Wealth Management IT Update

Growing client mistrust and self-directed service offerings are forcing wealth managers to justify their fees. To cope with these pressures, advisors and wealth management firms are adopting technology to improve service and transparency, deliver across various channels, and lower costs.

In a new report, Wealth Management IT Spending, Celent surveys financial institutions regarding their current wealth management initiatives. The survey was conducted online, and invitations went out to over 200 individuals from more than 130 financial institutions in North America and Latin America. Celent collected 26 completed surveys from family offices, brokerages, retail banks, private banks, trusts, and independent investment managers. In addition, feedback from over 20 firms was collected and used to provide general knowledge for the study.

In this report, Celent covers a broad range of topics within wealth management, including: overall strategy issues, technology implementation and spending, obstacles to implementing a wealth management platform, current services offered to investors, functionalities offered to advisors, and future priorities in wealth management IT spending.

Main findings of the study include:

• North American firms in general have had their wealth management technology implemented for a longer time than Latin American firms.
• The majority of wealth managers have indicated a change in strategy over the past 12 months.
• Wealth managers are most commonly using a combination of third party solutions and in-house technology.
• Going forward, wealth managers are likely to focus on adding client communications tools, such as CRM, client reporting tools, and client-facing tools. These priorities remain consistent across North and South America.
• Wealth managers are adding mobile applications for both advisors and end users, but are doing so slowly. The Latin American market has been especially delayed in adding mobile tools.

“Our results show that North American firms are more likely to have implemented their wealth management technology than Latin American wealth managers. Furthermore, North American firms are likely to be improving their tools, whereas many Latin American wealth management firms are still in the midst of implementing their strategy and technology.” says Alexander Camargo, Celent Analyst and coauthor of the report. “Celent expects that the Latin American market will continue to grow and mature and, as a result, adoption of wealth management technology will be an increasingly important focus.”

“Wealth managers across all regions are focusing on giving advisors more tools to not only capture a full view of goals and assets, but also improve ways to inform clients. As a consequence, firms will continue to add CRM systems and client reporting tools,” adds Isabella Fonseca, Research Director at Celent and coauthor of the report. “Furthermore, wealth managers are adapting to end user demand for more transparency and control by offering a variety of self-directed tools.”

The study first presents a breakdown of the participants’ major characteristics in terms of size, type of firm, geographic location, etc. The report then looks at various aspects of firms’ wealth management strategies, identifying major changes and priorities by customer segment. This is followed by a detailed look at the participants’ use of technology applications, functionalities, and future priorities for advisors. The report also examines delivery channels, assessing the strategic importance of each channel currently and in the future. Lastly, the report projects expectations for IT spending in 2012 and provides insights as to how wealth managers measure the success of their technology platform.