Innovation in wealth & asset management: Strategic investments for enhancing the client experience & driving operational efficiency

If you’re working on driving innovation for your asset management firm, here are the key trends, technologies, and services to stay focused on.

Wealth and asset management firms today face a rapidly evolving landscape shaped by digital transformation. To meet client expectations and ultimately secure a competitive edge in the fourth wave of the technological revolution, firms are showing increasing interest in cutting-edge trends and technologies that have punctured the financial sector over the past few years.

But there’s a lot of noise out there. As firms develop their innovation roadmap, they’re forced to navigate a plethora of current information, historical knowledge, and future predictions when determining the best ways to allocate precious time and resources.

This blog identifies and explores the most critical areas of technological investment in asset management, as learned by the experts here at Codal over many years of spearheading digital transformation projects in the financial services space. Here, we specifically focus on data management, system integrations, cloud infrastructure, core technology modernization, cybersecurity, and the utilization of generative AI to enhance client experiences and boost internal productivity.

So if you’re working on driving innovation for your asset management firm, here are the key trends, technologies, and services to stay focused on.

Data management: Consolidating information for greater visibility compliance

Effective data management strategies play a pivotal role in wealth and asset management by facilitating tailored advice and informed decision-making. With robust data management practices, financial advisors can sift through massive amounts of information to extract insights that are directly relevant to their clients’ unique financial goals and circumstances. Data around returns, sharpe ratio, liabilities, risk metrics, and tracking errors is leveraged to measure internal KPIs for the asset managers. A personalized approach not only enhances client satisfaction, but also fosters trust and loyalty by demonstrating a deep understanding of individual needs and preferences.

One of the key components of effective data management is the ability to integrate disparate sources through data feeds and consolidation. A centralized data source provides advisors with a cohesive view of client portfolios, eliminating redundancies and discrepancies that may arise from managing data across multiple platforms or systems. Moreover, it enhances data accuracy, a critical aspect for compliance and risk management in an increasingly regulated environment. By ensuring the integrity and reliability of data, firms can mitigate compliance risks and uphold regulatory standards with greater confidence.

Advanced data aggregation tools further augment the efficacy of data management strategies by enabling the collection of information from various financial institutions and investment accounts in real-time. These tools offer advisors a dynamic snapshot of client assets, allowing for timely adjustments and strategic decisions based on up-to-the-minute market developments. This real-time visibility not only enhances responsiveness to market fluctuations, but also empowers advisors to capitalize on emerging opportunities and mitigate potential risks on behalf of their clients.

Products and services that exemplify effective data management in asset management include:

• Custom data aggregation platforms, which aggregate data from multiple sources such as stock exchanges, banks, and other financial services to provide a unified view of client portfolios.

• Real-time data streaming services, which offer immediate access to market data feeds, enabling advisors to make informed decisions in response to evolving market conditions.

• Consolidated reporting tools, which compile data into comprehensive reports, simplifying compliance efforts and facilitating performance tracking for both advisors and clients.

By leveraging these innovative solutions, firms can optimize their data management practices to deliver superior service, drive performance, and maintain a competitive edge in their corner of the financial market.

System integrations: Connecting custom third-party tools to eliminate data silos workflow redundancies

By integrating different software systems such as customer relationship management (CRM) platforms and more specialized portfolio management tools, firms can create a cohesive ecosystem that optimizes workflows and facilitates seamless data exchange across various departments and functions.

Effective system integrations result in the consolidation of key data and workflows. In asset management, this translates to a unified view of client information, investment portfolios, and interactions. Eliminating data silos and workflow redundancies enables advisors to access comprehensive client profiles and make more well-informed decisions based on real-time data. Moreover, it enhances collaboration among team members by providing a centralized platform for sharing information and coordinating client interactions, ultimately improving client service and satisfaction.

