Wealth Briefing April 2015: Technology And The Evolving Role Of The Wealth Manager

Taken from Wealth Briefings' April 2015 publication:

Readers of these pages will know that financial technology firms are keen to point out how their offerings can help wealth management businesses deal with the challenges of rising regulation. Even allowing for a healthy dose of scepticism about the dangers of being encouraged to buy services of questionable value or durability, any discussion of tech as an aid to regulatory compliance and efficiency needs to have a clear focus on what the business is trying to achieve. With so much pressure coming from compliance departments, are executives in danger of rushing into buying and developing systems that might, with hindsight, have been handled differently? In this article by Mike Nicholls, chief executive of Pulse Software Systems, a UK firm serving more than 30 UK financial institutions, he looks at the role tech plays in responding to regulation, and considers how technology can support future business growth. His firm is launching an offering called "Fusion" in the winter, which Pulse Software Systems says delivers a state-of-the-art fluid investment business application suite.

As ever, this publication is grateful for such insights although it doesn’t necessarily agree with all the views expressed. Readers with responses can contact the editor at tom.burroughes@wealthbriefing.com.

The wealth management industry is a highly sophisticated, fast-moving and demanding sector. Indeed one of the most fascinating and challenging aspects of our work has been responding to the vast number of market developments that have taken place in the global financial marketplace and the economy over the past 20 years, and adapting our technology through each new iteration to provide for these.

The collapse of Barings in the mid-1990s, the introduction of the Financial Services and Markets Act in 2001 and the US sub-prime mortgage crisis, which triggered the financial meltdown of the late 2000s, were all key factors that led to the introduction of statutory industry regulation and major shifts in the way financial products were delivered to the market and managed.

Twenty years on and we can see how a new wave of even stricter UK Financial Conduct Authority regulations around conduct risk have turned the spotlight specifically on UK wealth and investment management practice, calling for unsurpassed levels of transparency, efficiency and client service that can only be achieved through sound technology investment.

Wealth managers must now deliver highly structured and sophisticated business critical functions such as assessing client suitability, optimal evidencing of know your client and portfolio analysis, modelling and rebalancing, order management, pre & post trade compliance, performance measurement and CGT through to settlement, corporate event processing, accounting, nominee and custody.

These all pose far-reaching implications for how investment business is conducted day-to-day going forwards.

Further, the parameters of how we manage the client relationship have been redefined and the digital/technological revolution that is taking place across the finance sector is here to stay. Management of the personal one-to-one client relationship that was once the domain of the investment manager is now a mission-critical asset by which a firm is measured, sanctioned or fined and must now be supported by technology proficient workflow systems, structured data management and optimised business operations.

Additionally the nature of the client has evolved too. The pace of technological advancement of the past 20 years has been relentless and alongside this has come an evolving expectation of a more sophisticated technology-proficient customer.

This is putting more pressure on firms to deliver smarter, more personalised and technologically advanced services to clients that are more customer-centric than ever and enable wealth managers to deliver enhanced business insight and market understanding.

Clients now want instant access to quality information, the right technology to help explain portfolio strategies in detail and convenient tools to access this themselves online – something that legacy systems simply cannot provide for. We’ve seen in the banking sector how predictive data analytics are allowing organisations to spot trends, identify cohorts and aggregate data to provide a 360-degree customer view, how mobile technology is enabling faster contactless payments and online data access, updates about new products and mobile banking applications for convenient access.

At Pulse Software Systems our continued research and evaluation of the sector, including our highly valued monthly client user groups, ensures that our software platforms continue to deliver optimal data efficiency for Investment business by being early adopters of the newest proven technologies. These enabling technologies offer wealth managers greater control and flexibility and the capability to process large volumes of sophisticated data sets, faster than ever before. Thus, providing more strategic and analytical client counsel and allowing for a seamless integration through all front and back office client activities.

It’s clear that regulation remains a core driver of technology adoption that can enhance the client offering and take the industry forward. Firms who do not now undertake sufficient due diligence into an extensible agile solution with bespoke applications that fit around its business, could lose their point of differentiation and lose competitive edge. I believe that software houses have a duty to the wealth management sector to continually research and deliver open, agile and intelligent software solutions that are future-proofed and can adapt quickly to industry and regulatory changes.