wealthy have never enjoyed much of a reputation as technologists,
but the ease and ubiquity of personal computers has levelled the
playing field. Can private banking reach the new Blackberry
generation? Charles
Davis reports.
Move past multi-generational wealth to the bulging mass affluent
and emerging affluent segments and the technology becomes
increasingly advanced: for example, try finding a US entrepreneur
without a Blackberry in their hands.
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With the number of affluent individuals in North America expected
to grow from 30 million to 37 million in the next three years,
private banking is set to reach a younger market segment than ever
before.
To reach the rapidly expanding affluent market, private bankers
have to be able to deliver private banking services seamlessly and
on the client’s terms, where they work, play and live.
Little wonder, then, that private banks are pouring money into new
wealth management platforms and innovative delivery systems.
Research company Celent reports financial companies will spend $1.5
billion in new platforms and modules in 2007, almost double what
was spent in 2004.
Internet technology
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By GlobalDataIn the most vivid example of the spread of popular internet
technology to private banking to date, Commerce Bancorp announced
that its proprietary, web-based private banking platform, Virtual
Private Bank, is now available for its customers via their
Blackberry, Treo or any other personal digital assistant (PDA) with
an internet browser, including the new iPhone.
While other financial service companies offer account aggregation
services and calculators online, Commerce Bank is the first to
deliver a highly sophisticated wealth-management tool on a wireless
device, allowing customers to view all their pertinent banking
information.
The move enables Commerce Bank’s private banking customers to
seamlessly access all of the information they need on a device that
they typically never leave home without. This technology equips
clients with an up-to-date financial picture of all of their
assets, and organises other important information – such as stock
trackers, medical and insurance information, account numbers, world
news, weather, sports and even their favourite wines.
“Private banking customers need to be able to see all of their
updated holdings wherever they happen to be,” say Commerce Bank
strategists. “Moving Virtual Private Bank onto customers’
Blackberries and other mobile PDA devices was the next logical step
for Commerce, giving high net worth customers instant access to
their private banking information and important data whether they
are poolside, in their cars or on the golf course.”
Commerce teamed up with eMoney Advisor, a wholly owned subsidiary
of Commerce Bank and a leading provider of wealth planning and
client-management solutions for the financial planning industry.
eMoney Advisor was acquired by New Jersey-based Commerce in January
2006.
Commerce’s Virtual Private Bank offers an aggregated, comprehensive
view of clients’ financial portfolio, aggregating all of their
assets such as stocks and bonds, artwork and even frequent flier
miles and other point programmes.
In addition to highly sophisticated planning and scenario analysis
tools, Virtual Private Bank provides an online document storage
Vault, so clients always have access to key legal, medical and
financial documents.
“Commerce Bank understands that strong private banking operations
rely on marrying top financial experience with concierge-like
services for its customers,” said Edmond Walters, CEO of eMoney
Advisor. “Taking Virtual Private Bank into the wireless space
brings the best of technology and service to its customers.”
Alois Pirker, a consultant with research company Aite Group, and
author of a new study, Evaluating Wealth Management Advisor
Platforms: Integrating the Front Office, asserts that Commerce’s
anywhere, anytime delivery platform will soon be the standard among
leading private banks.
“Everyone wants to expand the asset class and still protect service
quality, and tools like mobile private banking will allow private
banks to reach further downstream,” Pirker says. “You’ll see more
and more adviser productivity tools that allow them to reach
further down the asset class while keeping their adviser client
load in check. If you don’t do it well, productivity goes out the
window, though, so execution is extremely important.”
Besides new segments, Pirker says, private banks are also
redefining their target markets. For example, net worth is becoming
every bit as important as simple total assets when private bankers
analyse borrowing capacity.
A person with a $2 million house and a $1.9 million mortgage
probably has extensive insurance, college-finance planning and
retirement needs, compared with somebody who has paid off the
mortgage on their home. Aggregated dashboard views allow for such
analysis, turning data into strategy, Pirker notes.
Portfolio reporting
Providing a web-based feature is now common on most platforms in
order to provide more portfolio-performance reporting to clients of
all asset ranges in a format they can quickly and easily digest.
Once the data resides on a web-based platform, it’s a short step to
mobile banking applications that tie together the aggregation and
integration of data across all levels of investments.
Building web-based platforms also allows firms to replicate
white-glove service online, while increasing adviser client loads –
a key to moving further down in asset class, Pirker
asserts.
In addition, platforms are providing an important link between the
broker/bank business and other business segments.
“Efficiencies that improve service are the optimal situation, and
streamlining the administrative and back office tasks is critical,”
he says. “There is nothing worse than having a highly paid adviser
chasing forms, and the more these systems fit with the advice
model, the better they are. Every time you go downstream, your
clients per adviser increase, and so you expand that offering and
you have to build a new advice model.”
According to Pirker, wealth management firms have thrown far too
many tools at their advisers without considering how certain tools
fit into the advice process and without defining a consistent
technology strategy for the front office.
An integrated front-office environment will increase the
productivity of advisers within a firm, and it will help to attract
and retain top adviser talent.
