The increasing role of personalization in retail wealth management

By Shiva Nadarajah, VP, Agile Program Management, Publicis Sapient

The wealth management industry has seen much change over the past few years. Today, it's not just about how much you have in your bank account – it’s also about what kind of advice and guidance you can get from an advisor to help meet your financial goals. Personalization is one way that advisors can stay competitive with other firms that may offer lower fees or higher returns on investments. 

While personalization has typically been reserved for the highest tier of customers, technical advancements have made it possible for clients with fewer assets to demand increasing levels of personalization from their advisors.

A recent survey conducted by ThoughtLab and Publicis Sapient found that the demand for personalized, goal-based planning and other specialized services continues to grow among investors. 58% of those surveyed said that they will want personalized financial planning in the next 2 years. 

Types of personalization

Advisors can apply personalization across the spectrum of the client-advisor journey. From deeper servicing engagement to custom wealth products, personalization can ensure solutions are tailored to a client's unique needs.

Client servicing 

More and more, teams of managers are assembled with the depth of expertise in a client's circumstances. Developing tailored offerings by profession or source of wealth offers differentiation over cookie-cutter solutions. 57% of the investors who participated in the survey cited earlier said that providing innovative investment ideas is the best way to attract their business.

Content personalization

As clients are willing to share more data, advisors can customize portfolio selection context and market news to offer more relevant information to clients. Younger clients are especially attuned to increased levels of digital engagement. Advisors who can serve up relevant information in a timely way, at scale, increase the trust their clients have with their firms.

One challenge advisors face is the myriad of platforms they have to rely on to source this data internally. The data-driven wealth management industry is in a constant state of change, as various platforms struggle with how best to distribute and consume investment information.

To solve these challenges, advisors need an optimized content management solution to enhance investment advice and improve advisor efficiency. This will ultimately deliver a better client experience as it increases the effectiveness of all three areas: 

• content generation/distribution
• relationship building with clients through communication channels 
• providing customized financial information tailored specifically for each customer's needs 

Financial planning

The advice itself is personal. For generations, advisors have always thrived in understanding their clients' circumstances and views on risk, which has led them over time to create solutions that will work with whatever situation these people find themselves facing.

For example, knowing facts such as the size of a client's household, their state of residence, and what they earned last year are valuable data points in building personalized opportunities that may be better suited towards specific individuals.

Or understanding a client's unique views on future potential and risk tolerance offers paths for advisors to personalize advice that clients can adhere to. 

Investment management personalization

New technology has significantly reduced the costs of offering personalized advice and custom portfolios to clients. As this trend has become more popular, it's also become easier for advisors to do for their clients. By leveraging the following technological advances, it's now possible for wealth managers to offer personalized services at a reasonable cost, enabling them to better compete with firms that offer lower fees or higher returns on investments. 

• Automated portfolio allocation enables advisors to automate the trading and rebalancing process. Automated reporting capabilities offer the advisor the option to communicate portfolio adjustments to their clients at scale. 
• Tax-loss harvesting is an investment strategy designed to reduce taxes by realizing tax losses on investments before the end of the calendar year. To generate a tax loss, the investor will sell securities in a taxable account that have declined in value or up to their cost basis.
• Custom indexing is a method that is growing in popularity with advisors. Custom indexing has offered advisors the capability to custom design stock indexes that are personalized to meet the needs of investors—choosing from different sectors and regions, which can help to diversify portfolios. The specific advantage of these custom indexes is the ability to also create indexes around a client’s existing assets - without triggering a sale and incurring taxes.

In conclusion, wealth management providers can take practical first steps towards providing tailored and personalized services by digitizing processes, aggregating data, and working with the partners in the tech ecosystem to develop predictive analytics.

49% of investors surveyed viewed a simple, intuitive digital experience as one of the top criteria for evaluating providers, but only 18% are very satisfied with their current advisor’s digital experience. Coupled with the fact that 44% of respondents said they are planning to move their funds over the next 2 years – and the imperative to better know your customers and offer them what they want – how they want it has never been more important.

The aim should be to create seamless digital experiences that are fully integrated with advisor-led channels. Underpinned by transparent data frameworks and enabled by technology, digital interactions should match the personalization of face-to-face contact. 

Wealth management firms have the best opportunity in a generation to build an emotional connection with their clients. Clients are looking for more than just financial advice, and that's where wealth managers come into play by helping them find practical ways of accomplishing their goals through personalized experiences tailored specifically around what matters most – the client.