To build, optimize, and maintain software system integrations, firms should explore:

• Application Programming Interfaces (API)development services, which specialize in designing and developing custom APIs to facilitate seamless communication between different software systems. APIs serve as the bridge between disparate platforms, allowing for the exchange of data and functionalities in a standardized and efficient manner.

• Middleware solutions, which play a critical role in integrating third-party services with existing internal platforms, enabling firms to leverage external tools and resources while maintaining interoperability across core systems.

• ELT (Extract, Load, Transform) data integration solutions, which consolidate information from diverse data sources into a centralized system, enabling real-time processing and decision making. This can support scalability and improve overall data quality, which is critical for advanced analytics and regulatory compliance.

Embracing software system integrations not only enhances internal operations but also positions firms for sustainable growth and competitiveness in an increasingly digitized and interconnected landscape.

Cloud infrastructure: Reducing costly IT updates maintenance

By embracing cloud technology, wealth and asset management firms can transform their IT infrastructure, gaining access to a wide array of benefits that enhance their competitiveness and agility in the market.

Perhaps the most significant advantage of cloud computing is its ability to reduce IT overhead costs while simultaneously enhancing data storage capabilities. Cloud platforms offer scalable storage options, allowing firms to efficiently manage and access large volumes of data under a pay-as-you-go model, removing the need for a costly on-premise infrastructure that requires routine maintenance. Moreover, cloud infrastructure enables firms to leverage advanced analytics and machine learning tools that offer valuable insights into client behavior, market trends, and investment opportunities.

Products and services that exemplify the importance of cloud infrastructure in asset management include:

• Cloud migration services, which assist firms in securely migrating their existing data and applications to the cloud. These services streamline the transition process, minimizing disruption to operations while maximizing the benefits of cloud technology.

• Hybrid cloud solutions, which offer customized architectures that combine the security and control of private clouds with the scalability and flexibility of public clouds, giving firms the best of both worlds.

• Cloud-based analytics platforms, which provide data analytics and business intelligence tools specifically designed for the needs of the industry.

Solutions like AWS S3 Glacier offer cost-effective and secure solutions for long-term data storage. Overall, a solid cloud architecture plays a pivotal role in modernizing and future-proofing wealth management operations, enabling firms to stay agile, competitive, and responsive.

Core technology modernization: Enhancing mission-critical systems with a modular approach

Outdated systems present significant barriers to agility, efficiency, and innovation, hindering wealth and asset management firms’ ability to adapt to ever-shifting market dynamics. Whether it be for enhancing data management, internal operations, or digital client experiences, strategically updating legacy systems with modern solutions is paramount.

To make the biggest impact here, firms must dedicate resources to:

• Legacy system modernization. Modern, cloud-based systems enable faster data processing, more seamless integrations, improved scalability, and tighter security, empowering firms to keep pace with industry trends and client expectations.

• Modular architecture development. Instead of overhauling the entire system all at once, firms can adopt a modular approach. By breaking down complex systems into smaller components, firms can iteratively modernize their infrastructure, ensuring a smoother transition and mitigating risks associated with large-scale transformations.

• Digital transformation consulting. Legacy modernization initiatives encompass a wide range of strategies, including the adoption of cloud computing, the implementation of advanced analytics, and the integration of digital channels for client engagement. By partnering with consultants who understand unique challenges and opportunities within the financial industry, firms can accelerate their journey towards digital-first operations and better position themselves for long-term success.

Client onboarding: Getting new investors up and running with maximum efficiency transparency

With today’s digital capabilities, wealth and asset management firms can streamline their onboarding process, making life easier for both clients and employees. Certain elements can be fully automated, reducing manual tasks that are time-consuming and prone to human error.

Some of the key services and solutions in this arena include:

• User experience (UX) and user interface (UI) design. Leveraging engaging, data-driven interfaces makes the onboarding experience pleasant and straightforward for clients, increasing satisfaction and reducing abandonment rates. Intuitive design principles and interactive features guide clients through each step of the onboarding journey, simplifying complex processes and minimizing friction. By prioritizing UX/UI design, wealth management firms can differentiate themselves in a crowded market and create lasting impressions that foster client loyalty.

