The WEALTHTECH Book

Challenges of Digitizing Wealth Management Advisory

By Jasper Humphrey

Ex-Head Technology, Systems, Modules, swissQuant Group AG

It is not simple being a wealth manager in 2018. Regulatory overheads, pressure on margins, the implicit complexity of keeping up to date with the latest technology while still needing to run complex change programs, all add to the headaches of the modern bank executive.

Here, I present some techniques that we have used to help banks to diagnose and treat the migraine. A modern wealth advisory process is commonly broken down into logical stages:

• Understanding the client’s situation. Here the advisor performs a process to measure the risk tolerance of the client (how much risk the client prefers to take) and the risk capacity of the client (how much risk the client’s circumstances allow them to take).
• Defining a suitable investment strategy. The advisor may recommend that the client’s wealth tracks a portfolio with certain risk or reward characteristics, or follows a certain structured product strategy.
• Recommending suitable investments. The client is presented with a portfolio that meets the investment strategy.
• Controlling and monitoring the client’s wealth portfolio. The advisor shall periodically monitor the wealth portfolio to ensure that it continues to meet the investment strategy and the client’s situation.

Regulations such as MiFID 2 (the Markets in Financial Instruments Directive) are designed to ensure that the wealth manager proves that ...