Unlocking the Future of Wealth Management: A Roadmap for Success

October 2023

The 2 minute summary:

Wealth Management is changing and changing forever; Wealthtech is quickly moving from a sideshow to a core part of how future ready Wealth Managers operate. Every part of the value chain is being infused or rewired using technology. If you are a Wealth Management executive trying to determine how to adapt to the new world this 9 step road map is here to help you. This article provides invaluable insights from an industry expert, garnered through real world experiences, successes and failures, working as the buyer, seller, project deliverer and solution

consumer.

The steps are easy and are laid out for you. Following them, being disciplined and ensuring your team and organisation go along for the journey is a little more challenging. I hope this roadmap makes the journey a little easier for you all as you navigate a more digital future in Wealth Management.

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Introduction

In the ever-evolving landscape of wealth management, one truth remains constant: the pursuit of growth and wealth preservation is at the heart of our industry. For decades, this pursuit has been facilitated by experts who harness their investing acumen and deep market knowledge to serve clients. However, the winds of change are sweeping through our sector, ushered in by the unstoppable force of technology.

While Wealth Management has been somewhat shielded from the disruptive waves of digital transformation, it can no longer stand on the sidelines. Technology is now challenging the very core of our industry, pushing us to adapt and embrace change like never before. The old adage, "turkeys don't vote for Christmas," resonates with highly-paid Wealth Managers who have been reluctant to fully embrace technology. Yet, as in all walks of life, progress is inevitable, and the leaders and executives in Wealth & Asset Management firms are realising that to thrive in the future, they must embark on a transformation journey.

In this article, we will unveil the critical insights that can significantly enhance the chances of a successful technology-driven transformation for Wealth and Asset Managers. Before we dive into these invaluable lessons, it's essential to understand the three primary intents or values that technology can deliver within our sector:

1. Experience: Leveraging digital interfaces to enhance or even replace human interactions with clients.

2. Optimisation: Harnessing the power of monitoring tools, analytics, and AI to refine portfolios, contributions, strategies, and risk management.

3. Automation: Using technology to streamline or eliminate laborious tasks, freeing up valuable time for client-focused activities.

The question now is: How can you ensure a triumphant transformation for your Wealth Management business? How do you make the right choices, at the right time, and for the right reasons?

In this article, we offer a comprehensive guide, rooted in the experiences of operators, consultants, and change agents who have navigated the transformational journey within a multitude of Wealth and Asset Management organisations. Prepare to embark on a journey that will equip you with the knowledge and insights needed to steer your firm toward a prosperous future in an industry marked by change, innovation, and unparalleled opportunity. Welcome to the Expert's Guide to Transformation in Wealth Management.

Step 1 - Self-Discovery: Illuminating the Path to Wealth Management Transformation

In the quest for Wealth Management transformation, it's a common inclination for CEOs, executives, leaders, and change champions to turn their gaze outward, seeking innovative solutions to identified issues that may be plaguing their organisation. Often, a single pressing problem can lead to a rush to find external remedies, a reaction fuelled by the perception that the issue has permeated every corner of their organisation or the industry.

However, in the pursuit of sustainable transformation, it is imperative not to overlook the critical first step: an inward journey of self-discovery. Understanding your organisation in its entirety, not just the areas in need of improvement, is essential. Recognising the myriad facets that have contributed to your organisation's past successes and growth is equally crucial.

Practical Application:

To kickstart your Wealth Transformation journey, I recommend embarking on a comprehensive field analysis. This analysis should encompass not only your own organisation but also your existing and aspirational competitors. A valuable visual aid in this process may take the form of a radar chart.

Utilising a structured framework to evaluate factors such as strength, leadership, and investment across various dimensions pertinent to your organisation (and potentially benchmarking against your peers) can swiftly furnish you with a guiding compass—a Northstar—by which to commence your transformational odyssey. This self-awareness will serve as the bedrock upon which you'll construct the remaining steps of your journey toward Wealth Management transformation.

Step 2 - Crystal Clarity: Defining Your Wealth Management Transformation Destination

The term 'Transformation' is often tossed around without a precise vision of the desired future state. Even when there is contemplation of the future, it frequently takes the form of an abstract concept where the organisation continues to perform the same activities as today, only with the integration of more technology and reduced costs. This vague approach is a breeding ground for Transformation initiatives that eventually morph into systematic cost-cutting endeavours.

