In my previous post on how smart technology accelerated the digital transformation of the Wealth Management sector during the 2020 pandemic, I analysed some industry-wide issues that Covid-19 highlighted, even though solutions to these issues have existed for years.
After almost a year living and working under the “pandemic siege”, we can now see how financial institutions have responded to these issues.
A prompt reaction to secure business continuity
When Covid 19 hit us, after the initial upheaval, it seemed that firms had weathered the storm and were reporting good figures for their financial year-ends. Transitioning to remote working practices has been a relatively smooth operation. Internal IT departments and industry suppliers have collaborated and for the most part have ensured firms working as well as before, as we did promply reacting and meeting our customers’ requests to secure them the continuity of their business.
From business continuity to business growth
As time goes on however, firms are looking to see how they can grow their business in an environment that looks, at least well into 2021, that it will not be conducive to the usual face to face activities traditionally required for acquiring new clients and growing AUM. Activities such as meeting prospective new clients in an office, hosting networking events to showcase their product offerings and the usual everyday meetings designed to strengthen the bond in the client–advisor relationship seem a long way away.
New mindset for new business
Wealth managers are fortunate to a certain extent, in the sense that their business is based on long-term relationships. Most of them will deliver an acceptable return to their clients over their lifetime and clients continue to pay for this service even when the markets are volatile, when recessions hit or when global events such as a pandemic affect their portfolios unpredictably. However, every business needs to grow and attract new clients, and every firm needs to have the mindset to attract new business and not live on its past laurels.
Consider the onboarding of new clients: in a wealth management business, there is a lot of paperwork and AML documents required from the prospective new client. As most firms closed their offices, face to face meetings were almost impossible and relationship managers were working from home, this created a backlog on documentation, and huge bottlenecks in the wrokflow process.
The pandemic has highlighted deficiencies and accelerated change to address these beyond what firms had planned for, so that business continued to operate and in many cases started to operate better than before.
Wealth management firms need to adapt to new business paradigms. They need to recognise that change is constant, adopting new ways to attract additional clients and engage with existing ones are key to surviving in the long term.