Digital transformation

met·a·mor·pho·sis

In our 2022 Connected Wealth Report, we said that digital transformation is here to stay; though it hasn’t hit its stride in wealth management, it is well underway in many industries.

We reached out to three CMOs for their views on what wealth firms should learn from industries where this metamorphosis has happened.

It is an important dialogue in our change-averse industry. Readers of Geoffrey A. Moore’s seminal Crossing the Chasm on technology adoption will recognize that to move from a few early adopters of [digital transformation] technology to the early majority will require success stories and reliable, proven approaches.

Nicole Zheng, Susan Theder, Jaime Punishill, Mat Mathews, and Jed Maczuba ?discuss the importance of digital transformation, the most common mistakes that lead to a failed transformation initiative, and the consequences firms can face if they fail to digitally transform.

Cynthia Stephens

From egg to larva: Digital transformation (re)defined

There is no denying that digital transformation is table stakes in making a wealth firm competitive; however, transformation means different things to different people and the path to accelerating digital transformation is not necessarily linear.

“Most companies do digital kabuki theater under the guise of digital transformation,” said Jaime Punishill, Chief Market Officer at nCino. “They take the old world and shove it into the new world. And that never works. Digital transformation is not about taking your existing service or capabilities or products and selling them digitally. That’s digital enablement and digital selling and perhaps digital servicing. Digital transformation is recognizing that technological advancements allow you to get back to first principles—that is, if you were designing your product/service/solution today, with today’s capabilities, how would you design them? What would you automate? How would you price?”

“To keep up with changing client expectations and stay competitive in a crowded market, financial advisors and broker-dealers are turning to innovative marketing technologies that can help them reach and engage clients in new ways,” said Susan Theder, Chief Marketing and Experience Officer at FMG Suite.

“An example of these new marketing technologies include personalization, such as using data-driven insights to tailor marketing messages and content to individual clients' needs and interests; automation, like using marketing tools to streamline and optimize marketing campaigns like email marketing and social media advertising; content marketing, such as blog posts, videos, and infographics that establish thought leadership and build trust with clients; social media where firms can leverage social platforms to connect with clients, share insights, and build brand awareness; and mobile optimization as more and more clients are accessing financial information and services on their smartphones and tablets.”

“We’re seeing innovative firms focus their digital transformation efforts on streamlining client communication and centralizing data to unlock a better client experience and key business intelligence,” said Nicole Zheng, Chief Marketing Officer at Pontera. “For example, many firms are integrating their portfolio management software with order management systems and asset data sources to provide a complete financial picture to the client."

While Theder and Zheng are focused on the more technical aspects of accelerating digital transformation, Mat Mathews, Senior Vice President of Product at Advisor360°, believes a key component of accelerating digital transformation lies in the adoption of the transformation itself.?

“The biggest challenge is always cultural. Understand deeply who is impacted by the transformation, and not only how their lives will change for the better, but more importantly what could risk their immediate productivity or overall effectiveness,” said Mathews. “You want to get those people involved and brought in on the transformation process, and in that approach leverage their deep understanding of how things work—and don’t work—today.”

“To summarize, the most successful financial advisors and broker-dealers are those who are willing to embrace new technologies and adapt their marketing strategies to meet the evolving needs of their clients,” said Theder. “By leveraging innovative marketing tech, they can build stronger relationships with clients, generate more leads, and ultimately drive business growth.”

“The most successful financial advisors and broker-dealers are those who are willing to embrace new technologies and adapt their marketing strategies to meet the evolving needs of their clients.”—Susan Theder

Adult: Cross-industry learnings

“There are tremendous learnings to be had from examining other industries,” said Punishill. “Look at travel: in the year 2000, online travel was postulated to eliminate travel agents. Today, there are more travel agents than there were twenty-three years ago. This is a great example of digital transformation—the revenue model shifted and the value proposition of the travel agent along with it. The travel agents that didn’t transform didn’t last. It’s good to find proxies with dynamics like this and play them out in your own industry. New developments are usually accompanied by growing pains.”

Mathews agrees that there are certainly learnings to be had from other industries but that firms do not even need to look further than the financial services industry.

“Banks have created modern mobile experiences for customers to handle all their daily banking needs without ever coming into a branch. Insurance companies have adjuster-free claims processes. Large investment banks have benefited from migrating infrastructure to the cloud and almost all companies now benefit from fully managed SaaS for many internal business processes, freeing up IT staff to focus on driving new staff experiences,” said Mathews.

He continues, “digital transformation really starts with understanding at a business level what opportunities exist to get closer to your customers, to build more modern ‘consumer grade’ customer experiences, to achieve better operating efficiencies, or to provide a more productive working environment. These things eventually translate to becoming a better partner for your clients.”

“New developments are usually accompanied by growing pains.”—Jaime Punishill

Overcoming challenges

While there are many benefits to digitally transforming, this process does not come without its challenges.