Moreover, Step 2 underscores the significance of Step 1. By intimately understanding your company and the drivers behind its success, you gain the capacity to make informed decisions regarding which drivers require augmentation, refinement, divergence, or reduction. In theory, this may sound straightforward, but without data-driven and reflective decision-making, Transformation programs can easily devolve into mere flights of fancy and mimicry.

Practical Application:

To foster clarity, envision your organisation as a startup. Craft an elevator pitch and a supporting pitch deck exclusively centred on the future state. While acknowledging current constraints, leverage them to shape your proverbial 'blank sheet of paper,' rather than construing them as immutable elements of the present state.

Engage in a series of at least 10 meetings with diverse stakeholders within your immediate sphere of influence. Encourage them to actively listen, provide feedback, and collaborate on enhancements.

After every set of 3 meetings, make necessary alterations and improvements. This iterative approach not only propels you through innovation increments but also solidifies a future destination that holds profound meaning and distinction—transcending the notion of merely becoming a refined version of your existing business.

Following this process will:

• Build your initial coalition of support up to a critical mass enabling further engagement?
• Flush out any key objectors and barriers in your immediate circle
• Ensure that you are bullet proof on your vision
• Demonstrate your commitment to others through the act of pitching, listening? and innovating

Step 3 - Uniting Forces: Navigating Internal Dynamics for Wealth Management Transformation

Anyone with first-hand experience in a Wealth Management transformation will tell you that the most prevalent stumbling block is internal friction. This clandestine adversary, lurking beneath the surface, manifests itself through various symptoms, such as suboptimal vendor selection, protracted timelines, budget overruns, erratic shifts in scope and strategy, and fluctuations in key personnel.

Transformation programs demand not only a dedicated champion and sponsor but, most critically, robust stakeholder engagement that extends from influential leaders to entire teams—and ideally, across the entire organisation. Implementing change is a formidable challenge, and when it lacks clarity, which is frequently the case in Transformation initiatives, the difficulty is compounded. Devoting time and effort to identifying and linking existing pain points to the overarching Transformation vision is essential. This endeavour weaves a crucial 'red thread' into your program, establishing a tangible connection between the future state and the resolution of real-time challenges.

Practical Implementation:

Construct and maintain a network map that delineates your primary, secondary, and tertiary contacts and supporters—individuals crucial for engagement, alignment, and buy-in. Take a moment to assess the current mindset and support level of each person in relation to the impending change. As your network map evolves, continuously update it, including the individuals and their roles, and employ it as a strategic tool to address the primary concerns of your stakeholders.

By actively utilising a network map, you ensure that key decision-makers, advocates, and local teams take precedence in your engagement efforts over those who are already on board with the transformation journey and seek to delve into discussions about the future. This targeted approach fosters cohesion and alignment among your organisation's various factions, fortifying your path toward Wealth Management transformation success.

Step 4 - The Power of Pragmatism: Leveraging Proven Expertise in Wealth Management Transformation

In the intricate world of Wealth Management transformation, the involvement of partners, vendors, and specialised experts from domains not native to your Wealth or Asset Management firm is often a requisite. These experts bring a wealth of knowledge and innovative solutions, promising to elevate your transformation journey. However, the path to realising these promises can be riddled with pitfalls.

Too frequently, organisations become ensnared in lengthy and exhaustive RFP (Request for Proposal) processes and an endless cycle of meetings, where potential candidates, solutions, and partners are endlessly discussed. Regrettably, these processes often turn into fact-finding missions or aimless fishing expeditions, led by a select few within the organisation frequently operating at some distance to commercial business leaders. The result is a substantial investment of time and costs, both internally and with prospective partners, without yielding tangible outcomes.

Another common pitfall is getting mired in the pursuit of perfection or constant innovation at the expense of progress. This can lead to frustration among all stakeholders and, in many cases, spell the demise of well-intentioned transformation programs.

When enlisting external experts in your organisation, the most judicious approach is to commence with their recommendations or a ready-to-go solution, especially when it concerns proven technology systems, rather than immediately embarking on extensive customisation or entirely new builds.

Practical Application:

Initiate dialogues with industry peers and trusted advisors/consultants or your professional network to identify fintech and wealthtech partners worthy of initial discussions. Through these conversations, share insights about your challenges and aspirations, with the aim of swiftly identifying a shortlist of potential partners for a Phase 1 collaboration.

