The myths and fears surrounding hybrid client servicing models in wealth management

Traditional wealth management firms and private banks may think that human service will confer a point of difference in time. However, they could be standing on a burning bridge. There are some very compelling reasons for adopting AI technology and automation within your service model, and in time, protecting profitability will likely force action.

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There are many fears surrounding the adoption of hybrid servicing, some which hold little water like the loss of human interaction or client insight, or broken process and incomplete journeys – or even the fear of a breach of regulatory compliance. 

“Many firms believe that a hybrid servicing model might compound the challenges of providing a fully compliant client experience – whereas the reality is that hybrid servicing can embed compliance within pre-defined workflows and automated processes which ensure that clients receive the best possible service.” 

The reality of hybrid servicing is that it allows firms to create a fully joined up, omnichannel service proposition that combines the best features of traditional servicing with modern technology. It can reduce the concerns around regulatory control by providing a full audit trail of client interactions which can be used to demonstrate adherence to global regulations – or to flag risks from which mitigation strategies can be employed to correct swiftly.

Triggers and AI combine to provide deeper client insights and provide the right information at the right time supporting the development of trust between clients and their wealth manager. Reducing the administrative burden for WM’s frees them up to support clients where more complex and personalised advice is required.

Beware the limitations: 

Of course, hybrid service is not a universal cure-all. Hybrid service can also create compliance challenges, as businesses need to ensure that their client data is appropriately managed and protected.

It also needs careful management as firms charge for personal service from experienced, qualified professionals. When the balance is wrong, it can devalue the overall service proposition – or call into question the associated fees paid by the client. It is therefore imperative businesses test and learn where the ‘sweet spot’ – the optimal balance – lies.

Where is the internal resistance to change coming from?

The industry is proving slow to adapt, despite the pressure on margins. The adaption involves the replacement of entrenched, legacy technologies – but perhaps there are several other myths or fears preventing action which needs addressing:

Firstly, there is the fear of a breach of regulatory compliance. However, Hybrid servicing provides a full audit trail of client interactions which can be used to demonstrates adherence to glocal regulations – or to flag risks from which mitigation strategies can be employed to correct swiftly.

A fear of broken processes & incomplete journeys is sighted as another key concern, but this model allows firms to provide a fully joined up, omnichannel service proposition that combines the best features of traditional servicing with modern technology.

Next, Advisers fear a loss of client insight by placing information into a system rather than relying on paper records. But powerful triggers and AI combine to provide deeper client insights from which financial institutions can build trust with clients and attract new business by protecting client data and ensuring a high standard of compliance.

Related to this is the fear of a loss of human interaction. Yet, all advisers with high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) clients know that for more complex cases human advice will still be required to provide more personalised advice and services.

“The key to a successful hybrid-servicing model is knowing how to engage, onboard and develop enriched relationships with clients that take their preferences into account without compromising service, introducing risk or taking risks with compliance.”

Here are 3 reasons why a hybrid model could offer the optimal solution:

1. The clients of today (and tomorrow) want more for less

High inflation levels are pushing up salaries, making unlimited human advice unsustainable. Ultimately, firms must pass on the increased costs to their clients or accept lower margins. In a recessionary environment, clients are less likely to accept such fee increases, especially as their investments are not showing high rates of return as markets aren’t growing. At best, they will reduce their investment with the firm. At worst, they will vote with their feet.

2. Financial Advisor numbers are declining

There may also be a shortage of FAs available to serve a growing number of wealthy individuals in future years, presenting further challenges to scalability. The number of high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) across the globe is growing – against a backdrop of declining Wealth Management talent. Many reports point to a large number of advisers retiring within the next 10 years while recruiting adequately skilled talent is becoming ‘a tall task’.

3. Human advice will remain an essential element

As technology advances, the role of the human advisor is likely to shift from product selection to a focus on client engagement, emotional intelligence and even behavioural coaching. Automated advice and online services could replace the traditional role of an advisor to some extent, providing basic advice and services to clients. However, for more complex advice, human advisors will still be required to provide more personalised advice and services. Furthermore, technology has limitations, and firms and private banks have a duty of care to their clients. Under the Consumer Duty Act, clients must be able to access human Financial Advisors when they have a concern or questions and not rely on chat box, Robo advice or FAQ documentation alone.

We believe that Hybrid Servicing model is central to the future of wealth management. Its growing popularity has been driven by a more digitally adept population, and a younger demographic of HNW and UHNW investors impacting the current benchmarks for client servicing and accessibility to financial data.

For a more detailed examination of how the hybrid approach is changing the face of wealth management, please download our latest eBook.


Download the eBook: How Hybrid Servicing Can Transform Your Wealth Management Firm

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