“A common challenge is prioritization and simplification of the tech stack as too many tools can create maintenance overhead and diminishing returns. Firms can overcome this challenge by aligning their technology roadmaps with their clients’ needs as opposed to being all-things-to-everyone,” said Zheng.

She elaborates, “a way to overcome the tech stack complexity hurdle is to regularly measure usage by advisors and revisit the question of training or trimming. If a technology helps save an advisor time and reduces friction in their clients’ experience, it can have a significant impact on the business; but if a tool is unused, it is simply a cost center.”

“Other challenges include trying to run the business during the transformation, the immense choices of technology, and the resource war around talent,” said Jed Maczuba, Advisor360°’s Chief Technology Officer. Theder includes compliance, data privacy and security, integration, adoption, and keeping up with the pace of change as additional challenges.

“By addressing these challenges head-on, financial advisors and broker-dealers can successfully implement new marketing technologies and realize the benefits of digital transformation for their businesses and clients,” said Theder. “This requires a commitment to ongoing education and training, collaboration with compliance teams, and a willingness to embrace new technologies and strategies as they emerge.”

“If a technology helps save an advisor time and reduces friction in their clients’ experience, it can have a significant impact on the business.”—Nicole Zheng

Life cycles

There are many challenges that firms must face to digitally transform; however, the alternative of not transforming at all can be catastrophic.

“The industry is at a generational inflection point. As your older clients—who have been less digitally forward and inclined—pass on financial management to their Gen X or Gen Y kids, you will be facing entirely different expectations from these new generations on fees, interaction models, and digital interactions,” said Punishill.

“As with anything, vying for investors’ time and money is a competitive endeavor. Most people are becoming accustomed to self-service capabilities so they can immediately get their tactical needs met without waiting for people or processes,” said Mathews.

He continues, “Wealth management is not immune to this trend, especially as wealth transitions to the younger generation. Firms that understand this will continue to gain and retain more investors as they build trust across generational boundaries. On the flip side, firms that don’t provide a modern experience to clients risk being viewed as ‘old school’ and become overly reliant on advisor relationships alone.”

“Wealth management firms that are slow to adopt digital technologies may be seen as outdated or untrustworthy by clients and industry stakeholders. This can lead to a damaged reputation and loss of credibility. To remain competitive and meet the changing needs of clients, it is important for firms to embrace new technologies and invest in their digital capabilities,” said Theder.

“Firms that don’t digitally evolve may also struggle to attract and retain top talent who embrace smart technology. Manual processes, paper-based documentation, and legacy systems can scare away such talent in addition to slowing down operations, increasing errors, and creating compliance risks,” said Zheng. “Those who do not invest in digital tools to automate routine tasks may struggle to scale their businesses and could face increased costs associated with maintaining outdated systems.”

“If you plan on being in this business more than 5 years from today, or you plan on selling your business or handing it down, considering the models, experiences, and pricing schemes needed to support digital first customers are paramount today,” says Punishill.

“At the end of the day, transformation is not a transaction. The choices that you make actually

have a long tail, way beyond just the implementation timeline,” said Maczuba. “Ongoing

support and maintenance for software is a factor greater than the original costs.”

“Transformation is not a transaction.”—Jed Maczuba

We hope this conversation has been informative on the impact digital transformation is having on the industry.

About our contributors:

Jaime Punishill, nCino

Jaime Punishill serves as nCino's Chief Market Officer and leads the company's global marketing organization. An experienced and innovative marketing executive, Jaime has nearly three decades of experience in the technology and financial services sectors.

Susan Theder, FMG Suite

Susan Theder is the Chief Marketing and Experience Officer at FMG Suite and a member of the company’s Senior Leadership Team. Susan places an emphasis on the importance of customer-focused strategies that leverage data and technology to deliver personalized and customized experiences that WOW. She was named CMO of the year by WealthManagement.com in 2019 and a Women to Watch by InvestmentNews in 2019. Susan currently serves on the Board of Directors for SMARSH and ComplySci, both leading SaaS/RegTech companies serving the financial services industry.

Nicole Zheng, Pontera

Nicole is the Chief Marketing Officer of Pontera, a fintech company that is on a mission to be the bridge to a better retirement for millions of Americans by enabling financial advisors to manage, trade and report 401(k)s, 403(b)s, and other held-away accounts. In 2022, Zheng was recognized by the Stevie Business Awards for Women in Business Worldwide as a Female Executive of the Year. In 2020, Zheng landed on Entrepreneur’s list of Top Female Founders in the United States.

Mat Mathews, Advisor360°

Mat Mathews oversees and supports the Product team with all future and existing initiatives. Mat is skilled in complex technology markets and focused on distilling strategies into compelling stories and driving action by building and motivating high-performance teams.

Jed Maczuba, Advisor360°

Jed leads a globally distributed and diverse team of technologists responsible for building and operating the company’s market-leading, award-winning, innovative products and platform. Jed oversees Advisor360°’s Data, Platform, and Product Engineering teams and is responsible for accelerating research and development across the platform and spearheading development of future product capabilities.

Enjoyed this newsletter?

Learn more about digital transformation here: