Overview
Fast moving market trends in multigenerational wealth and investor choice run in parallel to wealth management platforms struggling with an older generation of technology, OMS and trading systems. This environment must evolve to include preferences of younger, more self-service capable investors for private wealth management firms to retain business and grow.
The shift toward modern, flexible, accessible OMS, portfolio management tools, performance, and UX capabilities for both advisors and their investors is at the heart of a well-connected wealth management technology ecosystem.
Learn how this private wealth manager improved advisor satisfaction and business efficiency with modern portfolio management tools.
The evolution in requirements for wealth management technology
The Private Wealth industry is encountering a challenge like none other in recent memory.
As wealth transitions between generations (projected at $84T through 2045*), as much as 80% of this money is also moving from an incumbent wealth manager to a new manager or exiting the system entirely as "self-managed” gains in popularity. Wealth management firms and their advisors are scrambling to determine how to capture and hold on to that business.
The rationale behind this change is never a single tangible item or issue. These migrations can usually be credited to larger cultural changes, along with an evolving financial market and generational preferences. That said, ‘know your client’ has always been a fundamental minimum requirement that has driven change.
This is reflected in both advisor and investor preferences for wealth management communications and engagement. Generally, an older generation of investor chooses more white glove attention, while the younger or “new money” investor demands more self-service tools, especially after Covid. Successful wealth management firms will deliver a flexible mix.
Know your investors
Understanding the next generation of investors should consider a holistic view across all wealth manager offerings:
- Investment strategy – asset classes, ESG, globalization, informed control
- Additional services – tax, white gloves, concierge
- Communications – on-demand, bite-sized, transparency, digital access
With delivery mechanisms being the most obvious transformation from face-to-face meetings and scheduled reporting to on-demand commentary and self-service portals, this can be viewed as a large change in current practices and thus cost to the wealth advisory firm.
However, with such a focus on digital interaction, the true value of the content delivered by the advisor can now be more easily measured by the wealth firm leading to new client initiatives being based on quantified data, rather than on traditional ‘opinion’ or ‘historical trends’ that can lead to a low return on investment.
Know your advisors
Looking internally, a wealth (forgive the pun) of information is also available for firms to identify cultural changes between generations. Employees at all levels of the firm have invaluable insight into current topics of interest and preferred methods of ingesting information.
Pairing advisors with investors at similar stages in their life experiences enables critical relationships to be formed that can benefit both sides for many years.
Linedata’s approach to wealth management software solutions
We at Linedata have seen those changes mirrored in client requirements and user experience expectations of our software and technology. As we started our Wealth Management Platform journey a few years ago, our wealth manager clients told us that access to data and web-based decision-making tools were critical to their future growth. Moreover, this focus was paramount to their ability to adapt to rapidly changing market and investor demands.
Built alongside our robust, battle-tested OMS, portfolio management for wealth managers and trading software that provides confidence and consistency are cutting-edge APIs (Application Programming Interfaces) and web-based technologies to modernize experience and accelerate extensions of our next generation of solutions for the next generation of investors (and advisors!).
Client driven development
Drawing another parallel to ‘know your client,’ we make it a priority to ‘know our user’ and ensure that Linedata’s tools and capabilities reflect the different requirements of a new generation.
One example of how this plays out in today’s highly competitive wealth market is ‘doing more with less’. Advisors and portfolio managers have increased the number of accounts, funds, portfolios, or investment strategies they must onboard and manage. This required us to increase their daily productivity by integrating the concept of exception management, or directing the user to areas requiring attention into workflows and tools, such as:
- Dashboard summaries
- Alerting capabilities
- Data visualizations
- New technology data interactions via API or directly within the applications
Our clients and ourselves: Positioned for future opportunity
The wealth management industry is undergoing a dynamic shift in response to market and generational changes that have firms scrambling to determine how to capture and hold on to the money flow. With all potential threats, there are potential opportunities, but change can often involve cost and risk.
At Linedata, we believe that wealth managers will prevail who adopt a balanced approach where tried and tested technology and experience are optimized while integrating new modular capabilities and the energy of a modern UX without ‘betting the house.’ With their growth trajectories and complexity, institutional wealth firms need technology solutions that leverage tools and APIs, enabling their systems to work more effectively while adopting and integrating modern capabilities. Technology capabilities such as continuous integration (CI/CD) ensure wealth managers can access new features and workflow improvements without costly upgrade projects.
Linedata’s culture of active listening and ability to experiment within ‘proofs of concepts’ initiatives enable efficient and numerous innovations to be assessed before more significant investment and project commitment. This greatly improves the accuracy of the return on investment estimation and the chances of successfully meeting the evolving demands of a new generation of advisors and investors.
A new dawn is upon us, but that is always how an exciting new day starts.
Learn more about how Linedata wealth management software solutions simplify how wealth managers and advisors run portfolios, onboard new business, and interact with clients with remote access, UX-rich tools supported by a highly performant engine.
About the author
Matt Gibbs is senior global product manager for Linedata’s front office technology solutions based in London. 2024 is his 30-year anniversary in the Industry since he joined Rothschilds as a young wide-eyed kid straight out of school. Since then he has worked for consultancies, vendors and asset managers to help resolve issues and set direction. Being a husband, dad of three sons and a devoted Cincinnati Bengals (NFL), Harlequins (rugby) and Kent (cricket) fan, time savers are always his main rationale for change requests!
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