• Digital onboarding platforms. These comprehensive and mobile-friendly systems help firms manage their entire onboarding journey, from automated form filling, to secure identity verification, and everything in between. By automating repetitive tasks like document submission and compliance checks, firms accelerate the onboarding process, enabling their clients to access accounts and start investing faster.

• Automated compliance tools. Compliance and security standards should be baked into the digital onboarding process, without creating too much manual work for internal staff. Automation tools like Know Your Customer (KYC) and Anti-Money Laundering (AML) streamline the verification process and ensure compliance with fluctuating regulatory requirements. These tools leverage real-time checks and integrations to accelerate client vetting while maintaining the highest standards of security and integrity.

• Communication and engagement tools. Integrated chat, email, and video conferencing tools further enhance the digital onboarding process, enabling seamless interactions between clients and advisors. By facilitating clear and real-time communication, clients can ask questions, seek guidance, and receive personalized assistance throughout the onboarding process, helping to foster greater transparency, trust, and collaboration.

Utilization of GenAI: Automating workflows and predicting market trends

Generative AI (GenAI) is reshaping the landscape of wealth and asset management, ushering in a new era of automation and data-driven investments. By harnessing the power of AI technologies, wealth management firms can revolutionize their operations, enhance client experiences, and unlock even deeper insights from data.

GenAI excels at tasks such as data entry and transaction processing, freeing up advisors to focus on more strategic activities that require human intuition and expertise. Such automation not only increases operational efficiency, but also enables advisors to deliver more value to clients by offering personalized investment strategies and proactive financial advice.

GenAI is redefining asset management with these key applications:

• AI-driven chatbots and virtual assistants, which leverage natural language processing and machine learning (ML) algorithms to interact with clients and advisors in real-time, providing instant responses to queries and proactive updates on portfolio performance. These tools also have the capability to identify upselling and cross-selling opportunities based on client preferences and behavior, driving business growth and maximizing client satisfaction.

• AI-powered predictive analytics tools, which help firms analyze vast datasets to predict market trends and client behavior. By leveraging ML algorithms, predictive analytics can identify patterns and correlations that humans may overlook, providing valuable insights for investment decisions. These tools enable advisors to offer more accurate and personalized investment advice tailored to each client’s unique financial goals and risk tolerance.

• ML-driven portfolio management systems, which learn from historical data to optimize portfolio allocations and identify investment opportunities, further enhancing the productivity and effectiveness of advisors.

As GenAI technologies continue to advance, their potential to revolutionize the asset management industry and empower firms to thrive in a rapidly evolving market becomes increasingly apparent.

Wrapping up

It’s simple to say that investment in digital transformation is crucial for wealth and asset management firms aiming to drive efficiency, maintain compliance, and deliver exceptional client service. The challenge comes with dedicating resources to either buying or building the right solutions to make the biggest impact. By strategically embracing advancements in data consolidation, system integrations, cloud infrastructure, core technology modernization, client onboarding tools, and GenAI, firms can better serve their clients and stay ahead in the competitive financial landscape.

These investments not only streamline operations but also empower advisors to provide insightful, data-driven financial guidance that meets the evolving needs of their clients. And as technology continues to advance, wealth management firms must remain agile and proactive in adopting new tools and strategies to secure their place in the future of finance.

Here at Codal, we partner with asset management firms to solve complex problems and drive innovation through cutting-edge digital strategies and solutions. Charles Schwab, for example, tasked our team with redesigning an internal compliance portal that accelerates growth for financial organizations by centralizing and automating complex workflows. You can learn more about that project here.

Fill in the gaps of your internal team with Codal Complete

Codal Complete offers a full range of design and development services for wealth and asset management firms. We act as an extension of your firm’s internal development team, helping to clean up the product backlog, take on new initiatives, and ultimately drive innovation for greater operational efficiency and client satisfaction.