To ensure your engagement with prospective partners is fruitful and focussed it is best to prepare a concise overview of your current state, challenges, and ambitions to share with each prospective partner. This information empowers partners to tailor their insights and presentations to align with your specific needs. By fostering open and transparent exchanges with your shortlisted partners, you can expeditiously determine which one is best suited to assist in achieving your goals and will seamlessly integrate with your teams.

Once this decision-making process is complete and the partnership commences, position your chosen partner to lead Phase 1 of the transformation journey. Their prior experience in similar scenarios is invaluable, and leveraging their expertise helps mitigate risks while providing a learning opportunity from their past successes.

Most Wealthtech and Fintech firms are willing to share their insights if given the chance. Unfortunately, more often than not, they are asked to provide pitches, proposals and solutions in isolation or with incomplete information. Subsequently, when an engagement is underway, internal team members or subject matter experts (SMEs) with deep sector knowledge but limited transformation experience often dictate terms, minimising the additional value a partners insights can deliver.

To maximise the value of such partnerships, incorporate learning sessions into each sprint of your transformation process. Some sessions should involve the partner, while others should exclusively cater to in-house staff members. These sessions serve to accumulate knowledge for future transformation endeavours. They should not descend into critiquing past efforts or pushing forward the project or teams; these should be moments of learning. This approach ensures that the wealth of insights gained contributes to long-term organisational growth and resilience.

Step 5 - The Art of Incremental Transformation: Mitigating Risks and Maximising Rewards

Successful Wealth Management transformations often utilise the strategy of incremental transformation as it provides a powerful approach to deconstruct the larger wealth management process. This method involves dissecting the process into its constituent components and then channelling transformation efforts towards one tightly defined element. Take, for instance, customer on-boarding, an integral step for Wealth & Asset Managers, as well as many other financial services.?By transforming this component of the experience you will accrue immediate and downstream benefits.

The key is to concentrate on this facet without succumbing to the temptation of simultaneously altering renewal processes, reporting mechanisms, or any other aspect of the journey. However, this path is not without its caveats. It's essential to embark on this journey with the understanding that decisions made today might require revision tomorrow, and there's a possibility of accumulating technical debt within your program. Yet, it remains a prudent choice to proceed incrementally rather than attempting to devour the metaphorical elephant all at once.

Practical Application:

Initiate the process by creating a comprehensive process diagram, identifying the high level components and allowing you to zoom in on a specific step within the client or process journey. This visual aid provides clarity, enabling you to break down the high-level step into its subcomponents and, in turn, unveil any underlying interdependencies.

Consider applying a RAG (Red-Amber-Green) status marker to each of these underlying steps. Define what excellence signifies for both the customer and the organisation but be prepared for challenging discussions. Often, what benefits the client may not align perfectly with the organisation's objectives, and vice versa.

Upon completing this meticulous process, you'll gain a clear perspective on the focal points that warrant attention and identify any recurring patterns threading through the process that might be causing concealed tensions. By charting this path of incremental transformation, you can mitigate risks, achieve meaningful progress, and navigate your Wealth Management transformation with confidence and precision.

Step 6 - Pause, Reflect, and Validate: Ensuring Transformation Success

Much like embarking on a cross-country road trip, engineering strategic rest stops along the journey of Wealth Management transformation is paramount. These pauses serve as pivotal moments for your team to catch their breath, rekindle their commitment and enthusiasm, and either reevaluate or reaffirm their strategic objectives. In practice, this often unfolds organically as new executives or team members join the endeavour or some depart at different junctures. However, what is equally—if not more—crucial is the rigorous testing that should punctuate these transformative moments.?

The perils of overlooking testing can't be overstated. Without allocating sufficient time for internal testing or running pilots or sample scenarios, you jeopardise the future alignment and commercial outcomes of your program. A seemingly minor deviation from your current intention or a subtle friction point might escalate into a substantial departure or an insurmountable obstacle down the road, especially in the context of multi-year, multi-phase transformation initiatives.

Critically, this step, when embedded within a phase or stream of your transformation journey, should not trigger an entirely new business case, resource allocation request, or internal bidding process. To initiate such processes intentionally could lead your team to lose sight of the original task, creating a scenario where they continually shift their focus to create new targets in order to sustain operations or resources resulting in slow or no progress and poorly completed deliverables.

