IBS Journal June 2018


is that new clients will expect it. Investors need to have all the most up-to-date information at their fingertips, accessible 24/7, with a mix of automated advice and the option, if they are uncomfortable with that, to set up a communication line with a real live human being.

Investopedia is one of the leading indicators of how digital and mobile technologies will lead to a more educated investor client base.

Machine learning might be able to better assess a client’s real needs and goals over time, and actively provide educational content that will

educates their clients, helps them develop an awareness of their financial behaviour, and aids them in using it to their benefit

“ PeachCap CEO David Miller

help them. As technology evolves, clients and consumers are sure to be better informed, educated and more aware than ever before.

While much of the industry has become almost completely commoditised, high-worth clients want more of a human element guiding them through their financial lives. That’s why, according to some wealth management companies, wealth management in future will put far more of an emphasis on the personal touch.

PeachCap CEO and founder David Miller says: “Understanding the emotional quotient (EQ) of a client is what we call their Avatar. A client’s Avatar is their combined, unique personality traits that make them more prone to certain financial behaviour. For example, the Giver is generous and dedicated to causes. Knowing this about your client will alert you to their preference to charitable organisations and giving back. The fiduciary duty of an advisor is to ensure their client doesn’t over-exert their fiscal liability – also known as over-commitment. Over time, the advisor educates their clients, helps them develop an awareness of their financial behaviour, and aids them in using it to their benefit.”

One of the new cloud-based wealth management systems is Morningstar Direct for Wealth Management which features risk model and scenario analysis. Tricia Rothschild, Morningstar’s chief product officer says: “Manager research teams are facing increasing scrutiny around due diligence and the manager selection process to prove they are aligned to their clients’ needs. By streamlining communication through one platform, manager researchers, due diligence teams and portfolio strategists can collaborate and connect with client-facing advisors in real time in order to share critical updates across firm locations. Our new edition of Morningstar Direct Cloud showcases a new workflow for wealth management users and our ongoing investment in proprietary data and research.”

Morningstar Direct for Wealth Management addresses the challenges wealth management professionals face, including organisational alignment, disparate technology solutions and changes in the regulatory environment. The platform provides a solution, addressing these obstacles by consolidating technology usage, simplifying the

compliance process and demonstrating best-interest product shelf decisions.

New features of the platform include data points such as active share and environmental, social and governance (ESG) data, custom data integration, custom scorecards, team notifications that allow firm-wide updates on relevant investments, as well as the option for client account analysis configuration.

Some companies give robo-advisors short shrift. Miller says: “We’re all familiar with the hype and notoriety around robo-advisors and apps. They’ve made investing more easily accessible and automated through the use of AI, software algorithms and mobile technology. But what’s important to remember is that, while these technologies will continue to evolve and advance the investor experience in many ways, they’re not replacing humans anytime soon. There’s simply no way (at this time) that an AI or an app can effectively assess and manage a client’s EQ or emotional state. While there is a clear long-term path in neuroscience to support a proven formula that accounts for the emotional aspect, it isn’t completely solved yet and is going to take years of collaboration.”

Miller believes the market will take a turn for the worse. When that happens, “clients can’t call an app or AI system on the phone. Rather, they’ll turn to their trusted human financial advisor to help ease the stress and figure out a plan moving forward. In the future, we’re likely to see more ‘hybrid’ types of models, where robo-advisor tech and humans work together to provide the best experience for clients. Things like asset allocation and rebalancing can easily be automated, while the human advisor works to set strategy, manage EQ and formulate lifetime financial goals with clients.”

He adds that while these changes in the wealth management space are unavoidable, they are also good, for investors and advisors. “Massive firms are actively raising their requirements for clientele, making white-glove financial services less accessible to Main Street,” he says. “Our objective is to bring the services of the uber-rich back to the average investor, ending the preference towards Wall Street and making financial services available for the chosen many.”

The advisor

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