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Wealth Management Automation: The Covert Advantage
The Future of Automation and AI in the Wealth & Asset Industry
We expect many of the challenges that influenced the wealth and asset management industry in 2023 to persist and intensify into 2024. This includes evolving customer and employee expectations, amplified by demographic and mindset shifts and the ongoing impacts of the great resignation.
At the same time, wealth and asset managers are also responding to new regulations encouraging the democratization of private markets and more established environmental, social and governance (ESG) reporting frameworks. And don’t forget about the public introduction of generative AI. It’s obvious the future is upon us now, so how should you put your best foot forward?
Let’s explore seven wealth and asset management automation technology trends to stay ahead of the curve:
- Generative AI
- Evolution of Customer Demand
- The Great Rejuvenation
- Automating Integrity
- Preventing the Impact of Uncertainty
- Sustainable Investments
- Democratization of Private Markets
1 — Generative AI and Wealth and Asset Management
What is the future of AI and automation in wealth and asset management? Well, exploring gen AI use cases has already started and yielded early payoffs in operational efficiency improvements in wealth and asset management. But despite its rapid adoption, the lack of gen AI accuracy and governance structures means we’re still far away from a world in which we can rely purely on it — especially in such a highly regulated environment like wealth and assets. So, the focus will be on gen AI and humans working together in harmony.
As we continue to explore new ways and uses for gen AI, tighter controls and governance structures will become even more essential to unlock its full potential – ensuring value creation for all stakeholders and a lasting positive impact on society. We anticipate significant value creation in 2024 will come from personalizing user engagement and improving the customer self-service experience.
19% of wealth and asset managers cited investment operations and financial advice as where gen AI could have the greatest impact on their organization. 21% cited data ingestion to drive alpha generating activities is where it can have the greatest impact.
, The transformation imperative: generative AI in wealth and asset management
Top tips:
- Lay the foundation for cross-team collaboration to define and prioritize use cases, key performance indicators (KPIs) and return on investment (ROI).
- Update data standards and upgrade existing data assets to ensure sustainable access to data inputs.
- Renew governance procedures for better legal, reputational and financial risk management.
At this stage, we have a long way to go until gen AI reaches maturity. As wealth and asset managers continue to trial its application across a variety of capabilities, we expect numerous new opportunities for adoption to arise in 2024.
2 — Evolution of Customer Demand
Wealth and asset managers are faced with several evolving customer needs in 2024. This includes pressure to reduce fees, diversify portfolios and respond to sustainable investing driven by the millennial and Gen Z populations — all while increasing the level of transparency, availability and immediacy of insights into their clients’ investments.
In 2024, wealth and asset managers will reassess infrastructure for streamlined operations as demands continue to evolve. This includes looking at personalizing communications and the ability to present diverse investment opportunities.
Over the next 30 years, 80% of wealth is expected to transfer into the hands of younger generations.
, Are you and your family prepared for the “Great Wealth Transfer?
Millennials are more than twice as likely (73%) than boomers (29%) to switch between providers, to move assets between firms or to begin working with new wealth managers.
, How can today’s millennial investors drive tomorrow’s business growth?
Top tips:
- Wealth and asset managers should leverage technology to exchange information via the necessary communication channels at the right time, for the right reasons.
- Understand client investment motivations and behaviors to serve up personalized services, advice and securities.
- Capitalize on gen AI and machine learning (ML) opportunities to garner meaningful insights.
“Intergenerational continuity planning is imperative to mitigate this risk by bringing those generations in to educate how a family’s wealth will be managed and transferred before it’s too late."
Director, banking, financial services and insurance, LinkedIn
3 — The Great Rejuvenation
Three years on, in 2024, we expect the skills gap to continue expanding as a lasting influence since the global pandemic. Employee concerns about burnout, workload, poor culture and lack of flexibility — already common in the financial sector — are expected to hit the asset and wealth management industry too.
Not only has the great resignation already resulted in a surge of talent exiting the industry, but the remaining and arguably most valuable industry workers are nearing retirement age, while only 10% of millennials and Gen Z would even consider a career in financial services.
There’s a need for a cultural shift in 2024 for firms to safeguard their talent. Particularly in more research-heavy areas in the front office, where junior employees have typically been tasked with boring manual research, investigation and other work that can be done by technology.
Top tips:
- Create a rich working environment so employees can utilize their skills and focus on creating value for the firm.
- Leverage automation to identify and fulfill manual, repetitive tasks.
- Build an infrastructure that allows for adequate compensation where deserved.
69% of employees want a fulfilling job and 71% say the increase in pay is a main motivator for making a job change.
“Intelligent automation allows firms to take care of their most valuable assets: their employees. As the risk of losing top talent continues to increase, automation is enabling our clients to identify the best use cases to free up employees’ time throughout the firm to focus on maximizing their unique skill sets and reap the personal and financial rewards of adding value.”
Senior industry marketing manager, banking, financial services and insurance, SS&C Blue Prism, LinkedIn
4 — Automation Integrity
The regulatory landscape in 2024, focused on financial resilience, market effectiveness and addressing new risks in sustainability and fintech, poses resource challenges for wealth and asset firms.