Practical Application:

Approach this step with a well-defined set of expectations for testing. The majority of documented tests in these moments should originate from the perspective of the customer or user and should be meticulously detailed through the lens of the business owner. The aim of the testing process is to gauge how closely the transformation aligns with adaptability and scalability and sense the commercial impacts that may be realised. This step is not solely about testing user experience (UX) or system stability; it encompasses a broader spectrum.

Ideally, the testing process should be overseen by key project team members, with active participation from non-project staff and, if feasible and warranted, clients. The shared expectation for all participants is to thoroughly evaluate each aspect of the transformation against the predefined criteria, ensuring that it aligns with the overarching goals and maintains fidelity to the original vision. These rigorous testing and validation processes are pivotal to safeguarding the long-term success of your Wealth Management transformation journey.

Step 7 - The Courage to Reassess: Adapting the Wealth Management Transformation Blueprint

As the journey of Wealth Management transformation unfolds, informed by testing data and an evaluation of the progress achieved thus far, it's an opportune moment to scrutinise the original plan. Armed with a wealth of additional information, data, and experience, and with a comprehensive grasp of the realities involved in running the program, it's time to pose some crucial questions:

1. Should we reconsider the original goal?

2. Does the timeline still align with our needs?

3. Are we genuinely realising value?

4. Is it prudent to bring in new partners or revise our existing partnerships?

5. Has the landscape shifted?

These questions are not just prudent but essential. They ensure that every step taken in this transformative journey is a purposeful and well-supported one, with all stakeholders in alignment. Among these questions, the first holds paramount importance. Should we change the goal? To what extent is "good enough" sufficient for achieving maximum impact??

It's often tempting for project teams, driven by vested interests and the desire for recognition, to linger in the 'almost finished' phase for longer than necessary. Therefore, the interrogation of the initial plan, particularly in terms of its alignment with current realities and business objectives, is pivotal.

Practical Application:

While it might seem counterintuitive for many projects to unveil less-than-perfect outcomes and decisions to senior stakeholders at this juncture, this is precisely the time to do so. Being in proximity to the finish line but not too far gone provides an opportunity to incorporate and act upon feedback that still benefits the overarching business objectives. This step allows for vital adjustments to accommodate shifts in the business landscape or operational climate that may have occurred since the transformation program commenced.

To effectively challenge the original plan, diligent preparation is key. Review, assess, and meticulously document both the positive and negative aspects of the transformation journey. The review pack should ideally be neutral and well-balanced, resisting the temptation to skew it overly positive or negative. Bias, whether protective or overly critical, can cloud judgement based on the project's progress and prevailing political currents. Most importantly, the review pack must be presented transparently to senior decision makers, offering a comprehensive account of the project's narrative. Questions, like those outlined above, should be openly and candidly discussed to ensure that the business, its customers, and all stakeholders derive maximum benefits from the investments and dedication poured into the transformation journey up to this point. This courageous reassessment bolsters the project's adaptability and resilience in the face of evolving circumstances.

Step 8 - The Crucial Exchange: Embracing Honest Feedback for Wealth Management Transformation

Wealth Management transformation at its core is intentional and disruptive change to your status quo, change can often be met with resistance, so seeking and receiving candid feedback is an indispensable step. Understanding that people inherently tend to resist change, it becomes paramount to engage the target group or market to ascertain whether their lives have indeed improved. Ideally, if Step 3 was executed thoroughly, you should possess a comprehensive list of current issues, accompanied by data or measurements that facilitate an evaluation of the previous state versus the current state.

During the feedback collection phase, it's essential to establish clear boundaries to prevent the process from being hijacked or veering into a realm of unchecked emotional reactions or unwarranted grievances. The overarching aim of this step is to answer two pivotal questions:

1. Have the lives of those affected by the change genuinely improved compared to the scenario if no action had been taken?

2. Was the impact worth the financial investment, time, and the inevitable challenges endured?

Practical Application:

Following an honest assessment and an open dialogue with the senior stakeholder group (Step 7), it's time to embark on a series of candid conversations with other stakeholders. This step should encompass three key objectives:

1. Present or re-present the solution implemented thus far.

2. Gather and, where necessary, address any negative feedback constructively.

3. Secure the support of identified stakeholders who wield substantial influence over the operational success of the transformation initiative.