“Serving mass affluent and high net worth clients is increasingly
becoming a numbers game, as adviser productivity is the top
priority for wealth management companies that play in those
segments,” Pirker says.
Pirker puts wealth management platforms into two broad groups:
complete solutions and integration platforms. Complete platforms
provide all the functionality required by the front office onto a
tightly integrated platform.
While an integration framework and infrastructure components are
also part of this kind of platform, these components are more
embedded in the overall system architecture and are usually not
stand-alone products.
Buying decisions are mostly influenced by the platform’s
front-office capabilities and not so much by the infrastructure
components. It advisers AdviceAmerica and SunGard follow this
product strategy.
Integration platform
The strength of the integration platform is its ability to
integrate various systems into a consistent front-office platform.
In addition to a robust integration framework, this type of
platform typically has strong infrastructure components such as
workflow, collaboration and data management capabilities.
Integration platforms can also provide a part, or all, of the
front-office functionality required by the wealth management
company.
However, the majority of these front-office modules are usually
optional add-ons to the platform. Separate buying decisions can be
made for the platform’s integration framework and infrastructure
components on one side and for its front-office modules on the
other.
Pirker cited Finantix, NorthStar, Thomson Financial and Xeye as
integration platforms that also provide front-office modules on an
optional basis.
While the integration platforms offer significantly more
flexibility in designing a platform that meets all the adviser’s
requirements, companies seem to prefer complete platforms that show
a high degree of pre-integration and are frequently offered as
hosted solutions.
John Fennelly, managing director of US operations for technology
company Xeye, says the pressing margins on all wealth-related
businesses have placed a new emphasis on self-help.
“If you go back, not that many years ago, if you went to the
private banks, the level of clients coming in and looking
online at account data was very low. Now virtually all their
clients are online, and it’s the clients that are driving the
adoption,” Fennelly says. “The mass affluent and the ultra high net
worth market are not as strictly defined as they once were, and it
certainly isn’t as defined when it comes to technology. The top end
guys and the mass affluent sort of run together and so the question
becomes how do they provide high-touch service while expanding the
market?”
Fennelly believes that mobile private banking will become
increasingly important as firms race to capture a piece of the
relatively underserved mass affluent market.
“How do you provide a private banker on the investment side for all
those millionaire clients? The race is on to get there,” he
says.
Fennelly cites Fidelity and Schwab as evidence that progressive
institutions can serve both ends of the wealth management
market.
“Schwab and Fidelity probably have as many wealthy clients as any
of the private banks in terms of assets, and they have advisers
with between 300 and 400 clients.They leverage the web by using an
array of alerts, triggers and service points, and they have used
modelling to develop product sets that work well for entire asset
classes. I think they demonstrate that business processes can be
developed to handle much larger client loads,” he says.
The best of the best
In its research report, Aite Group looks at a range of platform
providers that stand out in various categories.
Complete platforms for the mass market/mass
affluent
Plaudits go to AdviceAmerica. Its AdvisorVision solution is viewed
as a tightly integrated wealth management platform that offers
advisers a well-structured and easy-to-use environment, Aite
believes. Its recommendation engine allows firms to provide
automation and consistency in the advice process and to facilitate
cross-selling. In addition, LifeVision provides self-directed
investors with access to the wealth management platform and allows
for interaction with advisers when it is required. Collaboration
and information sharing is supported among the users of the
system.
Complete platforms for the high net worth/ultra high net
worth segments
SunGard WealthStation takes the honours in this category. The
integration of PlanningStation and AllocationMaster, two
best-of-breed solutions in their respective disciplines, allowed
SunGard to build a top-of-the line wealth management platform. Most
financial planning modules within PlanningStation offer advisers
the flexibility to choose among several levels of complexity. In
the area of investment planning, the recently released SunGard
WealthStation 2.0 provides advanced functionality for unified
managed accounts.
Integration platforms for the mass market/mass affluent
segments
Finantix OneWealth has a particularly impressive proposition, Aite
declares. The robust integration framework and workflow
capabilities of Finantix allow it to integrate a firm’s chosen
front-office applications into a best-of-breed adviser platform.
Process Manager, Finantix’s outstanding workflow tool, supports
wealth management firms with the definition and implementation of a
tailored advice process that meets the needs of the existing
organisation, Aite reckons. Legacy and third-party applications can
be integrated in this workflow. Finantix also offers a wide variety
of add-on modules to OneWealth, all of which are well designed for
the mass-affluent client segments.
Integration platforms for the high net worth/ultra high net
worth segments
Xeye wins this category. Its WealthManager’s workflow capabilities
allow for a great deal of flexibility. Tasks can be assigned to
single users or teams. A firm’s organisational hierarchies and team
structures can be set up in WealthManager, and they can be used for
messaging as well as task management. The system gives firms the
flexibility to store client data, either in its own data repository
or with a real-time integration in an external system.
Advanced alerting capabilities support a proactive advice model.
WealthManager also provides strong investment management, portfolio
management, and document management capabilities as well as
reporting capabilities – all on an optional basis.
