen Z clients (with earnings over $100,000). These younger investors will form approximately 60 per cent of the future wealth management market and represent a significant long-term growth opportunity.”
Retaining and empowering advisors
Legacy infrastructure and overstretched advisors can hold back the effort to reach these clients, they say. “Often firms are trapped by system complexity, fragmented data, operational silos and manual processes,” they continue, listing a number of challenges which need to be overcome in the process. These include finding the right engagement mix for clients, attracting, retaining and empowering advisors, managing cost and revenue pressures and driving higher return on investment by investing in the right technology. “Without a solid data foundation and a unified platform, AI initiatives can underperform and fail to produce a solid return on investment.”
Digitally enabled engagement models
To help, they recommend companies adopt an approach that integrates digital solutions for clients without sacrificing the personal touch that clients value. They recommend keeping current in technology investment and work to automate and simplify key processes. “A modern experience layer unifies and personalizes customer journeys,” they write. “Firms utilizing digitally enabled engagement models can achieve a 25 per cent to 35 per cent increase in revenue per advisor, allowing more clients to be managed without sacrificing the personalized experience.”
They also say firms have reported up to 30 per cent savings in operational expenses after implementing scalable, integrated front-end platforms while other wealth managers have reportedly been able to unlock up to 40 per cent efficiency gains in onboarding alone.
“Firms need the right systems, tools and governance in place, including data warehouses, data lakes and analytics tools to unlock the power of AI agents,” the paper states. “With the relevant data and business logic, these AI agents can support advisors in seamlessly managing client relationships across the entire lifecycle.”
