An e-migration strategy can help transform your company for growth, but it comes with challenges


The wealth-management industry is facing tremendous pressure due to growing compliance challenges from new regulation, increasing competition, margin compression, technological innovation and changing consumer behaviour. Yet, no single factor offers the potential to tip the balance — in your company’s favour or to its detriment — than digital transformation.

This article was originally written by Anthony Boright, President of InvestorCOM for Investment Executive’s Inside Track column.

This new, disruptive technology will force us to rethink the role of banks, dealers and other financial services institutions in society

Companies seeking to negotiate this evolving landscape should do so cautiously, yet deliberately, through an e-migration strategy that identifies how best to use digital technologies and innovation to reduce communications costs while improving the customer experience. A new study from McKinsey & Co. published in February entitled The Seven Decisions That Matter In a Digital Transformation: A CEO’s Guide to Reinvention suggests that company leaders facing digital disruption may feel like gamblers at a roulette table. They know they need to place bets to win, but have no idea where to put their chips. Advisors who have a seat at the leadership table can play a crucial role in championing this transformation by rallying the team for change.

Without a well thought-out e-migration strategy that impacts your company’s value proposition, people, processes and technologies, any digital initiative is likely to be a short-term fix. Knowing which decisions to prioritize and how to implement them can make the difference between a successful transformation and one that misses the mark. Here are the key decisions leaders in the wealth-management industry need to make:

Decision 1: Where should the business go? This is perhaps the most essential question in any business, particularly during periods of change. Leadership teams need to perform a thoughtful analysis of the market and business based on the fundamentals of economic analysis, supply and demand. Consideration for the long-term role of robo-advisors, mobile technology and artificial intelligence are important for an understanding of how digital technology could lead to changes in how you serve investors in the future.

Decision 2: Who will lead the effort? Like most major strategic initiatives, digital transformation must start at the top, as it requires continual support — particularly as obstacles and risks arise. CEOs should delegate aspects of the campaign to business and technical specialists, not least of whom understand digital. Although digital affects all aspects of the business and requires much co-ordination, the team need not be large. In fact, many e-migration strategies have stalled — and millions of dollars in cost savings jeopardized — because the team grew too large and unwieldy.

Decision 3: How do we “sell” the vision to key stakeholders? Digital transformations are long-term initiatives that require regular communication and persuasiveness. Change of this sort will encounter considerable resistance; so, consistent messaging surrounding the vision and how the team will achieve its goals is crucial. Metrics for e-adoption by customers, reduction in paper and postage costs for investor communications or other measures help focus the team’s attention on the long-term goal.

Decision 4: Where should we position the firm within the digital ecosystem? Disruption creates opportunity for new entrants and incumbent businesses alike. Robo-advisors have captured the media’s imagination as a threat to the traditional financial planning model, but are potentially a complement to existing dealers’ services. Equally, open digital frameworks allow asset managers and dealers to partner with innovative vendors, retaining control over precious customer relationships while offloading compliance and operational requirements.

Decision 5: How should we make decisions during the transformation? Like all major initiatives, the campaign will suffer setbacks and reach crossroads, so weekly touchpoints with the team and visibility through dashboards and digital metrics are crucial to maintaining momentum. Otherwise, inertia will inevitably slow progress with a return to established practices.

Decision 6: How will we allocate funds? Like all corporate initiatives, an e-migration strategy requires resource allocation; and unlike some corporate priorities, the budgeting process for a digital transformation must be much more frequent than the customary annual review. Large companies often have to fuel digital initiatives by cutting budgets for legacy operations, which is not always a popular decision.

Decision 7: What to do when? An e-migration strategy includes both short- and long-term projects; thus, the key is to maintain your focus on the ultimate goals while taking advantage of near-term wins that will help gain buy-in and fund larger initiatives. Increasing your clients’ adoption rate of electronic statements by 5% and the resulting millions of dollars in print and postage savings are a surefire way to maintain support for this transformation.

Implementing a successful e-migration strategy is challenging and according to the McKinsey report, more than 70% fail to reach their goals. However, the payoff is significant in financial terms and, potentially, your firm’s very survival. Thus, leaders who can help chart the course and maintain the team’s focus on the ultimate goal will position their companies well for the future.