In the second article of this series, we took a close look at the unique expectations that affluent people in the GBA (Greater Bay Area) have for their banks and wealth management firms and found that they are a complex mixture of the traditional and the modern. We now turn our attention to how executives targeting this market can manage to meet these demands profitably.
Wealth advisory firms will face stiff competition for Greater Bay Area investors as China continues to pursue greater fluidity and opportunity across this dynamically growing region. As opportunity expands, so will the complexity of the solutions and portfolios that banks and advisors must offer to compete effectively.
Delivering alpha will often be the deciding differentiator, and so quality presentations become a paramount concern. The client must thoroughly understand what you are offering before they will feel confident enough to accept it and to engage your services. Wealth management firms don’t compete on ideas. They compete on their ability to convey those ideas to their clients.
Clear communications at this level require modern analytical tools and state-of-the art, up-to-date substantiation. Overwhelming a client or prospect with graphs and charts may not be the best way to achieve understanding. That said, your presentation needs to be data-driven to convince analytical and educated GBA investors.
How can advisors strike the correct balance?
Alpha and modeling
Having served wealth management firms all over the globe since 1985, Avaloq has learned that a stellar client presentation begins in the back office, deep in the infrastructure underlying a wealth management firm.
The digital natives (of all ages) in the GBA will understand visualizations and animations better than any other communications method. The best wealth management systems on the market today, including those from Avaloq, can generate them for you. When your clients can see a visual model of your recommendations, they will appreciate your reasoning, making it easier for them to trust that the portfolio will meet their needs.
Since animations and visualizations increase comprehension, they invite speculation. Thus, successful advisors will be prepared for “what if” questions. For example, most prospects and clients will remember the global recession of 2008, and practically all of them will be intimately familiar with the pandemic. They’ll worry about how their portfolio will perform if either happens again.
Advisors who can proactively show clients how the proposed portfolio might perform under different future scenarios will have a much better chance to build client confidence in the strategies they present.
Winning advisors should also bring Artificial Intelligence (AI) and Machine Learning to the table, using it to back up their recommendations. A majority of our survey respondents said they would be happy to have their advisor use AI for such things as helping to analyze their portfolio or to determine pivots.
It’s important to note that since AI cannot provide the “personalized service” they demand, it is not perceived as a replacement for an advisor or banker. Rather, GBA prospects expect to see it used as a tool in the pursuit of excellence.
Modern systems, such as Avaloq Wealth, use AI-assisted data modeling to create projections of portfolio performance under differentiated scenarios. Our system even substantiates concepts, including ESG strategies, with links to relevant news.
When your client sees a presentation like this, they’ll have their own questions about the future as well. If you can answer them with new models on the fly, the client will feel even more comfortable and knowledgeable. They will have greater confidence in your recommendations and, just as important, they will know that you are backed-up by world-class infrastructure.
Alpha and profitability
Successful firms need to deliver market-beating service profitably, which means balancing opposing forces that apply pressure to a firm’s ability to profitably deliver the advanced and innovative products that will appeal to GBA investors.
The first force is the extreme expectations clients bring to the table, and the second is cost sensitivity. In the GBA, our survey indicates that up to 88% of affluent to high-net-worth investors “must have” or “would switch” financial services providers to get lower fees.
Significantly, GBA investors seem to be more willing to switch firms than has been typical in our industry, with our survey indicating that nearly half of those who have an advisor switched advisors in the last five years. This effectively means that your client relationship is on the line with each presentation. Only a platform that offers the full spectrum that Avaloq Wealth does can ensure that each presentation has the comprehensibility and flexibility to win the client’s confidence, and the power to profitably execute the strategy as presented.
The operations behind it all
Wealth managers should be able to concentrate on developing customer relationships by means of innovative portfolio creation. The CEOs, CIOs and executives who will dominate the incredible opportunity opening up in the GBA right now will free their advisors and relationship managers to do exactly that.
That means the back office must run smoothly and efficiently. Very few infrastructure providers can automate the entire process from end-customer through the advisor and all the way to trade settlement. Avaloq Wealth is one of the few providers that powers a firm’s digital transformation in exactly this way. Compatible with any core banking system, Avaloq spans the CIO, PMs, investment advisors, compliance officers, and RMs as it unifies your entire value chain on a single integrated data set.
We conducted hundreds of exhaustive on-site interviews at wealth management firms worldwide before we wrote a single line of code. This ensured that the processes the software enable match the processes that your staff will readily understand. Its user interface is based upon Google Material Design, so most people know how to use it as soon as they see it.
The combined effect is to empower your teams to coordinate their efforts and to extract full value from the system right from the start. It also eases regulatory compliance, regardless of how many systems it coordinates.
Avaloq Wealth is only one aspect of the way we serve GBA wealth management firms during this historic opportunity:
- Modularity and compatibility with any core banking system
- Our SaaS offering can drive down run costs and maximise revenues generated by the front office.
- High STP rates with low manual intervention can help free expensive human resources to focus on customer-facing service.
- Our flexible cost models can fit your business now and then scale appropriately.
- Easy to understand APIs unlock flexibility and extendibility with 3rd parties
The list goes on, but the bottom line remains the same: you need a unified data set and an integrated company-wide workbench to create the portfolios modern clients want. You need extreme power with integrated artificial intelligence to execute and run them. And you need to empower your advisors with presentations that can help them present complex solutions in a clear and compelling way so as to earn share of wallet and fresh introductions.
As the Greater Bay Area enters a new era of fluidity and wealth creation, with a substantial new market of people looking for a financial advisor, Avaloq can position you and your firm to seize this remarkable opportunity and to retain it as the future unfolds.