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How Advanced Analytics is Helping Wealth Managers?

The expectations and preferences of the new generation, including wealth management investors, is being increasingly shaped by new technologies such as artificial intelligence (AI) that enable enhanced self-service and 24/7 support. Investment managers, in turn, are responding to changing customer demands by deploying machine learning, Robotic Process Automation (RPA) and advanced analytics. Why? Armed with advanced techniques, digitally-enabled asset managers can create distinct competitive advantage and transform the way products are delivered, risks are managed, and clients are engaged. A new report by Boston Consulting Group suggests that over 75% of wealth management firms are increasing their investment in big data and analytics. The reason: for more than 70% of wealth management customers, personalized service is a key consideration when choosing the wealth management firms.  

Predictive analytics is one such advanced analytics discipline that brings enormous value to wealth managers. They can assess potential clients’ ability to purchase various products and services, their lifetime value, investment style and risk tolerance. Companies that apply predictive analytics across the customer acquisition and retention funnel will dominate the ever-evolving wealth management landscape through increased responsiveness and effective decision-making. No wonder, the team of wealth managers at Altiore Capital integrates leverages analytics to analyze client portfolios and enhance client investment decisions.

Let’s look at four ways in which advanced analytics can transform wealth management:

Offer hybrid investment intelligence and advice:

For dynamic advice, millennials prefer human wealth managers with advanced market insights. Blending digital investing tools with human advisors helps wealth management firms attract young, tech-savvy customers and better position themselves during investment process. Firms such as Vanguard, Fidelity, and Schwab are already tailoring their offerings to match this new hybrid investment strategy. For instance Fidelity provides its client with the option of leveraging robo-advisor platform or partnering with a Fidelity investment professional. This ensures comprehensive services for an improved customer experience.

Enable rapid client acquisition:  

Cutting-edge capabilities in predictive analytics enable banks and financial firms to deliver smart and customized products, optimize customer targeting, recognize high net worth clients, and capture new markets.   For wealth managers looking to improve lead generation and create rewarding experiences for savvy customers, investment in analytics can be a vital differentiator. It helps anticipate customer behavior, and design and deliver intelligent, personalized customer communications. Take the case of ANZ Bank in Australia. It leverages IBM Watson to assess customer’s financial situations and create tailored financial plans This has helped them advice the client with a consistent standard of quality and eliminate the manual work to create a financial plan.

Boost client loyalty:

An ideal predictive customer intelligence solution enables wealth managers to engage with customers through the right channel and provide contextual customer services. When combined with sentiment analysis, predictive analytics provides a deeper awareness of customer needs, wants and intentions to help gauge clients’ risk tolerance levels.  Take a leaf from Man Group PLC’s customer engagement playbook. The firm uses satellite imagery, social media sentiment, consumer transactions and web-crawled data to better match their services and recommendations to their clients’ needs.

Disseminate targeted financial advice:  

Analyzing client surveys and other customer data to tailor portfolio allocations and offer real-time trade/investment ideas helps create customized financial plans more quickly and efficiently. Advanced analytics also provides wealth managers the ability to regularly assess the suitability of wealth management and compare investment profiles with trading activities. UBS financial advisors leverages a wealth management platform to assess client portfolios using return and risk analysis, and provide financial advice to clients based on the results.  Similarly, Interactive Brokers uses an integrated robo-advisor platform to help advisors transform investment decisions.

The wealth management industry is in midst of significant disruption driven by technological advancements, changing customer expectations and evolving regulations. To generate superior investment performance for clients in this tough environment, it is critical for wealth managers to familiarize themselves with right analytics models to better understand clients’ needs. While advanced technologies can help wealth managers deliver better outcomes, it is important to remember that they are merely tools. Their effectiveness depends on how they are used. Companies will therefore continue to demand skilled wealth managers who can integrate advanced tools into decision making to offer a personalized as well as modern customer experience.

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