Wealth managers are increasingly relying on technology Solving the problems in assessing the suitability of client portfolios. This is shown by a global study by behavioral finance experts from Oxford risk, a company that develops behavioral risk suitability software to help money managers serve their clients. The study was conducted between September 2022 and January 2023 on a sample of 300 wealth managers from the UK, France, Spain, Ireland, Australia and New Zealand.
Wealth Manager and Technology
The study found that 78% of wealth managers expect global industry spending on proficiency assessment technology to increase over the next five years.
In addition, 16% expect one significant increase in spending on technologyAs an asset manager, we focus on improving suitability assessments for clients.
Research shows one thing widespread dissatisfaction with existing eligibility assessments during recent financial shocks, including the Covid-19 pandemic and the current volatility coupled with rising inflation and rising interest rates.
As for existing licensing systems, almost 70% of wealth managers agree that they are too cumbersome to adapt to rapidly changing circumstances. 14% firmly believe they were not up to the task. Additionally, 66% of wealth managers admit that existing systems are overly subjective, relying on human judgment and bias when making assessments.
However, one of the main reasons behind the increase in technology spending is that money managers believe they are getting value from it Competitive advantage over competitors and the potential for new business opportunities. About 81% believe technology will create them more attractive to potential customers and 20% are strong supporters of Attract customers through technology. Greg B DaviesHead of Behavioral Finance at Oxford Risk, comments:
“Wealth managers have often been slow to adopt technology, but around the world they now believe that technology plays an important role in suitability. It’s worrying when wealth managers themselves admit that their processes and systems are flawed, but it’s good that they acknowledge the problems. It is clear that the last three years have been challenging and the approval processes have suffered, some of which have simply fallen short. Cumbersome tools and annual review processes were often insufficient to respond to rapidly changing customer situations. Life changes fast and tools need to reflect that. The combination of technology and behavioral science enables a comprehensive approach to suitability that takes into account each client’s complexity and emotional needs over time. It can’t just be a tick exercise.”