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Client Onboarding: The Pain Point for Advisors and Clients

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3 June 2022
Ashley Longabaugh

The wealth management industry is one that is based on relationships. This is particularly true of more traditional wealth management markets, such as the UK and Switzerland, where in-person, face-to-face advisor-client contact is still critical to the overall advisor-client relationship. The pandemic took a lot of that away, and seemingly overnight, the esoteric decades-old vision of "digital transformation" in wealth management became a practical, needs-based metamorphosis. Inefficiencies in client onboarding is one aspect of the advisor workflow that was highlighted by the pandemic.

Client onboarding has been a pain point in the wealth management industry for a long time; it is not an unfounded question to wonder why, the first point of contact with a new client is still fragmented and a source of discontentment for advisors, employees, and clients. Onboarding is backed by manual, disconnected, paper-based processes, and while the front-end has become more digital, there is a lack of seamless data relay to the back-end. The average onboarding process takes 22 days. Many financial institutions run the onboarding process from an operational point of view - "how can we manage client onboarding with the systems that we have in place" - rather than from a client perspective, who views onboarding as a singular process. Redundancies in data entry (front-end through KYC) and a lack of process transparency (e.g. sign-off / approval status) are often cited as points of frustration.

A daunting task, however, critical to the successful implementation of a smooth onboarding process, includes rethinking the process - not simply replicating paper processes in a digital format. Points of consideration include: visibility of product onboarding, less paper, faster time to product fulfilment, managing client identity (authentication and verification), and expediting data and/or document collection is a centralized repository. The latter function is often a challenge due to identifying the sources of wealth for UHNW / HNWI and cross-checking against AML procedures. Leading FIs and vendors are implementing digital onboarding trackers, or a "bridge" that sits on top of the onboarding process where advisors and employees can see the next step in the sign-off process and identify bottlenecks. RPA is utilized to fulfill customer requests quickly, bots to speed-up manual and repeatable processes, and AI to propose a "next best action" and / or product suggestion. Integration is a significant component of the onboarding process in today's digital world - APIs, data-agnostic technology stacks, or even DLT in its early stages, are tools to facilitate the consolidation, sharing, and aggregation of data across the enterprise.

Ultimately, organizations are battling a legacy systems-based, linear process in the face of a digitally inclined advisor and client who have no shortage in choice of digitally-founded wealth managers. The need to innovate the client onboarding process, one that affects the entire lifecycle of a client, has never been greater.