In 2024, we predict firms will have even more pressure to adjust internal mechanisms to meet new and progressing requirements, requiring significant transformation and investment. More firms will turn towards intelligent automation (IA) and digital transformation to deliver scalable compliance solutions in a timely manner while achieving 100% accuracy, every time.
Top tips:
- Invest in IA as it enables simplification, standardization and auditability of processes.
- Deploy automation to address any existing or new regulations as it can do so with precision.
Estimated end-to-end time savings using technology for compliance can be up to 75%.
, How automation is transforming compliance in wealth and asset management
“Compliance activities are ones that humans are intrinsically bad at; sifting through large volumes of data, double-checking inputs and compiling complex reports are frustrating and … [lead to] inevitable mistakes. The digital workforce does not suffer from these challenges and its unique set of skills in fact makes it ideally suited to these tasks which challenge humans.”
Senior solutions consultant, SS&C Blue Prism, LinkedIn
5 — Preventing the Impact of Uncertainty
In 2024, uncertainties like inflation, interest rates, cost of living crises, civil unrest and supply chain disruptions will continue to prevail globally. But we also predict that the industry is far more attuned to the need to get better at preventing the impacts of uncertainty.
In wealth and asset management, we’ll likely see its impact on fluctuating volumes — demand either goes up or down for certain asset classes, financial instruments, liquidity or M&A activity. We anticipate asset and wealth management firms taking more action to strengthen their resilience by adopting a digital operating model.
Top tips:
- Adopt business process orchestration to identify processes at greatest risk of failure under extreme circumstances.
- Pinpoint individual tasks within the process that are repeatable and pose a risk if specific instructions are not followed identically every time.
- Leverage IA to fulfill these tasks to improve performance and protect against the inevitability of uncertainty impacting fluctuating volumes.
56% of survey respondents indicate that inflation will negatively impact their operations, while 58% express concerns about the geopolitical environment.
“By delivering actionable insights, firms are monitoring performance in real-time for 360-degree visibility across processes, people, digital coworkers, data and systems. This allows our clients to drive ongoing continuous improvements from having the visibility to detect problems, risks and bottlenecks, predict outcomes, offer real-time guidance, and alert and trigger remedial action.”
Senior industry marketing manager, banking, financial services and insurance, SS&C Blue Prism, LinkedIn
6 — Sustainable Investments
Responsible investment remains an area of importance in 2024. However, the ongoing lack of regulatory clarity alongside a smaller-than-expected appetite from institutional investors raises the question of whether ESG is an effective long-term investment strategy. The primary problem was believed to be a lack of access to consistent data, hindering the agreement on industry-wide guidelines.
Even with different opinions and behaviors among investors, the demand for transparency in ESG factors for investment portfolios is here to stay. This is especially true as millennials and Gen Z, who prioritize responsible investing, become more dominant in the market.
Top tips:
- Stay ahead of pending guidelines by continuing to build capabilities around defining, measuring and capturing ESG data.
- Leverage AI and ML technology to adapt to new regulatory guidance quickly and easily.
More than 60% of people are basing their purchasing behaviors on sustainability and ethical criteria, and this is growing by 10% each year.
“Although incoming legislation such as CSRD will ultimately open up more structured and reliable data sources, the process of retrieving, compiling and understanding the information they offer is something that is ideally suited to the digital workforce. … Simply by leveraging automation we make activities more efficient, reducing the need for human input and power consumption.”
Senior solutions consultant, SS&C Blue Prism, LinkedIn
7 — Democratization of Private Markets
With the new ELTIF 2.0 regulation coming into play in Europe in January 2024, entry barriers for retail investors are dropping. Global regulators are also recognizing the growing demand from retail investors for greater access to the alternatives industry, such as digital assets.
Wealth and asset managers are adapting to anticipate the surge in investor volume in 2024, with a keen focus on improving the investor onboarding process. Optimizing this aspect of the client experience is crucial, especially pending the volume challenges that will intensify operational pressures. Onboarding is the opportunity to make a great first impression on this new audience.
Top tips:
- Leverage IA to streamline investor onboarding.
- Identifying other operational processes to enhance for better continuous service.
- Increasing the availability of “evergreen” (or semi-liquid funds) offering predefined liquidity windows.
70% of investors expect to increase allocations to alternatives in the next 12 months.
“For many years, the investment space has been neatly stratified, with firms specializing in traditional securities, private equity or alternatives. Now, that distinction is being ripped apart by customers who want easier access to a broader range of assets and investment managers are being forced to create hybrid portfolios that support this desire for flexibility.”
Senior solutions consultant, SS&C Blue Prism, LinkedIn
The Future of Wealth and Asset Management
As we face the challenges of 2024, wealth and asset managers are consistently put to the test. The key to overcoming and staying ahead of these challenges lies in harnessing the right technology.
Work with SS&C Blue Prism to help sharpen your focus in these key areas and propel your firm into being future-ready, today.
