Building a Platform for Wealth

With the fall off of online investing over the past three years, bankers, brokers, advisers and investment managers have been migrating their organizations toward a holistic view of the retail customer, driven off a compressive financial plan. This plan-based approach has typically migrated the client from a commission-based relationship to an assets-under-management/wealth management-based approach. However, this is a difficult transition, as most firms are just beginning to realize.

A Definition

Wealth management is not just managing money for the wealthy, it is a change in philosophy from a product- and sales-based approach toward a client-service-based approach. It's more than financial planning or managed accounts. It's more than migrating from a commission-based service to a fee-based relationship. It's more than implementing a broker workstation. It's the repositioning of the firm from a product-centric, firm-based approach to a customer-centric, client-based approach where solutions are custom crafted using a variety of products, services and tools to create a more holistic and long-term solution.

While this sounds wonderful, in reality it is extremely difficult, demanding and scary. The transition to wealth management changes the rules to where advisers do not just sell captive internal products, they sell a host of solutions that may have little tie-back to the traditional product/technology silos that have historically developed.

Creating The Right Platform

Scaling a comprehensive wealth-management solution is challenging and few have succeeded as the tasks are tremendous.

There are seven disparate technology services needed to support comprehensive wealth management: channel management, financial advice, portfolio analysis, investment compliance, customer knowledge, commission/fee management and product/service integration.

Channel management entails managing client-service-delivery mechanisms. This not only includes the adviser channel (broker workstation) but online, call center, branch network and the back office providing a comprehensive 24x7 support network. Channel solutions not only provide support for the adviser and the client but also facilitate a collaborative infrastructure that enables the adviser to electronically communicate, share and store information with product and service specialists from both within the firm and outside.

The financial-advisory framework supports financial, estate, executorial, and philanthropic plans. These plans are at the heart of understanding the client's needs, evolving the broker into an adviser. The portfolio-analysis engines examine a customer's financial portrait, risk profile, and financial needs and recommend the appropriate financial strategy.

Customer knowledge allows the firm to analyze client information to ensure that clients are being serviced appropriately. Investment-compliance solutions need to ensure that the customer's wishes and needs are properly reflected within their portfolios.

Commission and fee management is self explanatory.

Last, but certainly not least, is product and service integration. This includes all of the typical financial products that modern financial-services firms offer.

Each of these categories is large enough to be deconstructed into projects that would be considered major by most firms. Delivering the whole enchilada is certainly a massive undertaking.

Getting Started

The crux of a wealth-management platform is just that: the platform. The wealth platform needs to be an open container that can easily integrate multiple, disparate and independent products, data, planning and analysis tools.

While wealth has certainly been lost over the past three years, that doesn't mean that retail investment technology has been at a standstill. And while there is no doubt that the retail investor will come back, there is also no doubt that the advisor-based model is here to stay.

Larry Tabb is founder and CEO of Westborough, Mass.-based The Tabb Group, a financial-markets strategic-advisory firm. [email protected]