The swiftness and success at this stage are intrinsically linked to the diligence and precision applied in Steps 2 and 3. If widespread engagement was achieved and the project closely aligns with expectations, this phase should yield robust support and modest suggestions for enhancement. It is critical during Step 8 to remain vigilant for any late-stage blockers that may have harboured doubts or lacked active engagement and have now emerged as voices of dissent.

Efficiently collecting and disseminating positive feedback, especially when endorsement to disclose the source of feedback is obtained, generates a wave of positivity that readily translates into eager adoption. By wholeheartedly embracing honest feedback, you pave the way for a more responsive adoption of the Wealth Management transformation that aligns seamlessly with the needs and aspirations of all stakeholders involved.

Step 9 - A Graceful Finish: Concluding Wealth Management Transformation as a Champion

When it comes to Wealth Management transformation the sad reality is?we often witness two contrasting scenarios. On one end of the spectrum, projects are abruptly terminated due to funding constraints, changes in management, or shifting market dynamics. On the other, projects overstay their welcome, extending beyond their natural lifecycle as they strive to iterate, refine, or redefine their scope. This extended duration can be likened to watching a professional fighter who continues to battle well past their prime, with recent performances tarnishing their once-sterling legacy, overshadowing their past achievements.

In the context of Wealth Management transformation, it is prudent to consider formally concluding a project upon achieving a significant commercial milestone, such as the acceptance of the first $10 million of Assets Under Management (AUM) or migration of the second wave of clients. This strategic decision serves a dual purpose: it allows for the identification and resolution of any lingering issues or bugs, while also preventing the project from lingering indefinitely, potentially becoming a cumbersome overhang. Furthermore, this approach empowers the business to assume ownership and nurture the opportunity for future growth.

Closing a project immediately after successful delivery may appear counterintuitive, especially in the context of the large-scale, multi-stream transformations that have become increasingly prevalent in Wealth Management. However, it aligns seamlessly with the concept iterative transformation, providing chapters in a novel, clearly demarcating sections for the reader or observer. By adopting smaller and more focused programs, Wealth Management transformation can further harness the Agile principles that have gained popularity throughout the Financial Services sector. This approach ensures a graceful conclusion to the transformation journey, leaving behind a legacy of achievement and championing the principles of adaptability and resilience within the industry.

Conclusion

In conclusion, the future of Wealth Management is undergoing a profound transformation, and at its heart lies the integration of cutting-edge technology. As financial service executives, it's imperative that we recognise the pivotal shift from viewing Wealthtech as a peripheral element to embracing it as the cornerstone of our industry's future. The journey towards a more digitised and agile Wealth Management landscape is both exciting and challenging, but with the right roadmap, we can navigate it successfully.

The nine steps outlined in this article serve as a valuable guide, drawing upon the extensive expertise of industry insiders who have experienced the nuances of this transformation firsthand. Each step provides crucial insights, gleaned from real-world experiences, successes, and even failures. By following these steps diligently and ensuring your entire team and organisation are on board, you can confidently embark on this journey toward a more digitally-driven future in Wealth Management.

Step 1 emphasises self-discovery for your organisation – an essential first step in recognising your strengths, weaknesses, and areas for improvement. Step 2 underscores the importance of achieving crystal clarity in your vision and goals. Step 3 highlights the necessity of broad and deep stakeholder engagement to ensure alignment and buy-in.

Steps 4 through 8 underscore the significance of collaboration, adaptability, and continuous improvement. Working with partners, targeting incremental transformation, reflecting, testing, reviewing the original plan, and taking on honest feedback are all key elements in this transformative process.

Finally, Step 9 serves as the ultimate goal – finishing as a winner in the evolving Wealth Management landscape. Success in this journey demands a relentless commitment to innovation, client-centricity, and leveraging the full potential of technology.

As C-level executives in the financial services industry, it is our responsibility to lead the charge in this digital revolution. I encourage each of you to embark on this transformational journey with a sense of purpose, resilience, and adaptability. The Wealthtech revolution is upon us, and by following these nine steps, you can position your organisation at the forefront of this exciting and rapidly evolving landscape.

In the words of William Pollard, "Without change, there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable." Embrace the change, seize the opportunity, and lead your organisation towards a prosperous and technology-driven future in Wealth Management. The time to act is now.