It’s all very well introducing digital tech to wealth management, but to make the most of it relationship managers also need to be trained in how and when to use the mass of data generated by their clients, writes Piotr Zboinski
Wealth management is one of the least tech-literate of the financial services sectors even as its client base enthusiastically adopts technology. No surprise there. But the problem doesn’t lie with out-of-touch management. Rather, there’s a general lack of clarity on the right model for the private banking industry when it comes to technology and RMs.
While it is accepted that they need digital tools and that advice is best delivered as a combination of face to face and robo advisers in a hybrid model, many RMs have yet to make the most of the digital tools at their disposal.
This is in part because they require new skills and training to help them navigate the digital world effectively. This new world contains a wealth of data that could reveal powerful insights into their clients but RMs need to be able to assess the quality of that data, apply common sense and understand where that data came from.
Today, the savvy RM can look at a client’s digital footprint to find out so much more than they are told directly. But much of that information may be sensitive. Gleaning it is the easy part; knowing if, when and how to use it without over-stepping personal boundaries is the hard bit. RMs need good data etiquette.
For example, social media might show that a client is on holiday with the family; or news media may report that a client is getting divorced or is being sued; there may be gossip about high-spending children.
In each case, the knowledge is useful to the bank. Holidays require forex; divorce and inheritance demand new financial arrangements; feckless children might need trust funds rather than direct access; a client being sued may suddenly become insolvent. The client might not like having these issues brought up directly, but having the knowledge allows the RM to direct a conversation towards the subject without actually bringing it up.
This is an important skill because appearing to be too well informed can spook the client and cause them to turn to a more polished rival. But equally, no RM wants to leave business on the table.
RMs will also need hard skills such as how to analyse data effectively – where has the data come from, does it tell the full story or does it only cover certain asset classes for example, in terms of trades due to system restrictions or because the client places trades with another bank. RMs will also need to know the basics of statistics to be able to assess when something is a trend that they can reliably use for decisions.
Channel management is also key – knowing how and when to communicate with the client. For example, when travelling a client might prefer to use emails but when at home a chat room, and at work the phone. Getting all this right will deepen the relationship and allow the bank to provide a better, more appropriate service.
Working like this comes with a health warning on compliance.
While many banks keep records of phone calls, emails, computer activity and face-to-face meetings, chat apps – popular in Asia, for example – have yet to be brought under closer scrutiny. Yet, keen to keep clients happy, RMs are increasingly accepting chat-based discussions, even though they leave them and the bank exposed. Should an RM be instructed over WeChat to buy 500 shares in Rising Star Company, for example, both the RM and bank could be vulnerable should the transaction be queried when Rising Star shares tank. RMs may also be inadvertently be giving advice or breaching cross border rules.
There are similar new changes relating to the increasing regulatory attention on data privacy. For example, does GDPR mean that client information disclosed by the client via a chat app such as Whatsapp and used in the bank’s transactions and services (e.g. in an order or advice) require a separate consent from the client? If the RM decides to use client data to analyse and understand their behaviour, perhaps even drawing on their social media presence, does this have to be disclosed beforehand to the client?
To date, few banks are systematically looking at the risks – after all, few court cases have made it into the public domain yet. While training on compliance helps, solutions increasingly lie with fintechs. Software, like Finchat for example, offer compliance monitoring, archive and analytics across their own chat apps (harder for clients to adopt) or existing apps such as WhatsApp, WeChat, Facebook Messenger and more (allowing clients to use their favourite chat service unimpeded).
Clearly there is more to digital wealth management than mastering new tools. RMs who hone their digital skills and etiquette will become an asset to their employers. And it’s worthwhile for banks to invest in these capabilities, be that working with targeted fintechs or through offering special training to their RMs.
Fundamentally, RMs in the digital age still have the same remit – to keep the client happy. It just needs a bit of thought to bring them up to date.