The wealth management industry is facing massive disruption. The COVID-19 pandemic has shaken traditional business models and exposed firms that have been slow to transition to digital ways of working and communicating. Clients are also more demanding—not only are they seeking broader financial advice, they are also expecting their advisers to be more socially and environmentally conscious.

Against that backdrop, profits are being squeezed—average cost-to-income ratios are sitting at 70%, and in an environment where growth will be harder to achieve, firms need to identify new ways to become more efficient.

The good news is that many firms recognise they need to change. According to a recent Orbium and Accenture survey, 78% of wealth managers acknowledge they need to address their business model inertia.

The challenge is how to achieve that. Wealth Dynamix’s CEO and Co-founder Gary Linieres, and Marketing Director Lucy Heavens, were joined by Orbium’s Head of Strategy and Change Ian Woodhouse, Kleinwort Hambros’ Group COO Tara Palmer, and Coutts’ Client Needs and Advice Journey Owner David Pallister for a webinar to discuss what successful firms are doing to boost revenues and cut costs in order to get their cost-to-income ratios under control.

1. Differentiated Client Experience

Revenues will be tougher to generate in a post-Covid environment, so firms need to focus on improving their client experience across the whole client journey. This starts with streamlining and digitising onboarding journeys so that clients are not forced to enter the same information multiple times as they move through the process. In addition, onboarding needs to be intuitive and simple to understand especially for those clients who are not as comfortable with technology. Firms should also be offering multichannel servicing, and adopting a hybrid adviser model that brings together technology and human expertise to deliver a hyper-personalised experience. Firms need to broaden their proposition to clients, from providing more holistic financial planning advice to offering different investment opportunities, such as ESG investing or other types of thematic strategies.

2. Operational Efficiency

Wealth managers need to accelerate their digital transformation efforts to reduce costs and eliminate the inefficiencies associated with legacy systems. This begins with improving data processing and avoiding data silos so that wealth managers can benefit from new technologies such as artificial intelligence (AI) and machine learning (ML). By leveraging AI and ML advisers will gain deeper client insights that can be used to provide that hyper-personalised advice. Firms also need to adopt technology to improve productivity by automating routine tasks. This will free up advisers to concentrate on where they can add the most value, such as spending more time engaging with clients and less time on repetitive administrative tasks. AI-driven insights can also help firms identify what clients are at risk of leaving or who might inherit wealth, enabling advisers to intervene at the right time with the right offer.

3. Responsible Leadership and Talent

As ESG trends become ever-more important to investors, wealth managers need to take steps to ensure their values are aligned with those of their clients and demonstrate they are meeting those expectations, whether it is in terms of diversity and inclusion or committing to sustainable investment guidelines. Firms must also focus on talent management to ensure they are hiring and retaining the best advisers who have the skills needed to succeed in an increasingly digital world. That means firms not only need to invest in technology that is client-facing but also in tools that enable advisers to do their jobs more effectively and deliver higher standards of client service. The next generation of talent will expect to use technology by default—they are unlikely to choose a firm that is not taking digital transformation seriously.