Preparing for a Post-Coronavirus Wealth Advice World
Advisors and dealers are rethinking their pre-coronavirus routine of serving clients from their offices.
I recently had a conversation with a leader at one of the largest global wealth managers. He shared the company’s plan to have only 50% of its wealth team return to the office after COVID-19. Thousands of employees will continue to work virtually on a permanent basis.
The firm is expecting real estate costs to be slashed and productivity to increase. For advisors who previously had a lifestyle that included exhausting commutes, client travel and a schedule packed with inefficient meetings, there is a big appeal to continuing to work remotely.
Shawn Kanungo, a leading disruption strategist and a keynote speaker at InvestorCOM client conferences, is referring to what’s coming as “The Big Reset.” While the worldwide loss and suffering from this crisis can never be forgotten, there may also be an opportunity to rethink remote work, collaboration and automation. It seems that some barriers have been lifted, enabling a more creative work revolution.
Dealers that have already been making investments in digital solutions are a step ahead in this new normal. One of our largest wealth clients has implemented a comprehensive online financial planning application, and they have recently seen a major spike in client engagement on the new platform.
Another wealth client has completely digitized its client onboarding, which has reduced the process from one week to 24 hours. That client has also seen a spike in new onboardings since the beginning of the crisis.
From a regulatory perspective, our industry is facing two very significant new regulations in the coming months. In the U.S., Reg BI (Best Interest) is being implemented on June 30, 2020. In Canada, the client-focused reforms (CFRs) follow in 2021.
These regulations represent the most comprehensive wealth compliance reform in decades. Dealer implementations will require a major resource commitment and a significant financial investment. Layered on top of these challenges is the new normal — advisors and compliance teams working remotely for the first time ever. Both Reg BI and the CFRs require advisors and dealers to enhance their know-your-product processes by monitoring their shelf of products and offering comparable or “reasonably available alternative” recommendations to their clients. Many of our clients have over 10,000 products on their shelves, and with up to 2,000 product changes weekly, there is an enormous volume of data to manage.
Combining this challenge with increased disclosure and recordkeeping obligations points you very quickly to the solution — technology. Layering on what is expected to be a more permanent virtual team environment, we expect the winners will be wealth managers that adopt digital capabilities across their businesses.
What of the age-old question: Will technology replace humans? Peter Thiel, one of our generation’s leading tech entrepreneurs and thought leaders, answers this succinctly by predicting that the successful entrepreneurs of the future will seek to empower people with technology, rather than replace them.
“People have intentionality — we form plans and make decisions in complicated situations,” Thiel writes in his book Zero to One. “We’re less good at making sense of enormous amounts of data. Computers are exactly the opposite: they excel at efficient data processing, but they struggle to make basic judgements that would be simple for any human.”
This quote is more relevant in the wealth industry than most others. The current coronavirus crisis also reminds us of the importance and value of human relationships in our personal lives and our wealth relationships.
Full Article: www.investmentexecutive.com