In the second article of this series, we took a close look at the unique expectations that affluent people in the Greater Bay Area (GBA) have for their banks and wealth management firms and found that they are a complex mixture of the traditional and the modern. We now turn our attention to how executives targeting this market can manage to meet these demands profitably.
Wealth advisory firms will face stiff competition for GBA investors as China continues to pursue greater fluidity and opportunity across this dynamically growing region. As opportunity expands, so will the complexity of the solutions and portfolios that banks and advisers must offer to compete effectively.
Delivering alpha will often be the deciding differentiator, and so quality presentations become a paramount concern. The client must thoroughly understand what you are offering before they will feel confident enough to accept it and to engage your services. Wealth management firms do not compete on ideas. They compete on their ability to convey those ideas to their clients.
Clear communications at this level require modern analytical tools and state-of-the-art, up-to-date substantiation. Overwhelming a client or prospect with graphs and charts may not be the best way to achieve understanding. That said, your presentation needs to be data-driven to convince analytical and educated GBA investors. How can advisers strike the right balance?
Alpha and modelling
Having served wealth management firms all over the globe since 1985, Avaloq has learnt that a stellar client presentation begins in the back office, deep in the infrastructure underlying a wealth management firm.
The digital natives (of all ages) in the GBA will understand visualizations and animations better than any other communications method. The best wealth management systems on the market today, including those from Avaloq, can generate them for you. When your clients can see a visual model of your recommendations, they will appreciate your reasoning, making it easier for them to trust that the portfolio will meet their needs.
Since animations and visualizations increase comprehension, they invite speculation. Thus, successful advisers will be prepared for “what if” questions. For example, most prospects and clients will remember the global recession of 2008, and practically all of them will be intimately familiar with the pandemic. They will worry about how their portfolio will perform if either happens again.
Advisers who can proactively show clients how the proposed portfolio might perform under different future scenarios will have a much better chance to build client confidence in the strategies they present.
Winning advisers should also bring artificial intelligence (AI) and machine learning to the table, using it to back up their recommendations. A majority of our survey respondents said they would be happy to have their adviser use AI for such things as helping to analyse their portfolio or to determine pivots.
It is important to note that since AI cannot provide the “personalized service” they demand, it is not perceived as a replacement for an adviser or banker. Rather, GBA prospects expect to see it used as a tool in the pursuit of excellence.
Modern wealth management platforms use AI-assisted data modelling to create projections of portfolio performance under differentiated scenarios. Some even substantiate concepts, including ESG strategies, with links to relevant news.
When your client sees a presentation like this, they will have their own questions about the future as well. If you can answer them with new models on the fly, the client will feel even more comfortable and knowledgeable. They will have greater confidence in your recommendations and, just as important, they will know that you are backed-up by world-class infrastructure.
Alpha and profitability
Successful firms need to deliver market-beating service profitably, which means balancing opposing forces that apply pressure to a firm’s ability to profitably deliver the advanced and innovative products that will appeal to GBA investors.
The first force is the extreme expectations clients bring to the table, and the second is cost sensitivity. In the GBA, our survey indicates that up to 88% of affluent to high net worth investors “must have” or “would switch” financial services providers to get lower fees.
Significantly, GBA investors seem to be more willing to switch firms than has been typical in our industry, with our survey indicating that nearly half of those who have an adviser switched advisers in the last five years. This effectively means that your client relationship is on the line with each presentation. Only a platform that offers the full spectrum can ensure that each presentation has the comprehensibility and flexibility to win the client’s confidence, and the power to profitably execute the strategy as presented.
The operations behind it all
Wealth managers should be able to concentrate on developing client relationships by means of innovative portfolio creation. The CEOs, CIOs and executives who will dominate the incredible opportunity opening up in the GBA right now will free their advisers and relationship managers to do exactly that.
That means the back office must run smoothly and efficiently. Very few infrastructure providers can automate the entire process from end client through the adviser and all the way to trade settlement. Avaloq is one of the few providers that powers a firm’s digital transformation in exactly this way by unifying your entire value chain on a single integrated data set.
The combined effect is to empower your teams to coordinate their efforts and to extract full value from the system right from the start. Avaloq's platform also eases regulatory compliance across jurisdictions.
This is how Avaloq serves GBA wealth management firms during this historic opportunity:
- Our SaaS offering can drive down run costs and maximize revenues generated by the front office.
- High straight-through processing rates with low manual intervention can help free expensive human resources to focus on client-facing service.
- Our flexible cost models can fit your business now and then scale appropriately.
- Easy to understand APIs unlock flexibility and extendibility with third parties.
The list goes on, but the bottom line remains the same: you need a unified data set and an integrated company-wide workbench to create the portfolios modern clients want. You need extreme power with integrated AI functionality to execute and run them. And you need to empower your advisers with presentations that can help them present complex solutions in a clear and compelling way so as to earn share of wallet and fresh introductions.
As the GBA enters a new era of fluidity and wealth creation, with a substantial new market of people looking for a financial adviser, Avaloq can position you and your firm to seize this remarkable opportunity and to retain it as the future unfolds.
Discover the Greater Bay Area opportunity
Uncover the potential of the rising wealth in the Greater Bay Area with our comprehensive report. Gain insights into the market opportunities for banks and wealth managers in this burgeoning region.