Over the past five or so years, personal wealth management has morphed into a new industry. In part, this transformation has resulted from new technologies like artificial intelligence (AI) and robo-advisors becoming mainstream resources. In part, it has happened because client demographics have begun to shift younger. The two trends go hand in hand.
Successful wealth management advisors already have taken steps to capture a share of this competitive, fluid market. The new and incumbent firms that are winning clients and managed assets are those that have engaged advanced technology resources for narrowing the funnel, accelerating sales engagement, and personalizing their services.
Predictive Analytics for Business Growth
Deloitte reported that “Big data and advanced analytics are on the cusp of transforming the wealth management industry, with new ways to engage with new clients, manage client relationships and manage risks.” The industry is moving from insight to foresight – knowing what's happening to knowing what may happen or what will happen. Predictive analytics can make a good company great, and a great company can excel even further.
Today, advanced analytics impacts every phase in the customer acquisition funnel and relationship:
New Client Acquisition:Across every step in the funnel, use predictive analytics to track and employ critical business results and key drivers like client segments, advisor books, and product penetration, and to assess the adoption and effectiveness of tools and methodologies.
Disrupting ‘One-size-fits-all’ Investment Strategies
Demographics have shifted notably younger. Millennials have overtaken Baby Boomers as the largest adult demographic, bringing with them high wealth potential and a possibility of tremendous customer lifetime value. Predictive analytics helps wealth advisors to understand "value" from the customer's point of view. In particular, the data can spotlight the point at which convenience and price hit a parity that appeals to the new or existing client.
With these insights, wealth advisors are more capable of pinpointing new customer growth opportunities within demographics currently served, as well as those in younger demographics. Both are important.
As Baby Boomers retire, many are revising their goals and risk tolerance. They may have a focus on succession or legacy planning, for instance, and are seeking peace of mind in knowing their investments will support businesses and loved ones for the long term. On the other hand, younger individuals bring a high potential for lasting customer lifetime value because their focus is more likely on generating wealth to eliminate debt, buy property, or start businesses. With the right data points, advisors can understand what each of these clients’ values, their proclivities for types of investments and risk profiles, and even how they like to engage with an advisor—personalizing the strategy and relationship.
Choosing the Right Technologies
Knowing what technology to engage, for whom, and for what specific purpose(s) is a far greater challenge than finding the right resources. As with so many other areas of your business, the target outcome should dictate the resource you choose. In this case, begin by identifying what data is most valuable for identifying, understanding, or serving your prospect or client.
With the end goal in mind, you can gather and employ the data to personalize and nurture the relationship with a high degree of agility.
Personalization:Understanding customers is critical to the continuity of any business relationship but is particularly vital for those relationships that demand a high degree of trust on the side of the client, and a high degree of proactivity on the part of the provider. Digital Foresight is an advanced predictive analytics tool that can quickly identify ideal prospects, individualize client counsel and resources, and prevent churn by informing positive, productive relationships.
The Future of Personalization Analytics Tools
Because they grew into broadly used mainstream resources so quickly, predictive analytics, AI, and cloud technologies have made personalized wealth management a reasonable offering for a firm of any size. Your existing clients and those you’re pursuing are aware that these resources exist and that they can find a wealth advisor who will put them to good use to provide highly intelligent, highly personalized counsel.
It took little time for these resources to go from innovative to expected. The next competitive horizon looks to be proactive personalization. Particularly as the client base spans a broader age range, advisors are discovering that service models, like investment advice, are best if they are individualized. Some clients might request in-person meetings, and some might prefer to get updates via text as needed. Predictive analytics supply data-driven insights about details like contact frequency and formats that shape a consultative relationship that works best for each client.
If it’s not yet apparent, integrating personalization, leveraging predictive analytics tools into your regular course of business is one of the surest ways to find your next generation of clients and nurture them into high-value lifetime relationships. Talk to us to learn what it will take to shorten the time it takes to find and close deals with your ideal targets, and to maintain those relationships with highly personalized engagements.