Andy Farmer
Consultancy Partner

Asset Management is the latest industry to be hit by the digital tsunami. Asset management firms are now not only grappling with the low interest rate environment, tightening of regulations, and a growing preference for passively managed funds, they are being forced to combat the rapid growth of robo-advice and fintech start-ups.


While technology and big data may be underlying causes, it’s customer experience that’s driving the digital revolution. Used to interacting with digitally sophisticated brands in their shopping or leisure time, FS customers are increasingly more demanding. They expect real time access to information, service and transparency, on any device, all at a low cost. Asset managers, who are used to competing with each other on performance or fund innovation, are now realising that poor customer experience is an issue for their brand perception and ultimately commercial performance. In particular, the industry’s familiar ways of working will have to modernise to serve the next digitally savvy millennial generation, who are expected to inherit $30 trillion of wealth in the next decade.


But competition is forcing this sector to enter the digital space. Research on Wealth and Asset Management conducted by Roubini Thoughtlab last year, found that wealth management firms in advanced stages of digital transformation reported a 7.2% increase in AUM, a 6.8% increase in profitability and a 9.4% rise in productivity. Fidelity recently reported that managers who deploy digital technology have 40% more AUM than those who don't. And, according to MorningStar, last year 54% of net flow into all mutual funds and EFTs went to the digitally transformed investment company Vanguard, which now has $4 trillion in AUMs, and specialises in low-cost investing using agile tech.


Aware of the threats that nimble digital savvy businesses pose on incumbents, Aberdeen Asset Management bought fintech start-up Parmenion last year, to help grow its investment solutions business and boost its distribution network around the UK. Its chief executive Martin Gilbert said the acquisition put Aberdeen Asset Management at the “forefront of the digital revolution within the industry”. He said, in a recent interview with CityWire, that: “We have to become the Robo-Advisors to stop start-ups from stealing our clients” and they have to offer clients “what they want on the technology front”.


Tower Bridge London skyline


For traditional Asset Management firms, “going digital” is not without its challenges, but doing nothing is not an option. Although there is not a ‘one size fits all’ digital strategy, there are some universal themes that should be addressed when planning for a digital future. Here we’ve outlined what they are:


1. Invest in new technologies to improve efficiency and service

Technology, such as implementing automated platforms, can enable real time financial planning, data aggregation and reconciliation, as well as behavioural segmentation, personalised reporting and risk management. Automating routine tasks can cut costs while also improving compliance through a more scalable and flexible back office infrastructure.


Introducing process automation can also help account rebalancing, customer support, customised portfolio reports and compliance and regulatory reporting. It can support client onboarding and diligence, freeing up staff to handle higher value tasks.


2. Personalise the customer experience to increase engagement

Bob Reynolds, President and CEO of Putnam Investments believes that future success in Asset Management will not be dependent on the number of active or passive funds under management, but about personalising a client’s investment goals and customer experience. Giving customers better information, at the right time, in the right place and on the right channel will save them time and effort, and increase engagement and satisfaction.


Understanding and anticipating key customer modes and needs is key here. This means being able to identify clients or prospects across any destination, regardless of whether they have declared themselves or not. It requires the capture of browsing as well as profile data and the alignment of sales and marketing platforms.


3. Create an omnichannel experience to increase convenience

Adopting an omnichannel approach is about delivering support and information to clients in the most convenient, most efficient way possible based on each client’s particular needs, whether it’s mobile, websites, call centres or face-to-face meetings, and offering a consistent experience across all these touch-points. This is a requirement for all audiences, not only millennials. Giving customers an opportunity to choose how they interact with you through preference centres and personal portals is common starting point.


4. Appoint a Chief Data Officer to enable your new personalised customer experience

With personalisation increasingly a differentiator, Asset Management companies will need people who can leverage data and not just manage it. As firms increasing rely on data to give them a competitive edge, it will be important to have staff at management level who can use that data to improve and benefit their firm.


A recent report by Deloitte said that for most financial institutions, a huge amount of work in the data space remains to be done, for which traditional management strategies and approaches may be less than well-suited.


ORM’s view

Whilst direct to consumer investment will increasingly become self-service and powered by digital technology, relationships with influential intermediary and institutional clients will continue to rely heavily on personal interaction. The role of digital here is to provide smart support for these relationships, by allowing Asset Managers to recognise potential opportunities through changes in client behaviours or recognise hot prospects who they may miss in an “offline” environment. The key to a more efficient, personal experience is the ability to align online browsing behaviours and marketing activity to individual sales record. These are practical, valuable enhancements, which we are already starting to deliver with our clients.