Are investment managers risking technology exclusion?

Conduct Risk regulations are driving critical technological innovation across the wealth management sectors and is turning the spotlight on technology investment.


Wealth Dynamix CEO, Gary Linieres, believes that Conduct Risk regulations are driving critical technological innovation and growth across the UK’s banking and wealth management sectors and is turning the spotlight on technology investment as a vital means to retain its position and relevance as a financial powerhouse going forwards

Since the FCA delivered its Business Plan for 2015/16, it has become clear that the Conduct Risk regulations which started to crystallise this year calling for sweeping changes across the wealth management sector in all aspects of Client Management, require firms to focus and prioritise on evidencing its current data records but further, that evolving their business through sound technology investment will be the only means to truly future-proof their business and remain competitive.

How institutions manage and Onboard Client business is ever more under the spotlight and is now mission critical for any serious Wealth Manager. But streamlining and enhancing front-office business process and client data management is only the starting point. Many of the technological advancements in enterprise software of the past ten years appear to have been overlooked by the Wealth and banking sector which still relies heavily on silo’d product and legacy systems. In order to achieve true transparency and best practice in Client Management, firms need to integrate their various business critical services on a properly implemented solid CRM platform that integrates proficiently with legacy systems, provides an intuitive user interface for its Wealth Managers and allows for future transitions on to mobile platforms, browser -based Microsoft systems and ultimately Cloud-based technologies. On a broader scale failure to properly implement and support these new systems carries huge risks – think of the estimated £175m incurred by RBS following its online banking meltdown.

I believe it is fair to say that the industry remains divided on the issue of FCA regulations, with currently only around 25% of wealth management firm’s having conducted serious Conduct Risk assessments and only approximately 15% having actually implemented a technology strategy to address the issues. Many wealth management firms now understand the FCA’s reforms and see the clear commercial advantages of adopting a more transparent and technologically-enhanced business practice. Compeer quote that currently 75% of the industry’s Wealth Managers are planning to increase the budgets of their compliance departments in the next 12-18 months, with 44% seeing it as an opportunity to introduce positive strategic change.

Wealth Managers Planning On Increasing Budgets

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75% of the industry’s Wealth Managers are planning to increase the budgets of their compliance departments in the next 12-18 months.

Two business man having a face to face about investments

However there remains a camp of resistance and opposition who resent this prevailing cultural shift and the perceived operational upheaval and potential loss in revenues that they believe regulation and the required technology upgrades will bring. In fact 88% say that this regulatory change isn’t justified and almost 80% find the extra workload of dealing with these regulations difficult or very difficult. It is widely believed that the biggest threats that Wealth Management firms are facing in 2015/16 are lack of experience and changing expectations from the regulator, not having enough time and money to change strategy and the unintended consequences from MiFID II for the UK.

But technology doesn’t stand still and with it a more sophisticated technology-proficient Client now wants a more personalised service, the ability to be more hands on with their investments, to understand exactly how their portfolios are performing, improved reporting offering more depth and breadth of data and easy anywhere access on the plethora of mobile platforms available. According to the Scorpio FutureWealth Report, ‘Helpful Investment Technologies’, less than half of the wealthy investors questioned felt their wealth manager had the appropriate technology to meet their needs. In particular clients felt that managers lacked the right technology to help explain portfolio strategies.

Our Microsoft-based CRM platform delivers front office efficiencies that offer superior data access and reporting tools to Investment Managers to meet these evolving Client expectations. Moreover the open nature of the Microsoft platform enables easy backward integration into legacy software systems but also provides for future proofing with synergies and compatibility to mobile platforms.

The strength of UK financial institutions and our market leading position is founded on a unique mix of attractive economic, social and market strengths that make British investment firms amongst the most revered and competitive on the global economic stage. But as we move forward into this new era of centralised codes of practice and widespread industry reform, it is the innovators and the business leaders who fully embrace the drive towards cultural and technological change and increased regulation around the conduct of boards, senior management and client managers, who will see their assets and revenues flourish.

Several UK firms have fallen foul of the regulator and incurred significant fines and sanctions due to their inability to demonstrate sound client record keeping and evidence that they have advised their clients suitably based on their current circumstances. Of course client suitability is only one of the pillars of the conduct risk framework and organisations that just focus on fulfilling basic client records and KYC data are being blinkered and not really addressing the more fundamental issue of Conduct Risk or the wider opportunities and necessity to instigate enterprise-wide technology enhancements.

A solid and well-executed Conduct Risk framework backed with the right technology investment will play a vital role in future–proofing investment business going forward. Firstly by safeguarding fundamental client and business relationships but further, it can also deliver significant new business potential through improved client acquisition and onboarding, the creation of sustainable and measurable investment strategies and provide critical management information to drive business efficiencies and KPIs to the benefit of senior management, relationship Managers and, of course, the client. Approximately 50% of UK firms are planning a major upgrade in their IT systems over the next 12 months.

At Wealth Dynamix we have noted the many benefits felt by major investment firms like Charles Stanley, Ruffer LLP, James Hambro, Quilter Cheviot and Brewin Dolphin who we have worked with to deliver client management solutions that provide both a leading CRM system and a Conduct Risk-ready platform.

• Any firm that takes conduct risk seriously and enshrines superior client outcomes as a central tenet of the business needs to invest in the measurement, monitoring and execution of all client interactions while retaining profitability and operational efficiency enterprise-wide.

• A centralised client master file designed with the right data model which correctly distinguishes the person or body corporate as the legal entity that advice is being given to or from whom instructions are received

• A user interface that provides a single point of access to all relevant client information in the context of the specific relationship in support of giving the best advice at all times

• Integrated contact and activity management providing efficient communication to and from authorised persons

• Open architecture allowing seamless integration with core transactional and accounting systems, document management and communications infrastructure

• A flexible approach to data capture and form design that allows each organisation to define the right level of detail appropriate to its clients and service offerings

• A flexible approach to process definition and workflow enabling the efficient collaboration of tasks and data capture in the right place at the right time

• A powerful document generation tool to produce client facing letters, proposals and review forms so that client documentation is included in the evidence trail efficiently and securely

• A powerful Management Information platform that allows KPIs to be defined and measured

• A low risk modern technical platform and skilled resource availability

Lines of code technology


In a competitive and diversified market, customer profiles and product offerings will naturally vary between firms but technology is moving forward apace and with it creating a more sophisticated Client and Client Relationship that firms must safeguard through leading–edge technology and optimal Client Activity Management. Each organisation must address the specific risks associated with poor client outcomes from their actions and these risks will vary in scale and focus depending on their business model. It cannot be true that one standard client management solution would support every business model when it comes to a detailed understanding of the client relationship.

The FCA requires that firms not only manage and monitor that risk but actively implement strategies that will mitigate against poor client outcomes. Firms need to demonstrate how they are doing this and keep an eye to the future technical developments in the market ensuring that their services remain competitive. They will be left behind if they don’t adapt.

Gary Linieres, CEO, Wealth Dynamix.

Biography Box Out

Since launching in January 2013, Wealth Dynamix has undertaken a number of high profile deployments in the UK wealth management sector that have provided a CRM based technology that has specifically been created to address the issues of client record keeping, client suitability and client onboarding. The business has been growing exponentially as demand for both the solution and the industry requirements continue to develop.

This can only be achieved with appropriate technology that provides the following key capabilities;


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