In response to the arrival and growth of robo advice, principally, the wealth management market has settled on the concept of a hybrid service model as its best response to date. But what exactly does hybrid mean and what is included within that term? Hybrid Wealth Management can be defined as the ‘supercharging’ of personalised service by a Relationship Manager, RM, through applying the benefits of digital platforms to important client service activities such as communication, planning and shopping for the right financial products to fulfil client plans. These platforms can be different, depending on segment, regulation, geographies and a wealth manager’s or bank’s own risk-based approach. But let’s look at one representative example of hybrid wealth management. Here, RMs themselves are more focused on in-person advisory and complex transactions. Their clients meanwhile have access to digital platforms for the following functionalities:
Trading certain products, such as equities, ETFs, etc.
Accessing discretionary portfolio management, such as via a robo-advisor
Completing simple transactions, such as document upload, statement requests, etc., via a self-service platform.
One important aspect of hybrid wealth management to note is its ability to equip RMs with digital tools to curate and collate hyper-personalised content, to help with task prioritisation, and to support frictionless engagement with their clients.
From the client/wealth holder’s perspective, what does hybrid mean and what can they expect from a best-in-class hybrid wealth management experience? From the client perspective, best-in-class means a frictionless user experience and the flexibility that comes from transacting independently, via digital self-serve platforms. A true best-in-class hybrid experience will offer all the strengths of a human relationship while supporting hyper-personalisation. The point is to make the experience as convenient as possible for the end-client whilst enabling the adviser or RM. In delivery terms, this means everything coming from the platform - content, insights and actions - is hyper-personalised to each and every client. Then the icing on the cake will be trusted in-person advice from the RMs themselves. This move towards a hybrid approach will also lead to democratisation of wealth management products. Products that previously were only available to UHNWI segments can now be offered to HNWI or even mass affluent clients (depending on prevailing regulations). One common example of this shift in action is the way some banks are offering discretionary portfolio management at scale by using robo-advisors and digital platforms.
From the advisor’s perspective, what does hybrid mean and what can they expect from a best-in-class hybrid wealth management experience? Firstly, we believe hybrid is a natural progression within the wealth management industry. Indeed, many other professionals and industries have been through this kind of transition. Look at how accountants have migrated from offering core services – ‘bean counting’ - to providing specialist expertise in valuation, risk management, etc. Hybrid adoption means a big change is coming. As with any transformation, hybrid offers the opportunity for RMs to position themselves more strategically. They can become, and then be perceived as, trusted advisers and risk managers, rather than being limited as transactions facilitators. With a correctly designed hybrid experience, many simpler transactions, such as trading (equities, ETFs, funds) and transactional requests (statements, trade confirmations, balance checks) will move completely to digital platforms. This will free up valuable RM time, time that can be spent engaging a larger set of clients, but equally engaging with higher quality and time focus on more complex issues. However, as part of being ‘correctly designed’, the hybrid experience has to enable RMs with the digital tools they need to drive their productivity. At the very least, their toolset must ensure symmetry of information and insights between adviser and client. The client who consistently knows more about key issues, or knows about them before their adviser, is unlikely to stick around.
For a marketplace that has been so heavily dominated by in-person advice and service, how does a wealth manager intelligently move to a model that mixes a multitude of technologies and options with a model that was previously led by an individual (albeit an individual using technologies)? With this move towards hybrid, wealth managers have a major opportunity to transform themselves by offering the next logical step in personalisation: the hyper-personalisation we’ve been emphasising. Wealth managers currently possess very rich data on their clients’ financial behaviours (information around transactions, holdings, preferences, aspirations, etc.). As key aspects of wealth management move to digital platforms, those same WMs will be able to offer hyper-personalised services that are based not just on historicals, but also on the rich and current data and analytics coming from digital platforms. This is where data science pays dividends, enabling wealth managers to draw and harness insights from the trove of client data – including behavioural data. This same approach to technology can also further enable RMs to offer better advice on more complex transactions, and to engage larger numbers of their clients with hyper-personalised content, insights and intelligence. With this increased productivity, yet without a massively increased physical workload, RMs can also start to look at managing their customer base more effectively. In some cases, they will not just increase service levels to existing clients – they will increase the number of new clients they support. These are some of the ways hybrid wealth management will offer unprecedented opportunities for hyper-personalisation, both via digital platforms and human-to-human service from RMs themselves. More specifically, how do they bring the various technologies into play that will form the basis of a hybrid service model and what are the tools and technologies that will be required? A wealth manager moving to a hybrid service model would need, at a bare minimum, a digital self-service platform, to give clients the flexibility to carry out simpler trades and transactions. The same platform could be also used to deliver hyper-personalised insights and ideas to each client. RMs do need to be technically enabled to manage their customers well. This cannot happen on its own. In summary, digital tools for RMs that help them access hyper-personalised insights, and then seamlessly communicate them to clients, are critical. To further enhance platform-derived offerings, wealth managers should also use an AI-based Next Best Action solution. This delivers actionable intelligence, based on individual clients’ transaction data, holdings, preferences, etc.